HZO

Good day, and welcome to the MarineMax, Incorporated Fiscal 2026 Second Quarter Conference Call. Today's call is being recorded. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. I would now like to turn the call over to Scott Solomon of the company's investor relations firm, Sharon Merrill Advisors. Please go ahead, sir.

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

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

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

Thank you, Mike. Good morning, everyone, and thank you for joining us today to discuss our second quarter performance. Before getting into the quarter, I want to thank our MarineMax teams across our organization. Their focus, discipline, and commitment to our customers is unwavering, even in what remains a more challenging and dynamic retail operating environment. Our second quarter results demonstrate the benefits and durability of MarineMax's diversified, integrated business model and the progress we've made in reshaping the operations to perform across a range of environments. While retail demand and margins for new and used boats remained pressured during the quarter, we delivered gross margin of 34.4%, expanding 440 basis points year-over-year, driven by continued strength across our higher-margin businesses.

Macroeconomic uncertainty and geopolitical dynamics continued to weigh on consumer confidence throughout the quarter, and that pressure was evident in double-digit unit declines for the industry. Due to the strength of our leading customer-focused approach, our team was again able to outperform the industry. However, we certainly were not immune from the impact. As expected, revenue in the quarter was down, given the difficult comparison with last year, but the softness was more pronounced than anticipated. Having said that, our higher-margin revenue streams continued to benefit our consolidated operations. Finance and insurance, parts and service, brokerage, superyacht services, and our vast marina portfolio, including IGY, once again provided balance and margin stability, helping to offset cyclicality of retail boat sales. This quarter further validates the strategic intent behind our diversification.

Over time, we've deliberately expanded MarineMax beyond traditional boat retail to build a more resilient and higher-quality business model, and that mix shift is increasingly evident in our gross margin performance. Today, MarineMax is uniquely positioned in the industry as an integrated model that others simply can't replicate. Each of our higher-margin businesses generally performed at or above our expectations. IGY is performing well and continues to benefit from its outstanding reputation as the only world-class operator of luxury marinas from the Caribbean to the United States and across the Mediterranean. IGY recently renewed its relationship with St. Katharine Docks in London, a highly visible strategic marina. IGY was also recently appointed marina advisor for the Il Monte Galala Towers and Marina project on Egypt's Red Sea coast.

This engagement is part of a broader strategic partnership and is a capital-light, advisory-driven way to deploy IGY's expertise, operating standards, and global brand. Technology is also becoming an increasingly important differentiator for MarineMax. Through New Wave Innovations, we continue to invest in digital platforms designed to enhance the customer experience, increase efficiency, and support long-term growth. Our technology portfolio now includes multiple products across the enterprise, including Boatyard, our all-in-one platform for marine service management. Boatyard continues to gain traction, with subscribers up 47%, demonstrating how our digital tools can strengthen customer engagement and deepen loyalty. More broadly, New Wave Innovations is steadily increasing the technology and data content of our business, which we view as a key driver of long-term value creation. Both Cruisers and Intrepid have launched new models, which are being well-received.

While all manufacturers are clearly impacted by the soft environment, developing and launching new models is a proven way for brands to gain share, especially in tough times. From a market standpoint, we are navigating a challenging near-term environment, but we continue to see resilience in the recreational marine consumer, particularly in premium segments. Recent boat shows, including the Palm Beach International Boat Show, produced strong results, reinforcing the demand in our premium categories. We continue to see healthy engagement with premium brands, which is also reflected in the continued strength in our superyacht service operations. Months ago, it was widely expected that the industry would return to positive new unit sales during the spring or summer. Industry inventory continues to normalize, but added uncertainty due to geopolitical concerns throws into question the timing of when unit sales turn positive.

Regardless, we did see very modest boat margin improvement in the March quarter and are optimistic that similar improvement could be in store for the summer. While a small step, the boat margin improvement is important for us as well as for the industry. Additionally, our balance sheet remains very strong and is a competitive advantage in this environment. Disciplined inventory management, lower floor plan exposure, and solid liquidity provides us with meaningful flexibility as we move into the summer selling season. That financial strength allows us to better protect margins, manage inventory proactively, and remain highly selective in how we allocate capital through the cycle, with a focus on returns and flexibility. Taken together, the quarter highlights the value of the diversified model we have built. One that is designed not only to perform in favorable conditions, but also to remain resilient during periods of uncertainty.

