UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 
FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2019.	
Commission File Number. 1-14173
 
MARINEMAX, INC.
(Exact Name of Registrant as Specified in Its Charter)

Florida	59-3496957	
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)	
 	 	
2600 McCormick Drive, Suite 200	 	
Clearwater, Florida 	33759	
(Address of Principal Executive Offices)	(ZIP Code)	
727-531-1700
(Registrant's Telephone Number, Including Area Code)
 
Indicate by check mark whether the registrant:  (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes   ☒     No   ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes   ☒     No   ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	 	☐	 	Accelerated filer	 	☒	
Non-accelerated filer	 	☐   	 	Smaller reporting company	 	☐	
 	 	 	 	Emerging growth company	 	☐	
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes   ☐     No   ☒
The number of outstanding shares of the registrant's Common Stock on April 26, 2019 was 27,323,100.

 

 

 

 
MARINEMAX, INC. AND SUBSIDIARIES
Table of Contents
 
Item No .	Page	
 	 	 	 	
PART I. FINANCIAL INFORMATION	 	
1.   	Financial Statements (Unaudited):	 	 	
 	Condensed Consolidated Statements of Operations for the Three and Six Months Ended March 31, 2018 and 2019	 	3	
 	Condensed Consolidated Balance Sheets as of September 30, 2018 and March 31, 2019	 	4	
 	Condensed Consolidated Statement of Stockholders’ Equity for the Six Months Ended March 31, 2019	 	5	
 	Condensed Consolidated Statements of Cash Flows for the Six Months Ended March 31, 2018 and 2019	 	6	
 	Notes to Condensed Consolidated Financial Statements	 	7	
 	 	 	 	
2.   	Management's Discussion and Analysis of Financial Condition and Results of Operations	 	16	
 	 	 	 	
3.   	Quantitative and Qualitative Disclosures About Market Risk	 	22	
 	 	 	 	
4.   	Controls and Procedures	 	23	
 	 	 	 	
PART II. OTHER INFORMATION	 	
1.   	Legal Proceedings	 	24	
1A.	Risk Factors	 	24	
2.   	Unregistered Sales of Equity Securities and Use of Proceeds	 	24	
3.   	Defaults Upon Senior Securities	 	24	
4.   	Mine Safety Disclosures	 	24	
5.   	Other Information	 	24	
6.   	Exhibits	 	24	
SIGNATURES	 	25	
 	 	 	 	
EX – 31.1	 	
EX – 31.2	 	
EX – 32.1	 	
EX – 32.2	 	
EX – 101 INSTANCE DOCUMENT	 	
EX – 101 SCHEMA DOCUMENT	 	
EX – 101 CALCULATION LINKBASE DOCUMENT	 	
EX – 101 DEFINITION LINKBASE DOCUMENT	 	
EX – 101 LABEL LINKBASE DOCUMENT	 	
EX – 101 PRESENTATION LINKBASE DOCUMENT	 	

 
 
2

PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
MARINEMAX, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Amounts in thousands, except share and per share data)
(Unaudited)
 
 	 	Three Months Ended	 	Six Months Ended	 	
 	 	March 31,	 	March 31,	 	
 	 	2018	 	 	2019	 	2018	 	 	2019	 	
Revenue	 	$	270,605	 	 	$	303,586	 	$	507,526	 	 	$	545,523	 	
Cost of sales	 	 	201,312	 	 	 	229,384	 	 	378,984	 	 	 	407,843	 	
Gross profit	 	 	69,293	 	 	 	74,202	 	 	128,542	 	 	 	137,680	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Selling, general, and administrative expenses	 	 	58,659	 	 	 	63,976	 	 	108,905	 	 	 	118,468	 	
Income from operations	 	 	10,634	 	 	 	10,226	 	 	19,637	 	 	 	19,212	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest expense	 	 	2,840	 	 	 	3,033	 	 	5,382	 	 	 	5,549	 	
Income before income tax provision	 	 	7,794	 	 	 	7,193	 	 	14,255	 	 	 	13,663	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income tax provision	 	 	1,610	 	 	 	1,890	 	 	3,859	 	 	 	3,450	 	
Net income	 	$	6,184	 	 	$	5,303	 	$	10,396	 	 	$	10,213	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic net income per common share	 	$	0.28	 	 	$	0.23	 	$	0.47	 	 	$	0.45	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted net income per common share	 	$	0.27	 	 	$	0.23	 	$	0.46	 	 	$	0.44	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted average number of common shares used in computing
   net income per common share:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	 	22,173,194	 	 	 	22,836,571	 	 	22,079,065	 	 	 	22,807,756	 	
Diluted	 	 	22,940,594	 	 	 	23,417,688	 	 	22,825,598	 	 	 	23,408,873	 	
 
See accompanying notes to condensed consolidated financial statements.

 
 
3

MARINEMAX, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Amounts in thousands, except share data)
(Unaudited)
 
 	 	September 30,	 	 	March 31,	 	
 	 	2018	 	 	2019	 	
ASSETS	 	 	 	 	 	 	 	 	
CURRENT ASSETS:	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	$	48,822	 	 	$	63,598	 	
Accounts receivable, net	 	 	34,003	 	 	 	45,505	 	
Inventories, net	 	 	377,074	 	 	 	454,557	 	
Prepaid expenses and other current assets	 	 	5,392	 	 	 	8,839	 	
Total current assets	 	 	465,291	 	 	 	572,499	 	
 	 	 	 	 	 	 	 	 	
Property and equipment, net of accumulated depreciation of $72,013 and $77,019	 	 	138,716	 	 	 	140,883	 	
Goodwill and other long-term assets, net	 	 	33,123	 	 	 	33,876	 	
Deferred tax assets, net	 	 	3,408	 	 	 	1,767	 	
Total assets	 	$	640,538	 	 	$	749,025	 	
LIABILITIES AND SHAREHOLDERS’ EQUITY	 	 	 	 	 	 	 	 	
CURRENT LIABILITIES:	 	 	 	 	 	 	 	 	
Accounts payable	 	$	23,134	 	 	$	11,626	 	
Customer deposits	 	 	17,006	 	 	 	33,330	 	
Accrued expenses	 	 	32,926	 	 	 	37,098	 	
Short-term borrowings	 	 	212,949	 	 	 	297,530	 	
Total current liabilities	 	 	286,015	 	 	 	379,584	 	
Long-term liabilities	 	 	1,431	 	 	 	952	 	
Total liabilities	 	 	287,446	 	 	 	380,536	 	
SHAREHOLDERS' EQUITY:	 	 	 	 	 	 	 	 	
Preferred stock, $.001 par value, 1,000,000 shares authorized, none issued or outstanding
   as of September 30, 2018 and March 31, 2019	 	 	—	 	 	 	—	 	
Common stock, $.001 par value, 40,000,000 shares authorized, 27,141,267 and
   27,321,227 shares issued and 22,670,536 and 22,836,993 shares outstanding as of
   September 30, 2018 and March 31, 2019, respectively	 	 	27	 	 	 	27	 	
Additional paid-in capital	 	 	262,250	 	 	 	267,264	 	
Retained earnings	 	 	166,071	 	 	 	176,683	 	
Treasury stock, at cost, 4,470,731 and 4,484,234 shares held as of September 30, 2018
   and March 31, 2019, respectively	 	 	(75,256	)	 	 	(75,485	)	
Total shareholders’ equity	 	 	353,092	 	 	 	368,489	 	
Total liabilities and shareholders’ equity	 	$	640,538	 	 	$	749,025	 	
 
See accompanying notes to condensed consolidated financial statements.

 
 
4

MARINEMAX, INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Shareholders’ Equity
(Amounts in thousands, except share data)
(Unaudited)
 
 	 	 	 	 	 	 	 	 	 	Additional	 	 	 	 	 	 	 	 	 	 	Total	 	
 	 	Common Stock	 	 	Paid-in	 	 	Retained	 	 	Treasury	 	 	Shareholders’	 	
 	 	Shares	 	 	Amount	 	 	Capital	 	 	Earnings	 	 	Stock	 	 	Equity	 	
BALANCE, September 30, 2018	 	 	27,141,267	 	 	$	27	 	 	$	262,250	 	 	$	166,071	 	 	$	(75,256	)	 	$	353,092	 	
Net income	 	 	—	 	 	 	—	 	 	 	—	 	 	 	10,213	 	 	 	 	 	 	 	10,213	 	
Purchase of treasury stock	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(229	)	 	 	(229	)	
Shares issued pursuant to employee stock purchase
   plan	 	 	30,650	 	 	 	—	 	 	 	507	 	 	 	—	 	 	 	—	 	 	 	507	 	
Shares issued upon vesting of equity awards, net of
   minimum tax withholding	 	 	35,000	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	-	 	
Shares issued upon exercise of stock options	 	 	109,275	 	 	 	—	 	 	 	1,319	 	 	 	—	 	 	 	—	 	 	 	1,319	 	
Stock-based compensation	 	 	5,035	 	 	 	—	 	 	 	3,188	 	 	 	—	 	 	 	—	 	 	 	3,188	 	
Cumulative effect of change in accounting principle - revenue recognition, net of tax	 	 	—	 	 	 	—	 	 	 	—	 	 	 	399	 	 	 	—	 	 	 	399	 	
BALANCE, March 31, 2019	 	 	27,321,227	 	 	$	27	 	 	$	267,264	 	 	$	176,683	 	 	$	(75,485	)	 	$	368,489	 	
 
See accompanying notes to condensed consolidated financial statements.

 
 
5

MARINEMAX, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited)
 
 	 	Six Months Ended	 	
 	 	March 31,	 	
 	 	2018	 	 	2019	 	
CASH FLOWS FROM OPERATING ACTIVITIES:	 	 	 	 	 	 	 	 	
Net income	 	$	10,396	 	 	$	10,213	 	
Adjustments to reconcile net income to net cash used in operating
   activities:	 	 	 	 	 	 	 	 	
Depreciation and amortization	 	 	5,113	 	 	 	5,576	 	
Deferred income tax provision	 	 	2,245	 	 	 	1,504	 	
Loss on sale of property and equipment	 	 	63	 	 	 	42	 	
Gain on insurance settlements	 	 	(906	)	 	 	—	 	
Proceeds from insurance settlements	 	 	1,849	 	 	 	475	 	
Stock-based compensation expense	 	 	3,209	 	 	 	3,188	 	
(Increase) decrease in —	 	 	 	 	 	 	 	 	
Accounts receivable, net	 	 	(12,638	)	 	 	(12,257	)	
Inventories, net	 	 	(20,129	)	 	 	(78,038	)	
Prepaid expenses and other assets	 	 	602	 	 	 	(3,109	)	
Increase (decrease) in —	 	 	 	 	 	 	 	 	
Accounts payable	 	 	(8,545	)	 	 	(11,508	)	
Customer deposits	 	 	(1,099	)	 	 	16,324	 	
Accrued expenses and long-term liabilities	 	 	470	 	 	 	5,389	 	
Net cash used in operating activities	 	 	(19,370	)	 	 	(62,201	)	
CASH FLOWS FROM INVESTING ACTIVITIES:	 	 	 	 	 	 	 	 	
Purchases of property and equipment	 	 	(7,203	)	 	 	(7,931	)	
Proceeds from insurance settlements	 	 	646	 	 	 	280	 	
Net cash used in acquisition of businesses, primarily property and equipment and
   inventory	 	 	(2,085	)	 	 	—	 	
Proceeds from sale of property and equipment	 	 	130	 	 	 	104	 	
Net cash used in investing activities	 	 	(8,512	)	 	 	(7,547	)	
CASH FLOWS FROM FINANCING ACTIVITIES:	 	 	 	 	 	 	 	 	
Net borrowings on short-term borrowings	 	 	42,825	 	 	 	84,581	 	
Net proceeds from issuance of common stock under incentive compensation and
   employee purchase plans	 	 	3,947	 	 	 	1,826	 	
Contingent acquisition consideration payments	 	 	(2,926	)	 	 	(129	)	
Payments on tax withholdings for equity awards	 	 	(118	)	 	 	(1,525	)	
Purchase of treasury stock	 	 	(695	)	 	 	(229	)	
Net cash provided by financing activities	 	 	43,033	 	 	 	84,524	 	
NET INCREASE IN CASH AND CASH EQUIVALENTS	 	 	15,151	 	 	 	14,776	 	
CASH AND CASH EQUIVALENTS, beginning of period	 	 	41,952	 	 	 	48,822	 	
CASH AND CASH EQUIVALENTS, end of period	 	$	57,103	 	 	$	63,598	 	
Supplemental Disclosures of Cash Flow Information:	 	 	 	 	 	 	 	 	
Cash paid for:	 	 	 	 	 	 	 	 	
Interest	 	$	6,304	 	 	$	6,282	 	
Income taxes	 	 	2,565	 	 	 	3,124	 	
 
See accompanying notes to condensed consolidated financial statements.

