MarineMax (HZO -0.90%) cruised to strong fiscal third-quarter results recently, landing record revenue and two of the best sales months in company history. That was surely a relief to shareholders after a rough few quarters. But can the recreational boat dealer keep up the momentum?

Let's dive in and see why this consumer discretionary stock continues to have bright prospects ahead.

A focus on the premium side of boating

Calling itself "the world's largest lifestyle retailer of recreational boats and yachts," MarineMax is a major player in the pleasure boating industry. In all, the company operates 78 dealerships and 59 marinas around the world. That breadth helped it rack up nearly $722 million in revenue for its fiscal third quarter, ended on June 30.

Aiming for further expansion, the company last October picked up IGY Marinas, a leading superyacht marina business comprising 23 luxury marinas worldwide.  IGY has since performed better than anticipated, according to CEO William Brett McGill. During the Q3 earnings call, he explained that IGY is not "simply a collection of some of the world's best marinas," but is assisting MarineMax in improving margins.

With MarineMax's significant footing in the global luxury marina business, McGill believes the company is even better positioned for growth. CFO Michael McLamb added how annual revenue has grown from around $1 billion to over half that amount in a single quarter, showing that "demand for the boating lifestyle is clearly alive and well."

MarineMax continues to focus on the premium end of the industry, which "continues to outperform other segments," according to McGill. May and June ended up being not only the best revenue months of Q3, but also in company history. 

Margins declined as expenses surged

Although May and June flourished, April proved sluggish and unit volume endured a double-digit drop during the month. Both pontoon and towboat sales have suffered in recent months. Overall, Q3 gross margin fell sequentially by 1.4 percentage points to 33.8%. However, keep in mind that Q2's gross margin of 35.2% was a new record, making sequential margin gains difficult. McLamb described last quarter's gross margin of 33.8% as "healthy."

MarineMax is now working to offset higher sales, general, and administrative costs, due primarily to the addition of IGY, other acquired businesses, as well as inflation. Interest expense, for example, increased to $14.8 million from just $1 million in the prior-year period thanks to higher interest rates, more long-term debt from the purchase of IGY Marinas, and higher dealership inventories. 

As a result, MarineMax's net income for the quarter finished at $44.4 million, a steep 37% fall from $70.2 million a year ago. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) sank 21% year over year to finish at $83.5 million.

Just the beginning

With a better picture of how 2023 will shake out, MarineMax narrowed its full-year guidance range, slightly raising the low end but keeping the top end the same. McLamb feels the company's concentration on "premium product" should continue to benefit MarineMax and anticipates margins to be in line with previous estimates. 

McLamb also expects interest expenses to remain elevated due to higher rates and saturated inventories. For the year, MarineMax projects an EBITDA of $225 million to $245 million. As for its fiscal Q4, July is forecast to hit positive same-store sales growth with boaters looking to spend time in the water as summer winds down.

While IGY has played a major role in recent quarters, Q3 did mark the 11th straight period of 30% or higher gross margin for MarineMax. Besides IGY, other bright spots include superyacht services, marinas, manufacturing, and service, which all contribute to MarineMax's diversified business model.

In Q3 alone, MarineMax acquired C&C Boat Works, a well-established boat dealer in Minnesota, and announced a partnership with NEOM, an extravagant waterfront development in the Red Sea of Saudi Arabia. Confident in his company's market position amid global trends that are "fueling the world's passion for the boating lifestyle," McGill asserted, "We are just beginning to scratch the surface of those exciting opportunities" -- and that's good news for investors.