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

Thank you, Brett. I also want to recognize our teams across the globe for their strong performance in a tough environment. It's great to see the success of our diversified business model. For the quarter, revenue was $527 million. We expected revenue to be down given the comparison, but it was softer than expected due to the increased global uncertainty. Most of the decline was due to a 15% decrease in same-store sales, driven by lower new and used boat revenue. Overall, our comparable units were down in the mid-single digits, which is much better than the industry overall. Our average unit selling price declined due to mix. Last year's March quarter had the benefit of delayed hurricane closings from Florida, which increased last year's mix of larger boats. Turning to margins, as Brett noted, gross margin expanded 440 basis points to 34.4%, driven by strength in our higher-margin businesses.

Higher-margin businesses, including our service and parts, finance and insurance, superyacht services, and marinas, including IGY, all performed well in the quarter, growing as a percentage of revenue and importantly, year-over-year in absolute dollars. SG&A expenses excluding changes in contingent consideration, transaction-related costs, weather-related impacts, and other items noted in the press release increased slightly year-over-year. Many of the higher-margin businesses, while more profitable than traditional boat sales, have a higher expense structure. This, combined with more aggressive marketing in a tough environment, drove the modest expense growth. Interest expense declined by more than $3.5 million, driven by lower inventory and lower rates. Adjusted EBITDA was $23.9 million, compared with $30.9 million, reflecting the impact of lower new and used boat sales, partially offset by our stronger margin mix. Adjusted earnings per diluted share were $0.04 compared with $0.24 last year.

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

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

After considering operating conditions, recent industry registration trends, retail performance, and other relevant factors, we are reaffirming our fiscal 2026 outlook for adjusted EBITDA for the year to be in the range of $110 million-$125 million, and adjusted net income to be in the range of approximately $0.40-$0.95 per diluted share. Our guidance reflects our disciplined approach to the current environment, alongside continued progress in expanding the mix of our business toward higher margin recurring and service-oriented revenue streams. With the first half of the fiscal year behind us, our full year outlook continues to assume industry unit volumes will range from modestly down to modestly up, reflecting ongoing demand dynamics. Same-store sales for fiscal 2026 are still expected to be flattish, primarily driven by a favorable product and segment mix, and improvements in the back half summer selling season.

While retail margin pressure persisted through the first half, we expect industry conditions to modestly improve to the back half of the year, alongside more meaningful progress in industry inventory levels compared with the second half of fiscal 2025. Driven by continued growth in our higher margin segments, we remain confident in our abilities to sustain consolidated gross margins in the low 30% range for the year. Our guidance continues to incorporate interest rate reductions announced to date, and assumes an effective annual tax rate of 26.5%, along with an average diluted share count of approximately 22.8 million shares. These estimates exclude the impact of any material acquisitions or other unexpected events, including changes in broader global economic environment. April trends generally have been up versus last year, which is what we anticipated versus the softness following Liberation Day.

Since early March, we have seen periods of very strong retail trends followed by weaker periods, but overall trends have been improving. We do realize that world events and other factors can change consumer behavior quickly in one direction or another, but today's trends would result in positive same-store sales for April, as expected. Now I'll turn the call back over to Brett for closing comments. Brett?

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

Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We do kindly ask each person in the queue to limit themselves to only one question and one follow-up to allow everyone a chance to ask a question. One moment please, while we poll for questions. Our first question comes from the line of Joe Altobello with Raymond James. Please proceed with your question.

Thanks. Hey guys, good morning.

Good morning, Joe.

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

Yeah, Joe, I can answer that. Good question. Q2, I'll give you some color on the quarter. January was doing reasonably well, as we had said on our January call. February was a little lighter, and then when the war started in late February, early March started soft, but finished pretty well, and we commented about the Palm Beach Boat Show doing pretty well. We talked about current trends being strong or being pretty good, which is what we expected with April looking like it's going to be up. That's playing to what we expected when this fiscal year started, which was the first half was going to be the tougher comparisons. The second half was going to be the easier comparison. We still feel generally pretty good about that.

We're still comfortable with the unit thoughts, with the revenue thought, with the same store sales range, all of that within the guidance. The quarter's EBITDA was kind of around where we expected. We always try to do better, but the revenue was a little lighter because of how March started, primarily.

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

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

Okay. Thank you.

Thank you.

Thank you. Our next question comes from the line of James Hardiman with Citi. Please proceed with your question.