 
 
6

MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 
1.	COMPANY BACKGROUND:	
We are the largest recreational boat and yacht retailer in the United States.  We engage primarily in the retail sale, brokerage, and service of new and used boats, motors, trailers, marine parts and accessories and offer slip and storage accommodations in certain locations.  In addition, we arrange related boat financing, insurance, and extended service contracts.  We also offer the charter of power yachts in the British Virgin Islands.  As of March 31, 2019, we operated through 64 retail locations in 16 states, consisting of Alabama, Connecticut, Florida, Georgia, Maryland, Massachusetts, Minnesota, Missouri, New Jersey, New York, North Carolina, Ohio, Oklahoma, Rhode Island, South Carolina and Texas. Our MarineMax Vacations operation maintains a facility in Tortola, British Virgin Islands.
We are the nation’s largest retailer of Sea Ray and Boston Whaler recreational boats and yachts, which are manufactured by Brunswick Corporation (“Brunswick”). Sales of new Brunswick boats accounted for approximately 40% of our revenue in fiscal 2018.  Sales of new Sea Ray and Boston Whaler boats, both divisions of Brunswick, accounted for approximately 21% and 17%, respectively, of our revenue in fiscal 2018. Brunswick is a world leading manufacturer of marine products and marine engines. We believe we represented approximately 42% of Brunswick’s Sea Ray boat sales, during our fiscal 2018.
In June 2018, Brunswick announced it was discontinuing Sea Ray sport yacht and yacht models.  Sea Ray sport yacht and yacht models represented approximately 10% of revenue during fiscal year 2018. Through the period ended March 31, 2019, our brand and product diversification allowed us to replace the Sea Ray sport yacht and yacht revenue.
We have dealership agreements with Sea Ray, Boston Whaler, Harris, and Mercury Marine, all subsidiaries or divisions of Brunswick. We also have dealer agreements with Italy-based Azimut-Benetti Group’s product line for Azimut Yachts. These agreements allow us to purchase, stock, sell, and service these manufacturers’ boats and products. These agreements also allow us to use these manufacturers’ names, trade symbols, and intellectual properties in our operations.
We have multi-year dealer agreements with Brunswick covering Sea Ray products that appoint us as the exclusive dealer of Sea Ray boats in our geographic markets. We are the exclusive dealer for Boston Whaler through multi-year dealer agreements for many of our geographic markets. In addition, we are the exclusive dealer for Azimut Yachts for the entire United States through a multi-year dealer agreement. Sales of new Azimut boats accounted for approximately 11% of our revenue in fiscal 2018. We believe non-Brunswick brands offer a migration for our existing customer base or fill a void in our product offerings, and accordingly, do not compete with the business generated from our other prominent brands.
As is typical in the industry, we deal with most of our manufacturers, other than Sea Ray, Boston Whaler, and Azimut Yachts, under renewable annual dealer agreements, each of which gives us the right to sell various makes and models of boats within a given geographic region.  Any change or termination of these agreements, or the agreements discussed above, for any reason, or changes in competitive, regulatory, or marketing practices, including rebate or incentive programs, could adversely affect our results of operations.  Although there are a limited number of manufacturers of the type of boats and products that we sell, we believe that adequate alternative sources would be available to replace any manufacturer other than Sea Ray and Azimut as a product source.  These alternative sources may not be available at the time of any interruption, and alternative products may not be available at comparable terms, which could affect operating results adversely.
General economic conditions and consumer spending patterns can negatively impact our operating results.  Unfavorable local, regional, national, or global economic developments or uncertainties regarding future economic prospects could reduce consumer spending in the markets we serve and adversely affect our business.  Economic conditions in areas in which we operate dealerships, particularly Florida, in which we generated approximately 55%, 55%, and 51% of our revenue during fiscal 2016, 2017, and 2018, respectively, can have a major impact on our operations.  Local influences, such as corporate downsizing, military base closings, inclement weather such as Hurricane Sandy in 2012 or Hurricanes Harvey and Irma in 2017, environmental conditions, and specific events, such as the BP oil spill in the Gulf of Mexico in 2010, also could adversely affect, and in certain instances have adversely affected, our operations in certain markets.
 
7

In an economic downturn, consumer discretionary spending levels generally decline, at times resulting in disproportionately large reductions in the sale of luxury goods.  Consumer spending on luxury goods also may decline as a result of lower consumer confidence levels, even if prevailing economic conditions are favorable.  As a result, an economic downturn could impact us more than certain of our competitors due to our strategic focus on a higher end of our market.  Although we have expanded our operations during periods of stagnant or modestly declining industry trends, the cyclical nature of the recreational boating industry or the lack of industry growth may adversely affect our business, financial condition, and results of operations.  Any period of adverse economic condition s or low consumer confidence is likely to have a negative effect on our business.
Historically, in periods of lower consumer spending and depressed economic conditions, we have, among other things, substantially reduced our acquisition program, delayed new store openings, reduced our inventory purchases, engaged in inventory reduction efforts, closed a number of our retail locations, reduced our headcount, and amended and replaced our credit facility.  Acquisitions and new store openings remain important strategies to our company, and we plan to accelerate our growth through these strategies as industry conditions continue to improve.  

2.	BASIS OF PRESENTATION:	
These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information, the instructions to Quarterly Report on Form 10-Q, and Rule 10-01 of Regulation S-X and should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended September 30, 2018. Accordingly, these unaudited condensed consolidated financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. All adjustments, consisting of only normal recurring adjustments considered necessary for fair presentation, have been reflected in these unaudited condensed consolidated financial statements. As of March 31, 2019, our financial instruments consisted of cash and cash equivalents, accounts receivable, accounts payable, customer deposits, and short-term borrowings. The carrying amounts of our financial instruments reported on the balance sheet as of March 31, 2019, approximated fair value due either to length to maturity or existence of variable interest rates, which approximate prevailing market rates.  The operating results for the three and six months ended March 31, 2019, are not necessarily indicative of the results that may be expected in future periods.
The preparation of unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the unaudited condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Significant estimates made by us in the accompanying unaudited condensed consolidated financial statements include valuation allowances, valuation of goodwill and intangible assets, valuation of long-lived assets, and valuation of accruals. Actual results could differ from those estimates.
Unless the context otherwise requires, all references to “MarineMax” mean MarineMax, Inc. prior to its acquisition of five previously independent recreational boat dealers in March 1998 (including their related real estate companies) and all references to the “Company,” “our company,” “we,” “us,” and “our” mean, as a combined company, MarineMax, Inc. and the 28 recreational boat dealers, two boat brokerage operations, and two full-service yacht repair operations acquired as of March 31, 2019 (the “acquired dealers,” and together with the brokerage and repair operations, “operating subsidiaries” or the “acquired companies”).
In order to provide comparability between periods presented, certain amounts have been reclassified from the previously reported unaudited condensed consolidated financial statements to conform to the unaudited condensed consolidated financial statement presentation for the current period. The unaudited condensed consolidated financial statements include our accounts and the accounts of our subsidiaries, all of which are wholly owned. All significant intercompany transactions and accounts have been eliminated.

3.	NEW ACCOUNTING PRONOUNCEMENTS:	
In May 2014, the FASB issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”), a converged standard on revenue recognition.  The new pronouncement requires revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.  The guidance also specifies the accounting for some costs to obtain or fulfill a contract with a customer, as well as enhanced disclosure requirements. The FASB also subsequently issued several amendments to the standard, including clarification on principal versus agent guidance, identifying performance obligations, and immaterial goods and services in a contract.
 
8

The new accounting standard update must be applied using either of the following transition me thods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a modified retrospective approach with the cumulative effect of initially adopting the standard recognized at the date of adoption (which requires additional footnote disclosures).
The new accounting standard is effective for reporting periods beginning after December 15, 2017. We adopted the accounting standard effective October 1, 2018, using the modified retrospective approach applied only to contracts not completed as of the date of adoption, with no restatement of comparative periods. Therefore, the comparative information has not been adjusted and continues to be reported under ASC Topic 605. We recognized a net after-tax cumulative effect adjustment to retained earnings of $399,000 as of the date of adoption. The details and quantitative impacts of the significant changes are described below.
 
We previously recognized revenue for parts and service operations (boat maintenance and repairs) when the services were completed and recorded amounts due to us as receivables. Under ASC Topic 606, performance obligations associated with parts and service operations are satisfied over time, which results in the acceleration of revenue recognition, and amounts due to us are reflected as a contract asset until the right to such consideration becomes unconditional, at which time amounts due to us are reclassified to receivables.
 
Consolidated Balance Sheet Line Items	 	
 	 	Impact of changes in accounting policies	 	
 	 	 	 	 	 	Balances without	 	 	Impact of	 	
 	 	 	 	 	 	adoption of ASC	 	 	adoption	 	
March 31, 2019	 	As Reported	 	 	Topic 606	 	 	Higher/(Lower)	 	
Inventories, net	 	$	454,557	 	 	$	454,607	 	 	$	(50	)	
Prepaid expenses and other current assets	 	 	8,839	 	 	 	5,722	 	 	 	3,117	 	
     Deferred tax assets, net	 	 	1,767	 	 	 	1,904	 	 	 	(137	)	
     Accounts payable	 	 	11,626	 	 	 	11,626	 	 	 	-	 	
     Accrued expenses	 	 	37,098	 	 	 	34,567	 	 	 	2,531	 	
     Retained earnings	 	$	176,683	 	 	$	176,284	 	 	$	399	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Consolidated Statements of Operations Line Items	 	
 	 	Impact of changes in accounting policies	 	
 	 	 	 	 	 	Balances without	 	 	Impact of	 	
 	 	 	 	 	 	adoption of ASC	 	 	adoption	 	
Three Months Ended March 31, 2019	 	As Reported	 	 	Topic 606	 	 	Higher/(Lower)	 	
Revenue	 	$	303,586	 	 	$	304,900	 	 	$	(1,314	)	
Cost of sales	 	 	229,384	 	 	 	230,098	 	 	 	(714	)	
Income from operations	 	 	10,226	 	 	 	10,826	 	 	 	(600	)	
     Income before income tax provision	 	 	7,193	 	 	 	7,793	 	 	 	(600	)	
Income tax provision	 	 	1,890	 	 	 	2,027	 	 	 	(137	)	
Net Income	 	$	5,303	 	 	$	5,766	 	 	$	(463	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Impact of changes in accounting policies	 	
 	 	 	 	 	 	Balances without	 	 	Impact of	 	
 	 	 	 	 	 	adoption of ASC	 	 	adoption	 	
Six Months Ended March 31, 2019	 	As Reported	 	 	Topic 606	 	 	Higher/(Lower)	 	
Revenue	 	$	545,523	 	 	$	546,030	 	 	$	(507	)	
Cost of sales	 	 	407,843	 	 	 	408,350	 	 	 	(507	)	
Income from operations	 	 	19,212	 	 	 	19,212	 	 	 	-	 	
     Income before income tax provision	 	 	13,663	 	 	 	13,663	 	 	 	-	 	
Income tax provision	 	 	3,450	 	 	 	3,450	 	 	 	-	 	
Net Income	 	$	10,213	 	 	$	10,213	 	 	$	-	 	

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Consolidated Statements of Cash flows	 	
 	 	Impact of changes in accounting policies	 	
 	 	 	 	 	 	Balances without	 	 	Impact of	 	
 	 	 	 	 	 	adoption of ASC	 	 	adoption	 	
Six Months Ended March 31, 2019	 	As Reported	 	 	Topic 606	 	 	Higher/(Lower)	 	
Net income	 	$	10,213	 	 	$	10,213	 	 	$	-	 	
(Increase) decrease in —	 	 	 	 	 	 	 	 	 	 	 	 	
Inventories, net	 	 	(78,038	)	 	 	(77,533	)	 	 	(505	)	
Prepaid expenses and other assets	 	 	(3,109	)	 	 	(1,083	)	 	 	(2,026	)	
Increase (decrease) in —	 	 	 	 	 	 	 	 	 	 	 	 	
Accounts payable	 	 	(11,508	)	 	 	(11,508	)	 	 	-	 	
Accrued expenses and other long-term liabilities	 	$	5,389	 	 	$	2,858	 	 	$	2,531	 	
 
In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”).  This update requires organizations to recognize lease assets and lease liabilities on the balance sheet and also disclose key information about leasing arrangements. ASU 2016-02 is effective for annual reporting periods beginning on or after December 15, 2018, and interim periods within those annual periods. Earlier application is permitted for all entities as of the beginning of an interim or annual period.  While we are continuing to evaluate the impact of the adoption of ASU 2016-02 on our unaudited condensed consolidated financial statements, we believe the adoption of ASU 2016-02 will have a significant and material impact to our unaudited condensed consolidated balance sheet given our current lease agreements for our leased retail locations.  We are continuing to evaluate the impact the adoption of ASU 2016-02 will have on our other unaudited condensed consolidated financial statements.  Based on our current assessment, we expect that most of our operating lease commitments will be subject to the new guidance and recognized as operating lease liabilities and right-of-use assets upon adoption, resulting in a material increase in the assets and liabilities recorded on our unaudited condensed consolidated balance sheet.
 
