Please ensure Javascript is enabled for purposes of website accessibility

Simply the Biggest

  • By
  • | 6:00 p.m. February 2, 2007
  • | 2 Free Articles Remaining!
  • Entrepreneurs
  • Share

Simply the Biggest

companies by Mark Gordon | Managing Editor

At MarineMax, all goals focus on growth, from spending on marketing to making daylong job interviews the norm.

The strategy utilized by MarineMax, the Clearwater-based company that's grown into the nation's biggest boat retailer during the past decade, is both simply efficient and efficiently simple.

The simple part lies in the company-wide, top-down sales motto that's centered on selling a lifestyle, not just a boat. "Boating is a right side of the brain decision," says Bill McGill, MarineMax's folksy president and CEO who founded the predecessor version of the company in Sarasota in 1974 with $50,000 in life savings.

"It's an emotional call," he says.

The efficiency is in the numbers: Since the company's 1998 IPO, when it merged with six other boat retailers, revenues have increased 326%, from $282 million to $1.2 billion. A chunk of that growth stems from a series of well-planned and well-timed acquisitions of other boat dealers.

What's more, until an earnings warning earlier this year, the company had hit nearly every target since going public, with numbers that usually included double digit increases in revenue, net income and same-store sales growth. Late last month, the company reported a loss in its fiscal first quarter, which ended Dec. 31, of $3.8 million, or 21 cents per share, compared with earnings of $664,000, or 4 cents per share for the previous year's period.

And although sales climbed 30% for the fiscal year, from $181.2 million to $234.7 million, the quarter still marks one of the company's first efficiency failures.

In Jan. 25 comments to Wall Street analysts, McGill reported that employee and product incentives hurt its operating margins and the company spent more on marketing and promotions to combat an industry-wide sales slowdown. Plus, inventory increased 41% due to two acquisitions completed in the second quarter and the addition of a new product line.

Even with that blip, when taken in the broad context, the simple and efficient approaches have spawned an industry - and Gulf Coast - giant. When MarineMax passed the billion-dollar revenue mark last summer, it joined about nine other Tampa-based public companies in that category. It has 88 retail stores and more than 2,200 employees spread out over 22 states.

It's also the only major boat retailer nationwide to be publicly traded. A recent share price of the stock, traded on the NYSE under the symbol HZO, was $23.67.

And MarineMax's closet competition, companies including Anna Maria Island-based Galati Yacht Sales and Bellevue, Wash.-based Olympic Boat Centers, remains far behind when it comes to stores, employees, annual revenues or market share.

The top grade

Still, McGill, 64, says that market dominance, as well as the company's gaudy growth stats, won't mean much if the company doesn't get both bigger and better in the future. That starts with hiring the right people for the right position, he says, which he recognized early on "is an easy thing to say, but a hard thing to do."

McGill and MarineMax developed a two-pronged solution. First, soon after the IPO, the company began conducting lengthy personality profiles with each candidate, from sales mangers to service techs, before making a hire.

Next, McGill brought in an interview process called Topgrading. Developed by two psychologists who specialize in hiring, the idea is to weed out job candidates until a company finds one in the top 10% of performers for a certain position. That's done through a sometimes daylong interview that goes through the candidate's entire life chronologically, from childhood to high school through the most recent job.

The MarineMax hiring process is so important to McGill that he sits in on just about every interview for positions of sales managers on up through the company food chain - a big task for a company with more than 2,200 employees. "Hiring is so critical," he says. "We can't afford to make a mistake."

There haven't been many mistakes since the company started using Topgrading, says McGill. Prior to implementing the system, McGill says about half of the company's hires turned out to be grade A, top 10% performers. With Topgrading, it's at about 90%.

Candidates that survive the interview gauntlet to become part of MarineMax then become initiated in the company's constant and regularly updated training programs, which were recently expanded to include Lean Six Sigma, a manufacturing process that combines two time-wasting reduction programs.

McGill also created what's now known as Passion Days, where employees at every level in the company take weekend-long boat trips, to destinations such as the Caribbean. It serves both as a fun perk and a learning experience, as many times the trips are on new boats the company will be selling.

Removing barriers

After putting together the right people, the focus turns to selling boats.

The simple sales strategy is applied here, starting with the idea that buying a boat is a family decision that enhances the leisure time a family spends with each other, MarineMax executives say. The sales staff spends a lot of time trying to de-intimidate the boat-buying process.

So for example, a major part of the sales phase is what's known as WOW, or Women on Water. It's a series of classes for women to learn the basics of boating. There are classes for children, too.

Other phases of the sale and post-sale system include delivering the boat with a certified captain who takes the buyers out on the maiden voyage; setting up getaway trips, where new boaters can learn from veterans; and hosting dock parties, where recent and longtime customers can socialize together.

"We are removing this barrier of 'can I really do it,'" McGill says. "We help them understand they can do it."

Top Gun

MarineMax isn't the only boat retailer that takes new customers on trips or teaches women and children the basics of boating. Likewise, it isn't the only company that sends employees out on voyages or has a rigorous training program.

The company has, however, had a knack for doing those things longer and with more demonstrable success than just about all of its peers. And it's done it without a major competitor similar in size pushing it - there's no Coke to the Pepsi, no Toyota to the Ford. It is in a size category of its own.