Hey, good morning.

Good morning.

Morning, guys. Hope everything is going well with you guys. To the margin question, I've been following you guys a long time, I can never quite nail down the margins ahead of time. I think last quarter, gross margins were down, call it 440 basis points. This quarter up about 440 basis points. Maybe help us think through the back half of the year, 3Q versus 4Q. I'm assuming we won't see swings that large in either direction during either of those quarters, but maybe help us think through sort of back half margins and what you expect.

Obviously, a bunch of moving parts, not just sort of what's happening in the underlying boat business, but sort of the mix effect of the non-boat businesses seems like it's a big factor, at least here, or was here in the second quarter. Maybe how to think through those items going forward. Thanks.

Yeah. I'll address some of the swings you mentioned. Clearly, when same-store sales are strong or weak, it can impact the consolidated gross margins, because like in this quarter, when same-store sales were weak, then all of your higher margin businesses, everything from service, parts, F&I, marinas, super yachts, those are all being steadily growing. So they grow as a percentage of the business, which will definitely skew the margin higher, which happened this quarter to a degree. My point was they all grew in absolute dollars also. If you go to the December quarter, we had stronger same-store sales growth on top of the previous year's hurricane. That kind of helps to explain some of the swings. In this June quarter, we're now up against a -9 comp from last year.

For us to achieve our guidance, which is about flatish same-store sales growth, we pretty much need to see growth this quarter, and depending on the strength of the growth, it could drive margins, consolidated margins, down from the 34% as an example. When you work your way through the whole year, our margins should be at or above kind of where we finished last year, partly because of this, well, two reasons, the strength of the higher margin businesses growing and then the modest improvement in boat margins.

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

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

Got it. That's really helpful. Thanks, guys.

Thanks, James.

Thank you. Our next question comes from the line of Gregory Miller with Truist Securities. Please proceed with your question.

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

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

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

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

Okay. Thank you both.

Thank you.

Thank you. Our next question comes from the line of Eric Wold with Texas Capital Securities. Please proceed with your question.

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

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

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

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

Helpful. Thanks, guys.

Thank you.

Thank you. Our next question comes from the line of Anna Glaessgen with B. Riley. Please proceed with your questions.

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

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

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

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

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

Yeah, through March, we're up in gallons sold at our marinas, which is something that we do watch just to see. I think in past periods of rising fuel prices, people have just boated different distances, quite frankly. We're so focused on the experience of boating, getting people out on the water, and our getaways events continue to be full. People are boating. They're out there on the water. That's always a positive sign.

Great. That's super helpful. Thanks.

Thank you. Our next question comes from the line of Greg Badishkanian with Wolfe Research. Please proceed with your question.

Hey, guys. This is Scott Stringer on for Greg. There's some positive commentary on your inventory positioning at this time. I'm wondering what your expectations are for the industry and when industry inventories could normalize. Thanks.

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

Seasonally, it should happen this quarter, which will be welcome news for the entire industry.

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

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

Got it. Thank you, guys.

Thank you.

Thank you. Our next question comes from the line of Mike Albanese with StoneX. Please proceed with your question.

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

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

Got it. Thanks, guys.

Thank you.

Thank you.

Thank you. Our next question comes from the line of David MacGregor with Longbow Research. Please proceed with your question.

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

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

Okay, got it. Could you just bridge the gross margin performance for us? I assume a lot of that was mix, but just talk about some of the other moving parts as well. Thanks.

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

Okay, got it. Thanks. I'll pass it on.

Yeah, thank you.

Thank you. Our next question comes from the line of Gerrick Johnson with Seaport Research Partners. Please proceed with your question.

Great. Thank you very much. Hey, congratulations on your Palm Beach performance. I was there.

Thanks.

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

Yeah. I'll just give some general comments. There's a lot of manufacturers, a lot of product out there in the marketplace. There's a lot of models, and there's brands ranging from the lower value orientation to the upper, maybe even custom side of that. When consumers start pausing and waiting, and then when they start coming back into it's a lot of product out in the market, and that's kind of an inventory comment, as well as just a lot of brands to choose from. I think what you probably saw at Palm Beach, Gerrick, is that the more premium brands definitely performed better. That was our experience at Palm Beach, and really it's always our experience, that the premium end of the market tends to hold up better almost regardless of the cycle.

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

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

Okay, great. Thank you very much.

Thanks, Gerrick.

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

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

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