A subsequent amendment to the standard provides an additional and optional transition method that allows entities to initially apply the new standard at the adoption date and recognize a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. Consequently, an entity’s reporting for the comparative periods presented in the financial statements in which it adopts the new leases standard will continue to be in accordance with current GAAP (ASC Topic 840) if the optional transition method is elected. While we are still evaluating the method of adoption, we currently anticipate adopting the standard using the optional transition method with no restatement of comparative periods and a cumulative effect adjustment, if any, recognized as of the date of adoption. We are continuing our assessment, which may identify additional impacts this standard will have on our unaudited condensed consolidated financial statements and related disclosures and internal control over financial reporting. We plan to adopt ASU 2016-02 in fiscal 2020.
.
 
4.	REVENUE RECOGNITION:	
The majority of our revenue is from contracts with customers for the sale of boats, motors, and trailers. We recognize revenue from boat, motor, and trailer sales upon transfer of control of the boat, motor, or trailer to the customer, which is generally upon acceptance or delivery to the customer. At the time of acceptance or delivery, the customer is able to direct the use of, and obtain substantially all of the benefits of the boat, motor, or trailer at such time. We recognize commissions earned from a brokerage sale when the related brokerage transaction closes upon transfer of control of the boat, motor, or trailer to the customer, which is generally upon acceptance or delivery to the customer.
We do not directly finance our customers’ boat, motor, or trailer purchases. In many cases, we assist with third-party financing for boat, motor, and trailer sales. We recognize commissions earned by us for placing notes with financial institutions in connection with customer boat financing when we recognize the related boat sales. Pursuant to negotiated agreements with financial institutions, we are charged back for a portion of these fees should the customer terminate or default on the related finance contract before it is outstanding for a stipulated minimum period of time.  We base the chargeback allowance, which was not material to the unaudited condensed consolidated financial statements taken as a whole as of March 31, 2019, on our experience with repayments or defaults on the related finance contracts. We recognize variable consideration from commissions earned on extended warranty service contracts sold on behalf of third-party insurance companies at generally the later of customer acceptance of the service contract terms as evidenced by contract execution or recognition of the related boat sale. We also recognize variable consideration from marketing fees earned on insurance products sold by third-party insurance companies at the later of customer acceptance of the insurance product as evidenced by contract execution or when the related boat sale is recognized.
 
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We recognize revenue from parts and service operations (boat maintenance and repairs) over time as services are performed. Each boat maintenance and repair service is a single performance obligation that includes both the parts and labor associated with the service. Payment for boat maintenance and repairs is typically due upon the completion of the service, which is generally completed within a short period of time from contract inception. We satisfy our performance obligations, transfer control, and recognize revenue over time for parts and service operations because we are creating a contract asset with no alternative use and we have an enforceable right to payment for performance completed to date. Contract assets primarily relate to our right to consideration for work in process not yet billed at the reporting date associated with maintenance and repair services. We use an input method to recognize revenue and measure progress based on labor hours expended to satisfy the performance obligation at average labor rates. We have determined labor hours expended to be the relevant measure of work performed to complete the maintenance and repair service for the customer. As a practical expedient, since repair and maintenance service contracts have an original duration of one year or less, we do not consider the time value of money, and we do not disclose estimated revenue expected to be recognized in the future for performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period or when we expect to recognize such revenue. Contract assets, recorded in Prepaid expenses and other current assets, totaled approximately $2.7 million and $3.1 million as of October 1, 2018 (beginning of the period of adoption of ASC 606) and March 31, 2019, respectively.  
We recognize deferred revenue from service operations and slip and storage services over time on a straight-line basis over the term of the contract as our performance obligations are met. We recognize income from the rentals of chartering power and sailing yachts over time on a straight-line basis over the term of the contract as our performance obligations are met.
The following table sets forth percentages on the timing of revenue recognition for the three and six months ended March 31, 2019.
 	 	Three Months Ended	 	 	Six Months Ended	 	
 	 	March 31,	 	 	March 31,	 	
 	 	2019	 	 	2019	 	
Goods and services transferred at a point in time	 	 	92.4	%	 	 	90.6	%	
Goods and services transferred over time	 	 	7.6	%	 	 	9.4	%	
     Total Revenue	 	 	100.0	%	 	 	100.0	%	

5.	INVENTORIES:	
Inventory costs consist of the amount paid to acquire inventory, net of vendor consideration and purchase discounts, the cost of equipment added, reconditioning costs, and transportation costs relating to acquiring inventory for sale. We state new and used boat, motor, and trailer inventories at the lower of cost, determined on a specific-identification basis, or net realizable value.  We state parts and accessories at the lower of cost, determined on an average cost basis, or net realizable value.  We utilize our historical experience, the aging of the inventories, and our consideration of current market trends as the basis for determining a lower of cost or net realizable value valuation allowance.  As of September 30, 2018 and March 31, 2019, our lower of cost or net realizable value valuation allowance for new and used boat, motor, and trailer inventories was $1.5 million and $2.0 million, respectively. If events occur and market conditions change, causing the fair value to fall below carrying value, the lower of cost or net realizable value valuation allowance could increase.

6.	IMPAIRMENT OF LONG-LIVED ASSETS:	
FASB Accounting Standards Codification 360-10-40, “Property, Plant, and Equipment - Impairment or Disposal of Long-Lived Assets” (“ASC 360-10-40”), requires that long-lived assets, such as property and equipment and purchased intangibles subject to amortization, be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of the asset is measured by comparison of its carrying amount to undiscounted future net cash flows the asset is expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the asset exceeds its fair market value. Estimates of expected future cash flows represent our best estimate based on currently available information and reasonable and supportable assumptions. Any impairment recognized in accordance with ASC 360-10-40 is permanent and may not be restored. The analysis is performed at a regional level for indicators of permanent impairment given the geographical interdependencies among our locations. Based upon our most recent analysis, we believe no impairment of long-lived assets existed as of March 31, 2019.

7.	INCOME TAXES:	
We account for income taxes in accordance with FASB Accounting Standards Codification 740, “Income Taxes” (“ASC 740”). Under ASC 740, we recognize deferred tax assets and liabilities for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. We measure deferred
 
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tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which we expect those temporary differences to be recovered or settled.  We record valuation allowances to reduce our deferred tax assets to the amount expected to be realized by considering all available p ositive and negative evi dence.  As of September 30, 2018 and March 31, 2019 , we had a valuation allowance on our deferred tax assets of $ 119,000 .
 
During the three months ended March 31, 2018 and 2019 we recognized an income tax provision of $1.6 million and $1.9 million, respectively. During the six months ended March 31, 2018 and 2019, we recognized an income tax provision of $3.9 million and $3.5 million, respectively. The effective income tax rate for the three months ended March 31, 2018 and 2019 was 20.7% and 26.3%, respectively . The effective income tax rate for the six months ended March 31, 2018 and 2019 was 27.1% and 25.3%, respectively . Due to the passage of the Tax Cuts and Jobs Act legislation in December 2017 which lowered the federal corporate tax rate from 35% to 21% (among other changes), our deferred tax assets were re-measured as of December 31, 2017 resulting in an approximately $889,000 reduction in our beginning deferred tax assets and corresponding increase in our income tax provision for the six months ended March 31, 2018, partially offset by the utilization of Hurricane Irma and Hurricane Harvey Employee Retention credits in fiscal 2018.

8.	SHORT-TERM BORROWINGS:	
In October 2018, we amended and restated our Inventory Financing Agreement (the “Amended Credit Facility”), originally entered into in June 2010, as subsequently amended, with Wells Fargo Commercial Distribution Finance LLC (formerly GE Commercial Distribution Finance Corporation). The October 2018 amendment and restatement extended the maturity date of the Credit Facility to October 2021, and the Amended Credit Facility includes two additional one-year extension periods, with lender approval. The October 2018 amendment and restatement, among other things, modified the amount of borrowing availability and maturity date of the Credit Facility. The Amended Credit Facility provides a floor plan financing commitment of up to $400.0 million, an increase from the previous limit of $350.0 million, subject to borrowing base availability resulting from the amount and aging of our inventory.
The Amended Credit Facility has certain financial covenants as specified in the agreement. The covenants include provisions that our leverage ratio must not exceed 2.75 to 1.0 and that our current ratio must be greater than 1.2 to 1.0. The interest rate for amounts outstanding under the Amended Credit Facility is 345 basis points above the one-month London Inter-Bank Offering Rate (“LIBOR”). There is an unused line fee of ten basis points on the unused portion of the Amended Credit Facility.
 
Advances under the Amended Credit Facility are initiated by the acquisition of eligible new and used inventory or are re-advances against eligible new and used inventory that have been partially paid-off. Advances on new inventory will generally mature 1,080 days from the original invoice date. Advances on used inventory will mature 361 days from the date we acquire the used inventory. Each advance is subject to a curtailment schedule, which requires that we pay down the balance of each advance on a periodic basis starting after six months. The curtailment schedule varies based on the type and value of the inventory.  The collateral for the Amended Credit Facility is all of our personal property with certain limited exceptions. None of our real estate has been pledged for collateral for the Amended Credit Facility.
As of March 31, 2019, our indebtedness associated with financing our inventory and working capital needs totaled approximately $297.5 million. As of March 31, 2018 and 2019, the interest rate on the outstanding short-term borrowings was approximately 5.1% and 6.0%, respectively. As of March 31, 2019, our additional available borrowings under our Amended Credit Facility were approximately $44.9 million based upon the outstanding borrowing base availability.
As is common in our industry, we receive interest assistance directly from boat manufacturers, including Brunswick. The interest assistance programs vary by manufacturer, but generally include periods of free financing or reduced interest rate programs. The interest assistance may be paid directly to us or our lender depending on the arrangements the manufacturer has established. We classify interest assistance received from manufacturers as a reduction of inventory cost and related cost of sales as opposed to netting the assistance against our interest expense incurred with our lenders.
The availability and costs of borrowed funds can adversely affect our ability to obtain adequate boat inventory and the holding costs of that inventory as well as the ability and willingness of our customers to finance boat purchases. As of March 31, 2019, we had no long-term debt. However, we rely on our Amended Credit Facility to purchase our inventory of boats. The aging of our inventory limits our borrowing capacity as defined curtailments reduce the allowable advance rate as our inventory ages. Our access to funds under our Amended Credit Facility also depends upon the ability of our lenders to meet their funding commitments, particularly if they experience shortages of capital or experience excessive volumes of borrowing requests from others during a short period of time. Unfavorable economic conditions, weak consumer spending, turmoil in the credit markets, and lender difficulties, among other potential reasons, could interfere with our ability to utilize our Amended Credit Facility to fund our operations. Any
 
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inability to utilize our Amended Credit Facility could require us to seek other sources of funding to repay amounts outstanding under the credit agreements or replace or supplement our credit agreements, which may not be possible at all or under commercially reasonable terms.
Similarly, decreases in the availability of credit and increases in the cost of credit adversely affect the ability of our customers to purchase boats from us and thereby adversely affect our ability to sell our products and impact the profitability of our finance and insurance activities.

9.	STOCK-BASED COMPENSATION:	
We account for our stock-based compensation plans following the provisions of FASB Accounting Standards Codification 718, “Compensation — Stock Compensation” (“ASC 718”).  In accordance with ASC 718, we use the Black-Scholes valuation model for valuing all stock-based compensation and shares purchased under our Employee Stock Purchase Plan. We measure compensation for restricted stock awards and restricted stock units at fair value on the grant date based on the number of shares expected to vest and the quoted market price of our common stock. We recognize compensation cost for all awards in operations, net of estimated forfeitures, on a straight-line basis over the requisite service period for each separately vesting portion of the award.
During the three months ended March 31, 2018 and 2019, we recognized stock-based compensation expense of approximately $1.7 million in each period, and for the six months ended March 31, 2018 and 2019, we recognized stock-based compensation expense of approximately $3.2 million in each period, in selling, general, and administrative expenses in the unaudited condensed consolidated statements of operations.
Cash received from option exercises under all share-based compensation arrangements and the employee stock purchase plan for the three months ended March 31, 2018 and 2019, was approximately $1.6 million and $0.1 million, respectively and for the six months ended March 31, 2018 and 2019, was approximately $3.9 million and $1.8 million, respectively. We currently expect to satisfy share-based awards with registered shares available to be issued.

10.	THE INCENTIVE STOCK PLANS:	
During February 2017, our shareholders approved a proposal to amend the 2011 Stock-Based Compensation Plan (“2011 Plan”) to increase the 2,200,456 share threshold by 1,000,000 shares to 3,200,456 shares.  During January 2011, our shareholders approved a proposal to authorize our 2011 Plan, which replaced our 2007 Incentive Compensation Plan (“2007 Plan”). Our 2011 Plan provides for the grant of stock options, stock appreciation rights, restricted stock, stock units, bonus stock, dividend equivalents, other stock related awards, and performance awards (collectively “awards”), that may be settled in cash, stock, or other property. Our 2011 Plan is designed to attract, motivate, retain, and reward our executives, employees, officers, directors, and independent contractors by providing such persons with annual and long-term performance incentives to expend their maximum efforts in the creation of shareholder value. Subsequent to the February 2017 amendment described above, the total number of shares of our common stock that may be subject to awards under the 2011 Plan is equal to 3,000,000 shares, plus: (i) any shares available for issuance and not subject to an award under the 2007 Plan, which was 200,456 shares at the time of approval of the 2011 Plan; (ii) the number of shares with respect to which awards granted under the 2011 Plan and the 2007 Plan terminate without the issuance of the shares or where the shares are forfeited or repurchased; (iii) with respect to awards granted under the 2011 Plan and the 2007 Plan, the number of shares that are not issued as a result of the award being settled for cash or otherwise not issued in connection with the exercise or payment of the award; and (iv) the number of shares that are surrendered or withheld in payment of the exercise price of any award or any tax withholding requirements in connection with any award granted under the 2011 Plan or the 2007 Plan. The 2011 Plan terminates in January 2021, and awards may be granted at any time during the life of the 2011 Plan. The dates on which awards vest are determined by the Board of Directors or the Plan Administrator. The Board of Directors has appointed the Compensation Committee as the Plan Administrator. The exercise prices of options are determined by the Board of Directors or the Plan Administrator and are at least equal to the fair market value of shares of common stock on the date of grant. The term of options under the 2011 Plan may not exceed ten years. The options granted have varying vesting periods. To date, we have not settled or been under any obligation to settle any awards in cash.
 