MarineMax vice president of marketing Glenn Sandridge says the company instead competes against itself to maintain motivation, as opposed to other dealers and retailers. For example, store managers compete with each other to win an annual Top Gun sales competition, with the winner receiving coveted bragging rights.

Despite the growth and successful strategies, Wall Street hasn't always rewarded the company with boosts in its share price. Two analyst firms that track the stock, Matrix Research and Credit Suisse, lowered its opinions in April, from buy and outperform to hold and neutral positions, respectively.

And after the earnings warning last month, Jefferies & Co. analysts downgraded the company from buy to hold and the stock began a slow slip; the past few weeks, it's only been trading about $4 more than its 52-week low of $19.24 a share.

McGill says Wall Street has regularly struggled to understand the company, as no other publicly traded company is in the business of selling boats.

Two other McGill thoughts on Wall Street. Daily, or even monthly, fluctuations in the company share price hold little interest for him as he's more focused on what the company will look like in 10 or even 20 years. He also says he's not interested in joining the latest craze of taking public companies back to being private, despite acknowledging the growing challenge of meeting onerous rules and regulations set up for publicly traded companies.

McGill says he intends to continue leading MarineMax through the same strategy of a simple sales approach, seeking the best hires and spending to promote and market its fleet of products. No matter how long the current industry slump lasts, McGill says he won't allow the company to "cocoon up" like some other companies have done.

"If it's long term," McGill says, "nothing is more important to us than market share."

Review summary

Company. MarineMax, Clearwater

Business. Selling and repairing boats

Key. Company is the largest boat retailer in the country, and with $1.2 billion in annual revenues, it's one of the largest publicly traded companies of any kind in the Tampa area.

Aerodynamic executive

Bill McGill thought he'd be flying through space one day, not water-skiing through the Gulf.

As a boy growing up in Nashville, McGill dreamed of becoming an astronaut as he toiled on his family's farm. And after earning a B.S. in mechanical engineering from the University of Dayton, he began a career in air and space. In the late '60s, McGill worked in testing labs with jet company Pratt & Whitney and then later, on spy plane-related projects at Langley Air Force Base in Virginia.

But by the early '70s, McGill had moved to Florida with his wife and three young children. He eventually combined his interests in water and boating - he was a competitive water skier - with business, by opening a branch of his uncle's Sea Ray boat dealership on City Island in Sarasota. He used his $50,000 in life savings to open the store.

McGill, now 64, grew that business, called Gulfwind USA, into what later combined with five other boat retailers to form Clearwater-based MarineMax in 1998.

Throughout the steady growth in his executive and entrepreneurial career, McGill has had two mainstays: One is passion for water sports, as he regularly goes boating with employees and family and continues to water-ski. (McGill enjoys land-locked sports, too; he jogs almost daily, and recently completed the Austin Marathon).

The second aspect that hasn't changed much is McGill's relaxed, low-key personality, which can even be seen through his name tag: A pin indicating only his first name and his length of service with the company - 32 years.

The move to open his own business 30-plus years ago has paid off personally for McGill, as well. He earned $2.32 million in total compensation last year as CEO, president and chairman of the company.

-Mark Gordon

At a glance

Headquarters: Clearwater

CEO: Bill McGill

FY 2006 Revenues: $1.2 billion

Stock symbol: HZO

Recent stock price: $23.67

52-week stock-price range: $19.24 to $36.72

Price-earnings ratio (trailing 12 months): 11.48

Dividend: Nil

Market capitalization: $444.59 million

Sources: Securities and Exchange Commission, Yahoo Finance.

Income Statement

($ in thousands) Years ended

Sept. 30, 2005 Sept. 30, 2006 %Change

Total revenue $947,347 $1,213,541 28%

Cost of revenue 712,843 906,781 27%

Gross Profit 234,504 306,760 31%

Selling, general and

administrative expenses 169,975 222,806 31%

Income from operations 64,529 83,954 30%

Interest expense, net 9,291 18,616 100%

Income before tax provision 55,238 65,338 18%

Income tax provision 21,412 25,956 21%

Net income 33,826 39,382 16%

Net income per share, diluted $1.88 $2.08 11%



Current Assets:

Cash and cash equivalents 27,271 25,113 -

Net Receivables 31,191 62,075 99%

Inventory 317,705 462,847 46%

Other current assets 6,934 8,445 22%

Total current assets 383,101 558,480 46%

Property plant and equipment 99,994 122,215 22%

Goodwill 50,521 94,068 86%

Intangible assets 5,663 22,127 290%

Accumulated amortization - - -

Other assets 211 4,673 2,115%

Deferred long-term asset charges - - -

Total assets 539,490 801,563 49%


Current liabilities:

Accounts payable 39,242 64,181 64%

Short/Current long-term debt 154,635 326,032 111%

Other current liabilities 25,793 17,170 -

Total current liabilities 219,670 407,383 85%

Long-term debt 25,540 32,654 28%

Other liabilities - - -

Deferred long-term liability charges 10,771 11,639 8%

Minority interest - - -

Negative goodwill - - -

Total liabilities 255,891 451,676 77%

Source: Securities and Exchange Commission filings, Yahoo! Finance


Latest News


Special Offer: $5 for 2 Months!

Your free article limit has been reached this month.
Subscribe now for unlimited digital access to our award-winning business news.
Join thousands of executives who rely on us for insights spanning Tampa Bay to Naples.