Marinemax Inc. (NYSE:HZO) Q2 2018 Earnings Conference Call - Preliminary Transcript
Apr 26, 2018 • 10:00 am ET
this allows for the opportunity of further margin expansion.
As we are moving into the summer selling season, our confidence continues to build. Our unit growth, coupled with sustained and ever-growing consumer confidence we are seeing, should support a healthy industry for the foreseeable future. What provides us with this growing confidence is our ability to execute in this environment.
To that point, for another consecutive quarter, we've produced very strong flow-through that resulted in robust cash flow and earnings. We accomplished this as our team did a good job controlling costs in the quarter which, combined with the gross margin expansion, allowed for mid-teens flow-through even with a meaningful rise of about $500,000 in net expense due to increased health care claims in the quarter. This implies that our flow-through, absent that increase, would have even been better.
While it's never easy to keep all the dials positioned exactly right, the team's sharp focus on maintaining a well-controlled expense structure, along with improving gross margins, has worked and should continue to result in positive operating leverage moving ahead.
New innovative models from our manufacturing partners continue to stimulate demand and interest from not only existing boaters and customers, but also those new to boating. Clearly, with the unit growth we have seen throughout this recovery, we have added many new boaters to our family and to the industry. The new models and the new entrants, over time, should simulate a replacement cycle as they become more comfortable on the water, enjoying the lifestyle of boating and, ultimately, trading up for larger products. That's -- this is what we call food item. This is one of the reasons MarineMax is well positioned to build on our industry-leading market share well into the future.
Now let me comment on our charter business in the BVI. MarineMax Vacation is still recovering from the devastation of the 2017 hurricane season. Yet as we expected, the BVI's remains a vacation destination in high demand for our charter fleet and is very active in creating dreams for our customers. The beaches, fishing, snorkeling, and the bars are very busy, which is great to see.
On a related note, we launched and created the Aquila brand of catamaran specifically for our charter business. As we have mentioned in the past, we have been pleased by the strong demand for the Aquila catamarans for private use in the U.S. and also internationally. Demand is very strong, and recently, the Achilles 36 received a prestigious Boat of the Year award for a multihull boat, beating out much larger boats from some of the industry-leading brands. I am proud of what our team has built in just a very few short years. While not a major brand yet in our P&L, it should be in the future, given the demand that we are seeing worldwide.
Regarding Brunswick's announcement on the intent to sell Sea Ray, one of our most important brands, we know the process is ongoing. Beyond that,