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The following table summarizes activity from our incentive stock plans from September 30, 2018 through March 31, 2019:
 
 	 	Shares
Available
for Grant	 	 	Options Outstanding	 	 	Aggregate
Intrinsic   Value
(in thousands)	 	 	Weighted
Average
Exercise
Price	 	 	Weighted
Average
Remaining Contractual
Life	 	
Balance as of September 30, 2018	 	 	1,047,247	 	 	 	611,223	 	 	$	5,544	 	 	$	12.18	 	 	 	4.4	 	
Options granted	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	 	 	
Options cancelled/forfeited/expired	 	 	7,167	 	 	 	(7,167	)	 	 	-	 	 	 	4.13	 	 	 	 	 	
Options exercised	 	 	-	 	 	 	(109,275	)	 	 	-	 	 	 	12.07	 	 	 	 	 	
Restricted stock awards issued	 	 	(319,624	)	 	 	-	 	 	 	-	 	 	 	-	 	 	 	 	 	
Restricted stock awards forfeited	 	 	5,850	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	 	 	
Additional shares of stock issued	 	 	(5,035	)	 	 	-	 	 	 	-	 	 	 	-	 	 	 	 	 	
Balance as of March 31, 2019	 	 	735,605	 	 	 	494,781	 	 	$	3,386	 	 	$	12.32	 	 	 	4.1	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Exercisable as of March 31, 2019	 	 	 	 	 	 	491,447	 	 	$	3,386	 	 	$	12.27	 	 	 	4.1	 	
 
No options were granted for the six months ended March 31, 2018 and 2019. The total intrinsic value of options exercised during the six months ended March 31, 2018 and 2019, was $3.7 million and $1.3 million, respectively. The total fair value of options vested during the six months ended March 31, 2018 and 2019, was approximately $1.3 million and $0, respectively.
 
We used the Black-Scholes model to estimate the fair value of options granted. The expected term of options granted is estimated based on historical experience. Volatility is based on the historical volatility of our common stock. The risk-free rate for periods within the contractual term of the options is based on the U.S. Treasury yield curve in effect at the time of grant.

11.	EMPLOYEE STOCK PURCHASE PLAN:	
During February 2019, our shareholders approved a proposal to amend our 2008 Employee Stock Purchase Plan (“Stock Purchase Plan”) to increase the number of shares available under that plan by 500,000 shares. The Stock Purchase Plan as amended provides for up to 1,500,000 shares of common stock to be available for purchase by our regular employees who have completed at least one year of continuous service. In addition, there were 52,837 shares of common stock available under our 1998 Employee Stock Purchase Plan, which have been made available for issuance under our Stock Purchase Plan. The Stock Purchase Plan provides for implementation of annual offerings beginning on the first day of October in each of the years 2008 through 2027, with each offering terminating on September 30 of the following year. Each annual offering may be divided into two six-month offerings. For each offering, the purchase price per share will be the lower of: (i) 85% of the closing price of the common stock on the first day of the offering or (ii) 85% of the closing price of the common stock on the last day of the offering. The purchase price is paid through periodic payroll deductions not to exceed 10% of the participant’s earnings during each offering period. However, no participant may purchase more than $25,000 worth of common stock annually.
We used the Black-Scholes model to estimate the fair value of options granted to purchase shares issued pursuant to the Stock Purchase Plan. Volatility is based on the historical volatility of our common stock. The risk-free rate for periods within the contractual term of the options is based on the U.S. Treasury yield curve in effect at the time of grant.
The following are the weighted average assumptions used for each respective period:
 
 	 	Three Months Ended	 	 	Six Months Ended	 	
 	 	March 31,	 	 	March 31,	 	
 	 	2018	 	 	2019	 	 	2018	 	 	2019	 	
Dividend yield	 	0.0%	 	 	0.0%	 	 	0.0%	 	 	0.0%	 	
Risk-free interest rate	 	1.2%	 	 	2.4%	 	 	1.2%	 	 	2.4%	 	
Volatility	 	50.9%	 	 	52.2%	 	 	50.9%	 	 	52.2%	 	
Expected life	 	Six months	 	 	Six months	 	 	Six months	 	 	Six months	 	
 
As of March 31, 2019, we had issued 891,185 shares of common stock under our Stock Purchase Plan.

 
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12.	RESTRICTED STOCK AWARDS:	
We have granted non-vested (restricted) stock awards (“restricted stock”) and restricted stock units (“RSUs”) to employees and officers pursuant to the 2011 Plan and the 2007 Plan. The restricted stock awards and RSUs have varying vesting periods, but generally become fully vested between two and four years after the grant date, depending on the specific award, performance targets met for performance based awards granted to officers, and vesting period for time based awards. Officer performance based awards are granted at the target amount of shares that may be earned and the actual amount of the award earned generally could range from 0% to 200% of the target number of shares based on the actual specified performance target met. We accounted for the restricted stock awards granted using the measurement and recognition provisions of ASC 718. Accordingly, the fair value of the restricted stock awards, including performance based awards, is measured on the grant date and recognized in earnings over the requisite service period for each separately vesting portion of the award.
The following table summarizes restricted stock award activity from September 30, 2018 through March 31, 2019:
 
 	 	Shares/ Units	 	 	Weighted
Average Grant
Date Fair Value	 	
Non-vested balance as of September 30, 2018	 	 	704,326	 	 	$	17.61	 	
Changes during the period	 	 	 	 	 	 	 	 	
Awards granted	 	 	319,624	 	 	$	20.89	 	
Awards vested	 	 	(35,000	)	 	$	20.40	 	
Awards forfeited	 	 	(5,850	)	 	$	18.75	 	
Non-vested balance as of March 31, 2019	 	 	983,100	 	 	 	 	 	
 
As of March 31, 2019, we had approximately $10.0 million of total unrecognized compensation cost, assuming applicable performance conditions are met, related to non-vested restricted stock awards. We expect to recognize that cost over a weighted average period of 2.3 years.

13.	NET INCOME PER SHARE:	
The following table presents shares used in the calculation of basic and diluted net income per share:
 
 	 	Three Months Ended	 	 	Six Months Ended	 	
 	 	March 31,	 	 	March 31,	 	
 	 	2018	 	 	2019	 	 	2018	 	 	2019	 	
Weighted average common shares outstanding used in
   calculating basic income per share	 	 	22,173,194	 	 	 	22,836,571	 	 	 	22,079,065	 	 	 	22,807,756	 	
Effect of dilutive options and non-vested restricted stock
   awards	 	 	767,400	 	 	 	581,117	 	 	 	746,533	 	 	 	601,117	 	
Weighted average common and common equivalent shares
   used in calculating diluted income per share	 	 	22,940,594	 	 	 	23,417,688	 	 	 	22,825,598	 	 	 	23,408,873	 	
 
For the three months ended March 31, 2018 and 2019, there were no weighted average shares related to options outstanding and non-vested restricted stock awards and 5,082 weighted average shares related to options outstanding and non-vested restricted stock awards, respectively, that were not included in the computation of diluted income per share because the options’ exercise prices or assumed proceeds per share were greater than the average market price of our common stock, and therefore, would have an anti-dilutive effect. For the six months ended March 31, 2018 and 2019, there were no weighted average shares related to options outstanding and non-vested restricted stock awards, respectively, that were not included in the computation of diluted income per share because the options’ exercise prices or assumed proceeds per share were greater than the average market price of our common stock, and therefore, would have an anti-dilutive effect.

14.	COMMITMENTS AND CONTINGENCIES:	
We are party to various legal actions arising in the ordinary course of business. While it is not feasible to determine the actual outcome of these actions as of March 31, 2019, we believe that these matters should not have a material adverse effect on our unaudited condensed consolidated financial condition, results of operations, or cash flows.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements regarding our “expectations,” “anticipations,” “intentions,” “beliefs,” or “strategies” regarding the future. These forward-looking statements include statements relating to market risks such as interest rate risk and foreign currency exchange rate risk; economic and industry conditions and corresponding effects on consumer behavior and operating results; environmental conditions; inclement weather; certain specific and isolated events; our future estimates, assumptions and judgments, including statements regarding whether such estimates, assumptions and judgments would have a material adverse effect on our operating results; the impact of changes in accounting policy and standards; our plans to accelerate our growth through acquisitions and new store openings; our belief that our existing capital resources will be sufficient to finance our operations for at least the next 12 months, except for possible significant acquisitions; and the seasonality and cyclicality of our business and the effect of such seasonality and cyclicality on our business, financial results and inventory levels. Actual results could differ materially from those currently anticipated as a result of a number of factors, including those set forth under “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2018.
General
We are the largest recreational boat and yacht retailer in the United States with fiscal 2018 revenue approaching $1.2 billion. Through our current 67 retail locations in 16 states (as of the filing of this Quarterly Report on 10-Q), we sell new and used recreational boats and related marine products, including engines, trailers, parts, and accessories. We also arrange related boat financing, insurance, and extended service contracts; provide boat repair and maintenance services; offer yacht and boat brokerage sales; and, where available, offer slip and storage accommodations, as well as the charter of power yachts in the British Virgin Islands.
MarineMax was incorporated in January 1998 (and reincorporated in Florida in March 2015).  We commenced operations with the acquisition of five independent recreational boat dealers on March 1, 1998.  Since the initial acquisitions in March 1998, we have, as of the filing of this Quarterly Report on 10-Q, acquired 29 recreational boat dealers, two boat brokerage operations, and two full-service yacht repair facilities. As a part of our acquisition strategy, we frequently engage in discussions with various recreational boat dealers regarding their potential acquisition by us.  Potential acquisition discussions frequently take place over a long period of time and involve difficult business integration and other issues, including, in some cases, management succession and related matters.  As a result of these and other factors, a number of potential acquisitions that from time to time appear likely to occur do not result in binding legal agreements and are not consummated.  We completed one acquisition in the fiscal year ended September 30, 2017, three acquisitions in the fiscal year ended September 30, 2018, and one acquisition to date in fiscal 2019.
General economic conditions and consumer spending patterns can negatively impact our operating results. Unfavorable local, regional, national, or global economic developments or uncertainties regarding future economic prospects could reduce consumer spending in the markets we serve and adversely affect our business. Economic conditions in areas in which we operate dealerships, particularly Florida, in which we generated approximately 55%, 55%, and 51% of our revenue during fiscal 2016, 2017, and 2018, respectively, can have a major impact on our operations. Local influences, such as corporate downsizing, military base closings, and inclement weather such as hurricanes and other storms, environmental conditions, and specific events, such as the BP oil spill in the Gulf of Mexico in 2010, also could adversely affect, and in certain instances have adversely affected, our operations in certain markets.
In an economic downturn, consumer discretionary spending levels generally decline, at times resulting in disproportionately large reductions in the sale of luxury goods. Consumer spending on luxury goods also may decline as a result of lower consumer confidence levels, even if prevailing economic conditions are favorable. As a result, an economic downturn could impact us more than certain of our competitors due to our strategic focus on a higher end of our market. Although we have expanded our operations during periods of stagnant or modestly declining industry trends, the cyclical nature of the recreational boating industry or the lack of industry growth may adversely affect our business, financial condition, and results of operations. Any period of adverse economic conditions or low consumer confidence is likely to have a negative effect on our business.
Historically, in periods of lower consumer spending and depressed economic conditions, we have, among other things, substantially reduced our acquisition program, delayed new store openings, reduced our inventory purchases, engaged in inventory reduction efforts, closed a number of our retail locations, reduced our headcount, and amended and replaced our credit facility.  Acquisitions and new store openings remain important strategies to our company, and we plan to accelerate our growth through these strategies as industry conditions continue to improve.
 
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Although past economic conditions have adversely affected our operating results, we believe we have capitalized on our core strengths to substantially outperform the industry, resulting in market share gains.  Our ability to capture such market share supports the alignment of our retailing strategies with the desires of consumers.  We believe the steps we have taken to address weak market conditions in the past have yielded, and will yield in the future, an increase in revenue. We expect our core strengths and retailing strategies will position us to capitalize on growth opportunities as they occur and will allow us to emerge with greater earnings potential as industry conditions continue to recover.
Application of Critical Accounting Policies
We have identified the policies below as critical to our business operations and the understanding of our results of operations. The impact and risks related to these policies on our business operations are discussed throughout Management's Discussion and Analysis of Financial Condition and Results of Operations when such policies affect our reported and expected financial results.
In the ordinary course of business, we make a number of estimates and assumptions relating to the reporting of results of operations and financial condition in the preparation of our financial statements in conformity with accounting principles generally accepted in the United States. We base our estimates on historical experiences and on various other assumptions (including future earnings) that we believe are reasonable under the circumstances. The results of these assumptions form the basis for making judgments about the carrying values of assets and liabilities, including contingent assets and liabilities such as contingent consideration liabilities from acquisitions, which are not readily apparent from other sources. Actual results could differ significantly from those estimates under different assumptions and conditions. We believe that the following discussion addresses our most critical accounting policies, which are those that are most important to the portrayal of our financial condition and results of operations and require our most difficult, subjective, and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
Revenue Recognition
The majority of our revenue is from contracts with customers for the sale of boats, motors, and trailers. We recognize revenue from boat, motor, and trailer sales upon transfer of control of the boat, motor, or trailer to the customer, which is generally upon acceptance or delivery to the customer. At the time of acceptance or delivery, the customer is able to direct the use of, and obtain substantially all of the benefits of the boat, motor, or trailer at such time. We recognize commissions earned from a brokerage sale when the related brokerage transaction closes upon transfer of control of the boat, motor, or trailer to the customer, which is generally upon acceptance or delivery to the customer.
We do not directly finance our customers’ boat, motor, or trailer purchases. In many cases, we assist with third-party financing for boat, motor, and trailer sales. We recognize commissions earned by us for placing notes with financial institutions in connection with customer boat financing when we recognize the related boat sales. Pursuant to negotiated agreements with financial institutions, we are charged back for a portion of these fees should the customer terminate or default on the related finance contract before it is outstanding for a stipulated minimum period of time.  We base the chargeback allowance, which was not material to the unaudited condensed consolidated financial statements taken as a whole as of March 31, 2019, on our experience with repayments or defaults on the related finance contracts. We recognize variable consideration from commissions earned on extended warranty service contracts sold on behalf of third-party insurance companies at generally the later of customer acceptance of the service contract terms as evidenced by contract execution or recognition of the related boat sale. We also recognize variable consideration from marketing fees earned on insurance products sold by third-party insurance companies at the later of customer acceptance of the insurance product as evidenced by contract execution or when the related boat sale is recognized.
We recognize revenue from parts and service operations (boat maintenance and repairs) over time as services are performed. Each boat maintenance and repair service is a single performance obligation that includes both the parts and labor associated with the service. Payment for boat maintenance and repairs is typically due upon the completion of the service, which is generally completed within a short period of time from contract inception. We satisfy our performance obligations, transfer control, and recognize revenue over time for parts and service operations because we are creating a contract asset with no alternative use and we have an enforceable right to payment for performance completed to date. Contract assets primarily relate to our right to consideration for work in process not yet billed at the reporting date associated with maintenance and repair services. We use an input method to recognize revenue and measure progress based on labor hours expended to satisfy the performance obligation at average labor rates. We have determined labor hours expended to be the relevant measure of work performed to complete the maintenance and repair service for the customer. As a practical expedient, since repair and maintenance service contracts have an original duration of one year or less, we do not consider the time value of money, and we do not disclose estimated revenue expected to be recognized in the future for performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period or when we expect to recognize such revenue. Contract assets, recorded in Prepaid expenses and other current assets, totaled approximately $2.7 million and $3.1 million as of October 1, 2018 (beginning of the period of adoption of ASC 606) and March 31, 2019, respectively.
 
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We recognize deferred revenue from service operations and slip and storage services over time on a straight-line basis over the term of the contract as our performance obligations are met. We recognize income from the rentals of chartering power and sailing yachts over time on a straight-line basis over the term of the contr act as our performance obligations are met.
Vendor Consideration Received
We account for consideration received from our vendors in accordance with ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”. ASC 606 requires us to classify interest assistance received from manufacturers as a reduction of inventory cost and related cost of sales as opposed to netting the assistance against our interest expense incurred with our lenders.  Pursuant to ASC 606, amounts received by us under our co-op assistance programs from our manufacturers are netted against related advertising expenses.  Our consideration received from our vendors contains uncertainties because the calculation requires management to make assumptions and to apply judgment regarding a number of factors, including our ability to collect amounts due from vendors and the ability to meet certain criteria stipulated by our vendors.  We do not believe there is a reasonable likelihood that there will be a change in the future estimates or assumptions we use to calculate our vendor considerations which would result in a material effect on our operating results.
Inventories
Inventory costs consist of the amount paid to acquire inventory, net of vendor consideration and purchase discounts, the cost of equipment added, reconditioning costs, and transportation costs relating to acquiring inventory for sale. We state new and used boat, motor, and trailer inventories at the lower of cost, determined on a specific-identification basis, or net realizable value. We state parts and accessories at the lower of cost, determined on an average cost basis, or net realizable value. We utilize our historical experience, the aging of the inventories, and our consideration of current market trends as the basis for determining a lower of cost or net realizable value valuation allowance. Our lower of cost or net realizable value valuation allowance contains uncertainties because the calculation requires management to make assumptions and to apply judgment regarding the amount at which the inventory will ultimately be sold which considers forecasted market trends, model changes, and new product introductions. We do not believe there is a reasonable likelihood that there will be a change in the future estimates or assumptions we use to calculate our lower of cost or net realizable value valuation allowance which would result in a material effect on our operating results. As of September 30, 2018 and March 31, 2019, our lower of cost or net realizable value valuation allowance for new and used boat, motor, and trailer inventories was $1.5 million and $2.0 million, respectively. If events occur and market conditions change, causing the fair value to fall below carrying value, the lower of cost or net realizable value valuation allowance could increase.
Goodwill
We account for goodwill in accordance with FASB Accounting Standards Codification 350, “Intangibles - Goodwill and Other” (“ASC 350”), which provides that the excess of cost over net assets of businesses acquired is recorded as goodwill. In January 2018, we purchased Island Marine Center, a privately owned boat dealer located in New Jersey resulting in the recording of $1.3 million in goodwill. In total, current and previous acquisitions have resulted in the recording of $27.4 million in goodwill.  In accordance with ASC 350, we review goodwill for impairment at least annually and whenever events or changes in circumstances indicate that the carrying value may not be recoverable.  Our annual impairment test is performed during the fourth fiscal quarter.  If the carrying amount of goodwill exceeds its fair value we would recognize an impairment loss in accordance with ASC 350. As of March 31, 2019, and based upon our most recent analysis, we determined through our qualitative assessment that it is not “more likely than not” that the fair values of our reporting units are less than their carrying values.  As a result, we were not required to perform a quantitative goodwill impairment test. The qualitative assessment requires us to make judgments and assumptions regarding macroeconomic and industry conditions, our financial performance, and other factors.  We do not believe there is a reasonable likelihood that there will be a change in the judgments and assumptions used in our qualitative assessment which would result in a material effect on our operating results.
Impairment of Long-Lived Assets
FASB Accounting Standards Codification 360-10-40, “Property, Plant, and Equipment - Impairment or Disposal of Long-Lived Assets” (“ASC 360-10-40”), requires that long-lived assets, such as property and equipment and purchased intangibles subject to amortization, be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of the asset is measured by comparison of its carrying amount to undiscounted future net cash flows the asset is expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the asset exceeds its fair market value. Estimates of expected future cash flows represent our best estimate based on currently available information and reasonable and supportable assumptions. Our impairment loss calculations contain uncertainties because they require us to make assumptions and to apply judgment in order to estimate expected future cash flows. Any impairment recognized in accordance with ASC 360-10-40 is permanent and may not be restored. The
 
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analysis is performed at a regional level for indicators of permanent impairment given the geographical interdependencies among our locations. Based upon our most recent analysis, we believe no impairment of long-lived assets existed as of March 31, 2019 . We do not believe there is a reasonable likelihood that there will be a change in the future estimates or assumptions used to test for recoverability which would result in a material effect on our operating results .
Stock-Based Compensation
We account for our stock-based compensation plans following the provisions of FASB Accounting Standards Codification 718, “Compensation — Stock Compensation” (“ASC 718”).  In accordance with ASC 718, we use the Black-Scholes valuation model for valuing all stock-based compensation and shares purchased under our Employee Stock Purchase Plan.  We measure compensation for restricted stock awards and restricted stock units at fair value on the grant date based on the number of shares expected to vest and the quoted market price of our common stock.  We recognize compensation cost for all awards in operations, net of estimated forfeitures, on a straight-line basis over the requisite service period for each separately vesting portion of the award.  Our valuation models and generally accepted valuation techniques require us to make assumptions and to apply judgment to determine the fair value of our awards.  These assumptions and judgments include estimating the volatility of our stock price, expected dividend yield, employee turnover rates and employee stock option exercise behaviors.  We do not believe there is a reasonable likelihood that there will be a change in the future estimates or assumptions we use to calculate our stock-based compensation which would result in a material effect on our operating results.
Income Taxes
We account for income taxes in accordance with FASB Accounting Standards Codification 740, “Income Taxes” (“ASC 740”). Under ASC 740, we recognize deferred tax assets and liabilities for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which we expect those temporary differences to be recovered or settled.  We record valuation allowances to reduce our deferred tax assets to the amount expected to be realized by considering all available positive and negative evidence.
Pursuant to ASC 740, we must consider all positive and negative evidence regarding the realization of deferred tax assets.  ASC 740 provides for four possible sources of taxable income to realize deferred tax assets: 1) taxable income in prior carryback years, 2) reversals of existing deferred tax liabilities, 3) tax planning strategies and 4) projected future taxable income.  As of March 31, 2019, we have no available taxable income in prior carryback years, limited reversals of existing deferred tax liabilities or prudent and feasible tax planning strategies.  Therefore, the recoverability of our deferred tax assets is dependent upon generating future taxable income.
The determination of releasing valuation allowances against deferred tax assets is made, in part, pursuant to our assessment as to whether it is more likely than not that we will generate sufficient future taxable income against which benefits of the deferred tax assets may or may not be realized. Significant judgment is required in making estimates regarding our ability to generate income in future periods.
During the first quarter of fiscal 2018, the Company recorded a reduction of our beginning deferred tax assets of approximately $889,000 and a corresponding increase in our income tax provision as a result of the Tax Cuts and Jobs Act legislation passed in December 2017, which lowered the federal corporate tax rate from 35% to 21%, among other changes.
The application of income tax law is inherently complex.  Laws and regulations in this area are voluminous and are often ambiguous.  Under ASC 740, the impact of uncertain tax positions taken or expected to be taken on an income tax return must be recognized in the financial statements at the largest amount that is more likely than not to be sustained upon audit by the relevant taxing authority.  An uncertain income tax position will not be recognized in the financial statements unless it is more likely than not of being sustained.  As such, we are required to make subjective assumptions and judgments regarding our effective tax rate and our income tax exposure.  Our effective income tax rate is affected by changes in tax law in the jurisdictions in which we currently operate, tax jurisdictions of new retail locations, our earnings, and the results of tax audits.  We believe that the judgments and estimates discussed herein are reasonable.
Recent Accounting Pronouncements
See Note 3 of the Notes to Unaudited Condensed Consolidated Financial Statements.
 
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Consolidated Results of Operations
The following discussion compares the three and six months ended March 31, 2019, with the three and six months ended March 31, 2018 and should be read in conjunction with the unaudited condensed consolidated financial statements, including the related notes thereto, appearing elsewhere in this report.
Three Months Ended March 31, 2019 Compared with Three Months Ended March 31, 2018
Revenue.   Revenue increased $33.0 million, or 12.2%, to $303.6 million for the three months ended March 31, 2019, from $270.6 million for the three months ended March 31, 2018. This increase was primarily attributable to a 12.2% increase in comparable-store sales. The increase in our comparable-store sales was primarily due to increases in new and used boat revenue.
Gross Profit.   Gross profit increased $4.9 million, or 7.1%, to $74.2 million for the three months ended March 31, 2019, from $69.3 million for the three months ended March 31, 2018. Gross profit as a percentage of revenue decreased to 24.4% for the three months ended March 31, 2019 from 25.6% for the three months ended March 31, 2018. The decrease in gross profit as a percentage of revenue was primarily the result of increased used boat sales because used boat sales generally carry the lowest margins contributing to our overall decreased margins. The increase in gross profit dollars was primarily attributable to increased new and used boat sales. Additionally, with strong comparable-store sales of 12.2% our higher margin parts and service businesses decreased as a percentage of revenue, contributing to our overall decreased margins.
Selling, General, and Administrative Expenses. Selling, general, and administrative expense increased $5.3 million, or 9.1%, to $64.0 million for the three months ended March 31, 2019, from $58.7 million for the three months ended March 31, 2018. Selling, general, and administrative expenses as a percentage of revenue decreased to 21.1% for the three months ended March 31, 2019 from 21.7% for the three months ended March 31, 2018. The increase in selling, general, and administrative expenses was primarily attributable to recent acquisitions, new store openings, and the reestablishing of our British Virgin Islands’ Charter business as the business restarted operations after Hurricane Irma, which occurred in September 2017. Additionally, to combat generally less favorable weather in certain markets, we expanded our marketing investment in an effort to drive greater sales.
Interest Expense.   Interest expense increased $0.2 million, or 6.8%, to $3.0 million for the three months ended March 31, 2019 from $2.8 million for the three months ended March 31, 2018. Interest expense as a percentage of revenue remained consistent at 1.0% for the three months ended March 31, 2019 and for the three months ended March 31, 2018. The increase in interest expense was primarily the result of increasing interest rates.
Income Taxes.    Income tax expense increased $0.3 million, or 17.4%, to $1.9 million for the three months ended March 31, 2019 from $1.6 million for the three months ended March 31, 2018. Our effective income tax rate increased to 26.3% for the three months ended March 31, 2019 from 20.7% for three months ended March 31, 2018. The increase was mainly due to the utilization of Hurricane Irma and Hurricane Harvey Employee Retention Credits which lowered our effective tax rate for the three months ended March 31, 2018.  
Six Months Ended March 31, 2019 Compared with Six Months Ended March 31, 2018
Revenue.   Revenue increased $38.0 million, or 7.5%, to $545.5 million for the six months ended March 31, 2019, from $507.5 million for the six months ended March 31, 2018 .  Of this increase, $34.1 million was attributable to a 6.7% increase in comparable-store sales and a $3.9 million increase was attributable to stores acquired that were not eligible for inclusion in the comparable-store base. The increase in our store revenue was due primarily to increases in new and used boat sales and our higher margin finance and insurance products, parts, service, and storage services.  
Gross Profit.   Gross profit increased $9.2 million, or 7.1%, to $137.7 million for the six months ended March 31, 2019, from $128.5 million for the six months ended March 31, 2018 .  Gross profit as a percentage of revenue decreased to 25.2% for the six months ended March 31, 2019 from 25.3% for the six months ended March 31, 2018. The increase in boat sales relative to our overall revenue caused our higher margin brokerage, finance and insurance, and parts and accessories products to decrease as a percentage of revenue, contributing to our overall decreased margins. The increase in gross profit dollars was primarily the result of increased new and used boat sales.  
Selling, General, and Administrative Expenses. Selling, general, and administrative expense increased $9.6 million, or 8.8%, to $118.5 million for the six months ended March 31, 2019, from $108.9 million for the six months ended March 31, 2018.  Selling, general, and administrative expenses as a percentage of revenue increased to 21.7% for the six months ended March 31, 2019 from 21.5% for the six months March 31, 2018.  The increase in selling, general, and administrative expenses was primarily attributable to
 
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recent acquisitions, new store openings, additional marketing expenses to drive sales growth, and the reestablishing of our British Virgin Islands’ Charter business as the business restarted operations after Hurricane Irma, which occurred in September 2017.
Interest Expense.   Interest expense increased $0.2 million, or 3.1%, to $5.6 million for the six months ended March 31, 2019, from $5.4 million for the six months ended March 31, 2018.  Interest expense as a percentage of revenue decreased to 1.0% for the six months ended March 31, 2019 from 1.1% for the six months ended March 31, 2018.  The increase in interest expense was primarily the result of increases in interest rates.
Income Taxes.    Income tax expense decreased $0.4 million, or 10.6%, to $3.5 million for the six months ended March 31, 2019 , from $3.9 million for the six months ended March 31, 2018. Our effective income tax rate decreased to 25.3% for the six months ended March 31, 2019 from 27.1% for six months ended March 31, 2018. The decrease was mainly due to the passage of the Tax Cuts and Jobs Act legislation in December 2017, which lowered the federal corporate tax rate from 35% to 21%, partially offset by the utilization of Hurricane Irma and Hurricane Harvey Employee Retention Credits during the six months ended March 31, 2018.  
Liquidity and Capital Resources
Our cash needs are primarily for working capital to support operations, including new and used boat and related parts inventories, off-season liquidity, and growth through acquisitions and new store openings. Acquisitions and new store openings remain important strategies to our company, and we have recently completed certain acquisitions, and we plan to accelerate our growth through these strategies. However, we cannot predict when unfavorable economic or financial conditions will return or the duration of such conditions. We regularly monitor the aging of our inventories and current market trends to evaluate our current and future inventory needs. We also use this evaluation in conjunction with our review of our current and expected operating performance and expected business levels to determine the adequacy of our financing needs.
These cash needs have historically been financed with cash generated from operations and borrowings under the Amended Credit Facility. Our ability to utilize the Amended Credit Facility to fund operations depends upon the collateral levels and compliance with the covenants of the Amended Credit Facility. Any turmoil in the credit markets and weakness in the retail markets may interfere with our ability to remain in compliance with the covenants of the Amended Credit Facility and therefore our ability to utilize the Amended Credit Facility to fund operations. As of March 31, 2019, we were in compliance with all covenants under the Amended Credit Facility. We currently depend upon dividends and other payments from our dealerships and the Amended Credit Facility to fund our current operations and meet our cash needs. As 100% owner of each of our dealerships, we determine the amounts of such distributions subject to applicable law, and currently, no agreements exist that restrict this flow of funds from our dealerships.
For the six months ended March 31, 2019 and 2018, cash used in operating activities was approximately $62.2 million and $19.4 million, respectively.   For the six months ended March 31, 2019, cash used in operating activities was primarily related to an increase of inventory driven by timing of boats received, increases in prepaid expenses and other assets, increases in accounts receivable, decreases in accounts payable, partially offset by increases in customer deposits, increases in accrued expenses, and our net income adjusted for non-cash expenses such as depreciation and amortization expense, deferred income tax provision, and stock-based compensation expense . For the six months ended March 31, 2018, cash used in operating activities was primarily related to an increase of inventory driven by timing of boats received, increases in accounts receivable, decreases in accounts payable and customer deposits, partially offset by insurance proceeds received as a result of Hurricane Irma and our net income adjusted for non-cash expenses such as depreciation and amortization expense, deferred income tax provision, and stock-based compensation expense.
For the six months ended March 31, 2019 and 2018, cash used in investing activities was approximately $7.5 million and $8.5 million, respectively. For the six months ended March 31, 2019, cash used in investing activities was primarily used to purchase property and equipment associated with improving existing retail facilities . For the six months ended March 31, 2018 , cash used in investing activities was primarily used to purchase property and equipment associated with improving existing retail facilities, purchase inventory and property and equipment associated with business acquisitions, and make capital improvements as a result of Hurricane Irma.
For the six months ended March 31, 2019 and 2018, cash provided by financing activities was approximately $84.5 million and $43.0 million, respectively.  For the six months ended March 31, 2019, cash provided by financing activities was primarily attributable to net short-term borrowings as a result of increased inventory levels and proceeds from the issuance of common stock from our stock based compensation plans, partially offset by the repurchase of common stock under the share repurchase program. For the six months ended March 31, 2018 , cash provided by financing activities was primarily attributable to net short-term borrowings as a result of increased inventory levels and proceeds from the issuance of common stock from our stock based compensation plans, partially offset by the repurchase of common stock under the share repurchase program and contingent consideration payments from acquisitions.
 
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In October 2018 , we amended and restated our Inventory Financing Agreement (the “Amended Credit Facility”), originally entered into in June 2010, as subsequently amended, with Wells Fargo Commercial Distribution Finance LLC (formerly GE Commercial Distribution Finance Corporation). The October 2018 amendment and restatement extended the maturity date of the Credit Facility to October 2020, and the Amended Credit Facility includes two additional one-year extension periods, with lender approval. The October 2018 amendment and restatement, among other things, modified the amount of borrowing availability and maturity date of the Credit Facility. The Amended Credit Facility provides a floor plan financing commitment of up to $ 400 .0 million, an increas e from the previous limit of $35 0 million, subject to borrowing base availability resulting from the amount and aging of our inventory .
The Amended Credit Facility has certain financial covenants as specified in the agreement. The covenants include provisions that our leverage ratio must not exceed 2.75 to 1.0 and that our current ratio must be greater than 1.2 to 1.0. The interest rate for amounts outstanding under the Amended Credit Facility is 345 basis points above the one-month LIBOR. There is an unused line fee of ten basis points on the unused portion of the Amended Credit Facility.
Advances under the Amended Credit Facility are initiated by the acquisition of eligible new and used inventory or are re-advances against eligible new and used inventory that have been partially paid-off. Advances on new inventory will generally mature 1,080 days from the original invoice date. Advances on used inventory will mature 361 days from the date we acquire the used inventory. Each advance is subject to a curtailment schedule, which requires that we pay down the balance of each advance on a periodic basis starting after six months. The curtailment schedule varies based on the type and value of the inventory. The collateral for the Amended Credit Facility is all of our personal property with certain limited exceptions. None of our real estate has been pledged for collateral for the Amended Credit Facility.
As of March 31, 2019, our indebtedness associated with financing our inventory and working capital needs totaled approximately $297.5 million. As of March 31, 2018 and 2019, the interest rate on the outstanding short-term borrowings was approximately 5.1% and 6.0%, respectively. As of March 31, 2019, our additional available borrowings under our Amended Credit Facility were approximately $44.9 million based upon the outstanding borrowing base availability. The aging of our inventory limits our borrowing capacity as defined curtailments reduce the allowable advance rate as our inventory ages.
Except as specified in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" and in the attached unaudited condensed consolidated financial statements, we have no material commitments for capital for the next 12 months. We believe that our existing capital resources will be sufficient to finance our operations for at least the next 12 months, except for possible significant acquisitions.
Impact of Seasonality and Weather on Operations
Our business, as well as the entire recreational boating industry, is highly seasonal, with seasonality varying in different geographic markets. With the exception of Florida, we generally realize significantly lower sales and higher levels of inventories, and related short-term borrowings, in the quarterly periods ending December 31 and March 31. The onset of the public boat and recreation shows in January generally stimulates boat sales and typically allows us to reduce our inventory levels and related short-term borrowings throughout the remainder of the fiscal year. Our business could become substantially more seasonal if we acquire dealers that operate in colder regions of the United States or close retail locations in warm climates.
Our business is also subject to weather patterns, which may adversely affect our results of operations. For example, prolonged or severe winter conditions, drought conditions (or merely reduced rainfall levels) or excessive rain, may limit access to area boating locations or render boating dangerous or inconvenient, thereby curtailing customer demand for our products and services. In addition, unseasonably cool weather and prolonged or severe winter conditions may lead to a shorter selling season in certain locations. Hurricanes and other storms could result in disruptions of our operations or damage to our boat inventories and facilities, as has been the case when Florida and other markets were affected by hurricanes. Although our geographic diversity is likely to reduce the overall impact to us of adverse weather conditions in any one market area, these conditions will continue to represent potential, material adverse risks to us and our future financial performance.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk
As of March 31, 2019, all of our short-term debt bore interest at a variable rate, tied to LIBOR as a reference rate. Changes in the underlying LIBOR interest rate on our short-term debt could affect our earnings. For example, a hypothetical 100 basis point increase in the interest rate on our short-term debt would result in an increase of approximately $3.0 million in annual pre-tax interest expense. This estimated increase is based upon the outstanding balance of our short-term debt as of March 31, 2019 and assumes no
 
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mitigating changes by us to reduce the outstanding balances and no additional interest assistance that could be received from vendors due to the interest rate increase.
Foreign Currency Exchange Rate Risk
Products purchased from European-based and Chinese-based manufacturers are transacted in U.S. dollars. Fluctuations in the U.S. dollar exchange rate may impact the retail price at which we can sell foreign products. Accordingly, fluctuations in the value of other currencies compared with the U.S. dollar may impact the price points at which we can profitably sell such foreign products, and such price points may not be competitive with other products in the United States. Thus, such fluctuations in exchange rates ultimately may impact the amount of revenue, cost of goods sold, cash flows, and earnings we recognize for such foreign products. We cannot predict the effects of exchange rate fluctuations on our operating results. In certain cases, we may enter into foreign currency cash flow hedges to reduce the variability of cash flows associated with forecasted purchases of boats and yachts from European-based and Chinese-based manufacturers. We are not currently engaged in foreign currency exchange hedging transactions to manage our foreign currency exposure. If and when we do engage in foreign currency exchange hedging transactions, there can be no assurance that our strategies will adequately protect our operating results from the effects of exchange rate fluctuations.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that material information required to be disclosed by us in Securities Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based on such evaluation, such officers have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Controls
During the quarter ended March 31, 2019, there were no changes in our internal control over financial reporting that materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.
Limitations on the Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures and internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Although our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, a control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
CEO and CFO Certifications
Exhibits 31.1 and 31.2 are the Certifications of the Chief Executive Officer and Chief Financial Officer, respectively. The Certifications are required in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (the “Section 302 Certifications”). This Item of this report, which you are currently reading is the information concerning the Evaluation referred to in the Section 302 Certifications and this information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented .

 
23

PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are party to various legal actions arising in the ordinary course of business.  While it is not feasible to determine the actual outcome of these actions as of March 31, 2019, we do not believe that these matters will have a material adverse effect on our unaudited condensed consolidated financial condition, result of operations, or cash flows.  
ITEM 1A. RISK FACTORS
None.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
 
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
 
3.1	 	Articles of Incorporation of MarineMax, Inc., a Florida corporation . (1)	
 	 	 	
3.2	 	Bylaws of MarineMax, Inc., a Florida corporation . (1)	
 	 	 	
4.1	 	Form of Common Stock Certificate . (1)	
 	 	 	
10.1	 	2008 Employee Stock Purchase Plan, as amended.	
 	 	 	
31.1	 	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended.	
 	 	 	
31.2	 	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended.	
 	 	 	
32.1	 	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	
 	 	 	
32.2	 	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	
 	 	 	
101.INS	 	XBRL Instance Document	
 	 	 	
101.SCH	 	XBRL Taxonomy Extension Schema Document	
 	 	 	
101.CAL	 	XBRL Taxonomy Extension Calculation Linkbase Document	
 	 	 	
101.DEF	 	XBRL Taxonomy Extension Definition Linkbase Document	
 	 	 	
101.LAB	 	XBRL Taxonomy Extension Label Linkbase Document	
 	 	 	
101.PRE	 	XBRL Taxonomy Extension Presentation Linkbase Document	

 	(1)	Incorporated by reference to Registrant’s Form 8-K as filed March 20, 2015.	
 	†	   Certain information in this exhibit has been omitted and filed separately with the Securities and Exchange Commission.                    Confidential treatment has been requested with respect to the omitted portions.	

 
24

SIGNAT URES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 	 	 	MARINEMAX, INC.	
 	 	 	 	
May 1, 2019	 	By:	/s/ Michael H. McLamb	
 	 	 	 	
 	 	 	Michael H. McLamb	
 	 	 	Executive Vice President,	
 	 	 	Chief Financial Officer, Secretary, and Director	
 	 	 	(Principal Accounting and Financial Officer)	

 
25

Exhibit 10.1

MARINEMAX, INC.
 
AMENDED 2008 EMPLOYEE STOCK PURCHASE PLAN
 
ARTICLE I
 
PURPOSE
 
1.1   Name.   This Stock Purchase Plan shall be known as the MarineMax 2008 Employee Stock Purchase Plan (the “Plan”).
 
1.2   Purpose.   The Plan is intended to provide a method whereby employees of MarineMax, Inc., a Florida corporation (the “Company”), and one or more of its Subsidiary Corporations will have an opportunity to acquire a proprietary interest in the Company through the purchase of shares of the Common Stock of the Company.
 
1.3   Qualification.   It is the intention of the Company to have the Plan qualify as an “employee stock purchase plan” under Section 423 of the Code. The provisions of the Plan shall be construed so as to extend and limit participation in a manner consistent with the requirements of that section of the Code.
 
ARTICLE II

DEFINITIONS
 
2.1   Base Pay.   “Base Pay” shall mean all annual cash compensation received by an Employee. If any Offering is a six-month Offering, the Base Pay shall be divided by one-half.
 
2.2   Code.   “Code” shall mean the Internal Revenue Code, as amended.
 
2.3   Closing Price.   “Closing Price” shall have the meaning set forth in Section 6.2.
 
2.4   Committee.   “Committee” shall have the meaning set forth in Section 11.1.
 
2.5   Employee.   “Employee” shall mean any person who is customarily employed on a full-time or part-time basis by the Company and is regularly scheduled to work more than 20 hours per week.
 
2.6   Offering.   “Offering” shall have the meaning set forth in Section 4.1.
 
2.7   Offering Commencement Date.   “Offering Commencement Date” shall have the meaning set forth in Section 4.1.
 
2.8   Offering Termination Date.   “Offering Termination Date” shall have the meaning set forth in Section 4.1.
 
2.9   Option.   “Option” shall have the meaning set forth in Section 6.1.
 
2.10   Option Price.   “Option Price” shall have the meaning set forth in Section 6.2.
 
2.11   Participating Company.   “Participating Company” shall mean the Company and such Subsidiary Corporations as may be designated from time to time by the Board of Directors of the Company.
 
2.12   Participant.   “Participant” shall have the meaning set forth in Section 3.4.
 
2.13   Participation Amount.   “Participation Amount” shall have the meaning set forth in Section 5.1.
 
2.14   Stock.   “Stock” shall mean the Common Stock of the Company, par value one-tenth of one cent ($.001 per share).
 
 2.15   Subsidiary Corporation.   “Subsidiary Corporation” shall mean any present or future corporation which

 
would be a “subsidiary corporation” of the Company, as that term is defined in Code Section 424.
ARTICLE III

ELIGIBILITY AND PARTICIPATION
 
3.1   Initial Eligibility.   Any Employee who shall have completed one year of continuous employment with a Participating Company and is employed by a Participating Company on the date such Employee’s participation in the Plan is to become effective shall be eligible to participate in Offerings under the Plan that commence on or after such one-year employment period has concluded. Any corporation that becomes a Subsidiary Corporation after the initial Offering Commencement Date shall become a Participating Company only upon the decision of the Board of Directors of the Company to designate such Subsidiary Corporation as a Participating Company and to extend the benefits of the Plan to its eligible Employees.
 
3.2   Leave of Absence.   For purposes of participation in the Plan, a person on leave of absence shall be deemed to be an Employee for the first 90 days of such leave of absence and such Employee’s employment shall be deemed to have terminated at the close of business on the 90th day of such leave of absence unless such Employee shall have returned to regular full-time or part-time employment (as the case may be) prior to the close of business on such 90th day. Termination by a Participating Company of any Employee’s leave of absence, other than termination of such leave of absence on return to full time or part time employment, shall terminate an Employee’s employment for all purposes of the Plan and shall terminate such Employee’s participation in the Plan and right to exercise any Option.
 
3.3   Restrictions on Participation.   Notwithstanding any provision of the Plan to the contrary, no Employee shall be granted an Option to participate in the Plan:
 
(a) if, immediately after the grant, such Employee would own Stock, and/or hold outstanding Options to purchase Stock, possessing five percent or more of the total combined voting power or value of all classes of Stock of the Company (for purposes of this paragraph, the rules of Section 424(d) of the Code shall apply in determining Stock ownership of any Employee); or
 
(b) which permits such Employee’s rights to purchase Stock under all employee stock purchase plans of the Company and all Participating Companies to accrue at a rate that exceeds $25,000 in fair market value of the Stock (determined at the time such Option is granted) for each calendar year in which such Option is outstanding.
 
3.4   Commencement of Participation.   An eligible Employee may become a participant (“Participant”) by completing the enrollment forms prescribed by the Committee (including a purchase agreement and a payroll deduction authorization) and filing such forms with the designated office of the Company prior to the Offering Commencement Date for the next scheduled Offering. Payroll deductions for a Participant shall commence on the next scheduled Offering Commencement Date when such Participant’s authorization for a payroll deduction becomes effective and shall continue in effect for the term of this Plan, except to the extent such payroll deduction is changed in accordance with this Section 3.4 or terminated in accordance with Article 8. Subject to Section 5.4 , a Participant may, at any time, increase or decrease the rate of, or cease, the Participant’s payroll deductions by filing the appropriate form with the designated office of the Company and such change shall become effective as of the next applicable Offering Commencement Date.
 
ARTICLE IV

OFFERINGS
 
 4.1   Annual Offerings.   The Plan will be implemented by up to ten annual offerings (“Offerings”) of the Company’s Stock beginning on the 1st day of October in each of the years 2008 through 2027, with each Offering terminating on September 30 of the next year; provided, however, that each annual Offering may, in the discretion of the Committee exercised prior to the commencement thereof, be divided into two six-month Offerings commencing respectively, on October 1 and April 1, and terminating six months thereafter. As used in the Plan, “Offering Commencement Date” means the October 1 or April 1, as the case may be, on which the particular Offering begins and “Offering Termination Date” means the March 31 or September 30, as the case may be, on

 
which the particular Offering terminates. Any decision of the Committee to adjust the number of shares of Stock in
an Offering must be made prior to the Offering Commencement Date of that Offering.

ARTICLE V

PAYROLL DEDUCTIONS
 
5.1   Percentage of Participation.   At the time an Employee files authorization for payroll deductions and becomes a Participant in the Plan, the Employee shall elect to have deductions made from the Employee’s pay on each payday during the time the Employee is a Participant in an Offering. Such deductions shall be an amount equal to the Employee’s Participation Amount divided by the number of payroll periods occurring during the Offering. An Employee’s “Participation Amount” shall equal the rate of 1, 2, 3, 4, 5, 6, 7, 8, 9 or 10 percent (as elected by the Employee) times such Employee’s Base Pay in effect at the Offering Commencement Date of such Offering; provided, however, that prior to any Offering Commencement Date, the Committee shall have the discretion to limit deductions to less than 10 percent (but no less than 5 percent) for any Offering.
 
5.2   Calculation of Base Pay.   An Employee’s Base Pay as of an Offering Commencement Date and whether an Employee is “part-time” shall be determined in the discretion of the Committee based on the provisions of this Plan. In calculating an Employee’s normal weekly rate of pay under this Section 5.2, retroactive adjustments occurring during an Offering that are retroactive to the last day prior to the Offering Commencement Date of that particular Offering shall be taken into account. In addition, if an Employee’s Base Pay includes commissions, the Committee may set such Employee’s Base Pay based upon commission averages and standards as determined in the discretion of the Committee.
 
5.3   Participant’s Account.   All payroll deductions made for a Participant pursuant to this Article 5 shall be credited to such Participant’s account under the Plan. A Participant may not make any separate cash payment into such account except when on leave of absence and then only as provided in Section 5.5.
 
5.4   Changes in Payroll Deductions.   A Participant may discontinue participation in the Plan as provided in Article 8, but no other change can be made during an Offering and, specifically, a Participant may not alter the amount of such Participant’s payroll deductions for that Offering.
 
5.5   Leave of Absence.   If a Participant goes on a leave of absence, such Participant shall have the right to elect: (a) to withdraw the balance in such Participant’s account pursuant to Section 8.1 hereof, or (b) to discontinue contributions to the Plan but remain a Participant in the Plan, or remain a Participant in the Plan during such leave of absence, authorizing deductions to be made from payments by the Company to the Participant during such leave of absence and undertaking to make cash payments to the Plan at the end of each payroll period to the extent that amounts payable by the Participating Company to such Participant are insufficient to meet such Participant’s authorized Plan deductions.
 
ARTICLE VI

GRANTING OF OPTION
 
6.1   Number of Option Shares.   On each Offering Commencement Date, a Participant shall be deemed to have been granted an option (“Option”) to purchase a maximum number of shares of Stock equal to the Participation Amount with respect to such Participant, divided by the Option Price, determined as provided in Section 6.2 hereof.
 
 6.2   Option Price.   The “Option Price” of Stock for each Offering shall be the lower of (a) 85% of the Closing Price of the Stock on the Offering Commencement Date, or (b) 85% of the Closing Price of the Stock on the Offering Termination Date. The “Closing Price” of the Stock as to a particular day shall be the closing price of the Stock as reported for such day in the Wall Street Journal or in such other source as the Committee deems reliable. If the Stock is not traded on the New York Stock Exchange or other principal exchange or market on which it is authorized or listed for trading on the Offering Commencement Date and/or Offering Termination Date, as the case may be, the Closing Price for the Stock as to either of such dates on which such trading did not occur shall be the

 
Closing Price on the nearest prior business day on which trading did occur.

 
ARTICLE VII

EXERCISE OF OPTION
 
7.1   Automatic Exercise.   Unless a Participant gives written notice to the Company as hereinafter provided, such Participant’s Option for the purchase of Stock granted under Section 6.1 hereof will be deemed to have been exercised automatically on the Offering Termination Date applicable to such Offering for the purchase of the number of full shares of Stock that the accumulated payroll deductions in such Participant’s account at that time will purchase at the applicable Option Price (but not in excess of the number of shares for which Options have been granted to the Employee pursuant to Section 6.1 hereof).
 
7.2   Fractional Shares.   Fractional shares will not be issued under the Plan and any accumulated payroll deductions that would have been used to purchase fractional shares will be, at the option of the Committee, either (a) returned (without interest) to the Participant promptly following the termination of an Offering, or (b) added to the Participation Amount for such Participant and held for the purchase of Stock in connection with the next Offering; provided, however, that such amount (without interest) shall be refunded to any Participant who provides the Company with a written request for a refund prior to the use of such amount to purchase Stock at the end of the next Offering.
 
7.3   Transferability of Option.   During a Participant’s lifetime, Options held by such Participant shall be exercisable only by such Participant.
 
7.4   Delivery of Stock.   As promptly as practicable after the Offering Termination Date of each Offering, the Company will deliver to each Participant, as appropriate, the Stock purchased upon exercise of such Participant’s Option. All Stock delivered to each Participant will contain a restriction stating that such Stock is restricted from being transferred for a period of one year from the date of issuance unless the Committee otherwise consents. The Committee may withhold its consent to any such transfer in its absolute and sole discretion. Any transfer in violation of the legend placed on each such stock certificate shall be void ab initio. In no event, however, shall Stock be forfeited for violation of the transfer restriction.
 
ARTICLE VIII

WITHDRAWAL
 
8.1   In General.   At any time prior to the last five days of an Offering, a Participant may withdraw payroll deductions credited to such Participant’s account under the Plan by giving written notice to the designated office of the Company, which withdrawal notice shall be in form and substance as decided by the Committee. All of the Participant’s payroll deductions credited to the Participant’s account will be paid to the Participant promptly after receipt of such Participant’s notice of withdrawal, and no further payroll deductions will be made from the Participant’s pay during such Offering or during any subsequent Offering unless the Participant re-enrolls as provided in Section 8.2 hereof. The Company may, at its option, treat any attempt by a Participant to borrow on the security of such Participant’s accumulated payroll deductions as an election to withdraw such deductions.
 
8.2   Effect on Subsequent Participation.   An Employee’s withdrawal from any Offering will not have any effect upon such Employee’s eligibility to participate in any succeeding Offering or in any similar plan that may hereafter be adopted by the Company. In order to be eligible for a subsequent Offering; however, an Employee who has withdrawn from an Offering must satisfy the requirements of Section 3.4 hereof prior to the Offering Commencement Date of such subsequent Offering.
 
 8.3   Termination of Employment.   Upon termination of a Participant’s employment for any reason, including retirement (but excluding death or permanent disablement while in the employ of a Participating Company or continuation of a leave of absence for a period beyond 90 days), the payroll deductions credited to such Participant’s

 
account will be returned to the Participant, or, in the case of the Participant’s death subsequent to the termination of such Participant’s employment, to the person or persons entitled thereto under Section 12.1 hereof.
 
8.4   Termination of Employment Due to Death.   Upon termination of a Participant’s employment because of death or permanent disablement, the Participant or Participant’s beneficiary (as defined in Section 12.1 hereof)
shall have the right to elect, by written notice given to the designated office of the Company prior to the earlier of the Offering Termination Date or the expiration of a period of 60 days commencing with the termination of the Participant’s employment, either:
 
(a) to withdraw all of the payroll deductions credited to the Participant’s account under the Plan; or
 
(b) to exercise the Participant’s Option on the next Offering Termination Date and purchase the number of full shares of Stock that the accumulated payroll deductions in the Participant’s account at the date of the Participant’s cessation of employment will purchase at the applicable Option Price, and any excess in such account will be returned to said beneficiary, without interest.
 
In the event that no such written notice of election shall be duly received by the designated office of the Company, the beneficiary shall automatically be deemed to have elected, pursuant to paragraph (b), to exercise the Participant’s Option.
 
8.5   Leave of Absence.   A Participant on leave of absence shall, subject to the election made by such Participant pursuant to Section 5.5 hereof, continue to be a Participant in the Plan so long as such Participant is on continuous leave of absence. A Participant who has been on leave of absence for more than 90 days and who therefore is not an Employee for the purpose of the Plan shall not be entitled to participate in any Offering commencing after the 90th day of such leave of absence. Notwithstanding any other provisions of the Plan, unless a Participant on leave of absence returns to regular full time or part time employment with the Company at the earlier of: (a) the termination of such leave of absence, or (b) three months after the 90th day of such leave of absence, such Participant’s participation in the Plan shall terminate on whichever of such dates first occurs.
 
ARTICLE IX

INTEREST
 
9.1   Payment of Interest.   No interest will be paid or allowed on any money paid into the Plan or credited to the account of any Participant, including any interest paid on any and all money which is distributed to a Participant or such Participant’s beneficiary pursuant to the provisions of Sections 7.2, 8.1, 8.3, 8.4 and 10.1 hereof.
 
ARTICLE X

STOCK
 
10.1   Maximum Shares.   The maximum number of shares of Stock that shall be issued under the Plan, subject to adjustment upon changes in capitalization of the Company as provided in Section 12.4 hereof, shall be 1,500,000 shares plus the number of shares reserved for issuance under the Company’s 1998 Employee Stock Purchase Plan (the “1998 Plan”) that are not purchased as of the expiration date of the 1998 Plan. If the total number of shares for which Options are exercised on any Offering Termination Date in accordance with Article 6 exceeds the maximum number of shares for the applicable Offering, the Company shall make a pro rata allocation of the shares available for delivery and distribution in as nearly a uniform manner as shall be practicable and as the Committee shall determine to be equitable, and the balance of payroll deductions credited to the account of each Participant under the Plan shall be returned to such Participant as promptly as possible.
 
10.2   Participant’s Interest in Option Stock.   A Participant will have no interest in Stock covered by such Participant’s Option until such Option has been exercised.
 
 10.3   Issuance of Shares.   The shares issued upon the exercise of any such Option may be, as the Committee may from time to time determine: (i) unissued shares of Stock, (ii) shares of Stock now held as treasury shares; or

 
(iii) shares of Stock subsequently acquired by the Company, including, without limitation, shares of Stock purchased in the open market by the Company.
 
10.4   Registration of Stock.   Stock to be delivered to a Participant under the Plan will be registered in the name of the Participant, or, if the Participant so directs by written notice to the designated office of the Company
prior to the Offering Termination Date applicable thereto, in the names of the Participant and the Participant’s spouse, in the form and manner permitted by applicable law.
 
10.5   Restrictions on Exercise.   The Board of Directors may, in its discretion, require as conditions to the exercise of any Option that the shares of Stock reserved for issuance upon the exercise of the Option shall have been duly listed, upon official notice of issuance, upon the New York Stock Exchange or other principal exchange or market on which the Common Stock is authorized or listed for trading, and that either:
 
(a) a Registration Statement under the Securities Act of 1933, as amended, with respect to said shares shall be effective; or
 
(b) the Participant shall have represented at the time of purchase, in form and substance satisfactory to the Company, that it is such Participant’s intention to purchase the shares for investment and not for resale or distribution.
 
ARTICLE XI
 
ADMINISTRATION
 
11.1   Appointment of Committee.   The Board of Directors shall appoint a committee (“Committee”) to administer the Plan, which shall consist of no fewer than two (2) members of the Board of Directors. Members of the Committee who are Employees shall be eligible to purchase Stock under the Plan.
 
11.2   Authority of Committee.   Subject to the express provisions of the Plan, the Committee shall have plenary authority in its discretion to interpret and construe any and all provisions of the Plan, to adopt rules and regulations for administering the Plan, and to make all other determinations deemed necessary or advisable for administering the Plan. The Committee’s determination regarding the foregoing matters shall be conclusive. The Committee may delegate its authority as it deems necessary or appropriate.
 
11.3   Rules Governing Administration of the Committee.   The Board of Directors may from time to time appoint members of the Committee in substitution for or in addition to members previously appointed and may fill vacancies, however caused, in the Committee. The Committee may select one of its members as its Chairman and shall hold its meetings at such times and places as it shall deem advisable and may hold telephonic meetings. A majority of its members shall constitute a quorum. All determinations of the Committee shall be made by a majority of its members. The Committee may correct any defect or omission or reconcile any inconsistency in the Plan, in the manner and to the extent it shall deem desirable. Any decision or determination reduced to writing and signed by a majority of the members of the Committee shall be as fully effective as if it had been made by a majority vote at a meeting duly called and held. The Committee may appoint a secretary and shall make such rules and regulations for the conduct of its business as it shall deem advisable.
 
ARTICLE XII

MISCELLANEOUS
 
 12.1   Designation of Beneficiary.   A Participant may file a written designation of a beneficiary who is to receive any Stock and/or cash that such Participant would be entitled to under the Plan. Such designation of beneficiary may be changed by the Participant at any time by written notice to the designated office of the Company. Upon the death of a Participant and upon receipt by the Company of proof of identity and existence at the Participant’s death of a beneficiary validly designated by the Participant under the Plan, the Company shall deliver such Stock and/or cash to such beneficiary. In the event of the death of a Participant and in the absence of a beneficiary validly designated under the Plan who is living at the time of such Participant’s death, the Company shall deliver such Stock and/or cash to the executor or administrator of the estate of the Participant, or if no such

 
executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such Stock and/or cash to the spouse or to any one or more dependents of the Participant as the Company may designate. No beneficiary shall, prior to the death of the Participant by whom he has been designated, acquire any interest in the Stock or cash credited to the Participant under the Plan.
12.2   Transferability.   Neither payroll deductions credited to a Participant’s account nor any rights with regard to an Option granted under the Plan may be assigned, transferred, pledged, or otherwise disposed of in any way by the Participant, other than by will or the laws of descent and distribution. Any such attempted assignment, transfer, pledge or other disposition shall be without effect, except that the Company may treat such act as an election to withdraw funds in accordance with Article 8.
 
12.3   Use of Funds.   All payroll deductions received or held by the Company under this Plan may be used by the Company for any corporate purpose and the Company shall not be obligated to segregate such payroll deductions.
 
12.4   Adjustment Upon Changes in Capitalization.
 
(a) If, while any Options are outstanding, the outstanding shares of Stock of the Company have increased, decreased, changed into, or been exchanged for a different number or type of shares or securities of the Company through reorganization, merger, recapitalization, reclassification, stock split (whether or not effected in the form of a stock dividend), reverse stock split or similar transaction, equitable and proportionate adjustments shall be made by the Committee in the number and/or type of shares of Stock that are subject to purchase under outstanding Options and to the Option Price applicable to such outstanding Options. In addition, in any such event, the number and/or type of shares of Stock which may be offered in the Offerings described in Article 4 hereof shall also be proportionately adjusted.
 
(b) Upon the dissolution or liquidation of the Company, or upon a reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, or upon a sale of substantially all of the assets or stock of the Company to another corporation, the holder of each Option then outstanding under the Plan will thereafter be entitled to receive at the next Offering Termination Date upon the exercise of such Option for each share as to which such Option shall be exercised, as nearly as reasonably may be determined, the cash, securities and/or property which a holder of one share of Stock was entitled to receive upon and at the time of such transaction. The Board of Directors shall take such steps in connection with such transactions as the Board shall deem necessary to assure that the provisions of this Section 12.4 shall thereafter be applicable, as nearly as reasonably may be determined, in relation to the said cash, securities and/or property as to which such holder of such Option might thereafter be entitled to receive.
 
12.5   Amendment and Termination.   The Board of Directors shall have complete power and authority to terminate or amend the Plan; provided; however, that the Board of Directors shall not, without the approval of the stockholders of the Company (a) increase the maximum number of shares that may be issued under the Plan (except pursuant to Section 12.4 hereof); or (b) amend the requirements as to the class of Employees eligible to purchase Stock under the Plan. No termination, modification, or amendment of the Plan may, without the consent of a Participant then holding an Option under the Plan to purchase stock, adversely affect the rights of such Participant under such Option.
 
12.6   No Employment Rights.   The Plan does not, directly or indirectly, create in any Employee or class of Employees any right with respect to continuation of employment by any Participating Company, and it shall not be deemed to interfere in any way with any Participating Company’s right to terminate, or otherwise modify, an Employee’s employment at any time.
 
12.7   Effect of Plan.   The provisions of the Plan shall, in accordance with its terms, be binding upon, and inure to the benefit of, all successors of each Participant, including, without limitation, such Participant’s estate and the executors, administrators or trustees thereof, heirs and legatees, and any receiver, trustee in bankruptcy or representative of creditors of such Participant.
 
12.8   Governing Law.   The law of the State of Florida will govern all matters relating to this Plan except to the extent it is superseded by the laws of the United States.

Exhibit 31.1
CERTIFICATION
I, W. Brett McGill, certify that:
 	1.	I have reviewed this quarterly report on Form 10-Q of MarineMax, Inc.;	
 	2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;	
 	3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;	
 	4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:	
 	a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;	
 	b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;	
 	c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and	
 	d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and	
 	5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):	
 	a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and	
 	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.	
 
 	/s/  W. BRETT McGILL	
 	W. Brett McGill	
 	Chief Executive Officer and President	
 	(Principal Executive Officer)	
 	 	
Date: May 1, 2019	 	

Exhibit 31.2
CERTIFICATION
I, Michael H. McLamb, certify that:
 	1.	I have reviewed this quarterly report on Form 10-Q of MarineMax, Inc.;	
 	2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;	
 	3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;	
 	4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:	
 	a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;	
 	b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;	
 	c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and	
 	d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and	
 	5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):	
 	a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and	
 	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.	

 	/s/  MICHAEL H. MCLAMB	
 	Michael H. McLamb	
 	Chief Financial Officer	
 	(Principal Financial Officer)	
 	 	
Date: May 1, 2019	 	

Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of MarineMax, Inc., (the “Company”) on Form 10-Q for the quarterly period ended March 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, W. Brett McGill, Chief Executive Officer of the Company, certify, to my best knowledge and belief, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
 	(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and	
 	(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.	

 	/s/  W. BRETT McGILL	
 	W. Brett McGill	
 	Chief Executive Officer	
 	 	
Date: May 1, 2019	 	

Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of MarineMax, Inc., (the “Company”) on Form 10-Q for the quarterly period ended March 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael H. McLamb, Chief Financial Officer of the Company, certify, to my best knowledge and belief, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
 	(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and	
 	(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.	

 	/s/  MICHAEL H. MCLAMB	
 	Michael H. McLamb	
 	Chief Financial Officer	
 	 	
Date: May 1, 2019