Malibu Boats Inc (MBUU) 2015 Q3 法說會逐字稿

Good morning and welcome to the Malibu Boats conference call to discuss the third-quarter fiscal 2015 results. (Operator Instructions) Please be advised that reproduction of this call in whole or in part is not permitted without written authorization of Malibu Boats, and as a reminder this call is being recorded. On the call today from the management are Mr. Jack Springer, Chief Executive Officer, and Mr. Wayne Wilson, Chief Financial Officer.

I will now turn the call over to Mr. Wilson to get started. Please go ahead, sir.

Thank you and good morning, everyone. Ritchie Anderson, the Company's Chief Operating Officer, is also on the call today.

Jack will provide commentary on the business, and I will discuss our third-quarter financials and outlook for fiscal 2015. We will then open the call for questions.

A press release covering the Company's third-quarter fiscal 2015 results was issued this morning, and a copy of that press release can be found in the Investor Relations section of the Company's website.

I also want to remind everyone that management's remarks on this call may contain certain forward-looking statements, including predictions, expectations, estimates, or other information that might be considered forward-looking and that actual results could differ materially from those projected on today's call. You should not place undue reliance on these forward-looking statements, which speak only as of today and the Company undertakes no obligation to update them for any new information or future events.

Factors that might affect future results are discussed in our filings with the SEC. And we encourage you to review our SEC filings for a more detailed description of these risk factors.

Please also note that we will be referring to certain non-GAAP financial measures on today's call such as adjusted EBITDA, adjusted EBITDA margin, and adjusted fully distributed net income. Reconciliations of these non-GAAP financial measures to GAAP financial measures are included in our earnings release.

Now let me turn the call over to Jack Springer.

Thank you, Wayne, and I would like to welcome everyone to our call.

We had another very strong quarter at Malibu and I want to commend the Malibu team for continuing to execute at a very high level. While we don't provide specific earnings guidance, we did lay out a lot of detail about the way that we planned our business on the last two conference calls. I am happy to tell you that the business has performed in line or better than those plans, and we are exceeding the metrics we have communicated to the investors.

For the quarter, net sales increased a very strong 29% and unit volume was up over 24%. Net sales per unit increased 6.7% in the United States and 3.5% globally for the third quarter and the Malibu brand made up nearly 73% of the unit volume. If you recall, we told you that we anticipated a heavier mix of Malibu units this quarter and this would have positive implications to sales and margins. That is exactly what happened in our third fiscal quarter. The result was a healthy increase in our adjusted EBITDA margin, which climbed to 20.5% in the quarter.

It's also worth noting that, during Q3, we lost a week of production due to bad winter weather, primarily ice and snow. We were able to make up that production in the quarter, which was important for us to meet the demand that we had. Despite the additional overtime and a couple of Saturdays that we worked, the quarter was still very strong, which we are proud of.

I will let Wayne speak to the rest of the numbers in a minute, but I just want to reiterate how pleased we are with our business model and our ability to continue to execute the business objectives.

As we discussed on the last call, we knew there would be some headwinds in Canada and certain international areas due to the strength in the US dollar over the past nine months. In Canada, a boat now costs 15% to 20% more than in the fall. South America has been extremely hard-hit as well with the Brazil real down almost 33% from 9 to 12 months ago. We have seen our sales decrease in those markets specifically, as well as Europe, versus last year.

Now this is not a pervasive event. Australia is benefiting from this reality and Asia is a growing market for us, despite any currency headwinds. In addition, the Middle East remains strong for us. To date, strength in the US market has compensated for the weakening demand in Canada and in some other international markets and we are delivering well against our global growth initiatives.

Our third quarter is our boat show season and this is the time when our dealers are conducting their shows, getting prospective buyers into the showroom or on the water and closing new sales. This is the period when custom boat orders from retail consumers become more pronounced. A custom order is an order from a retail customer who chooses not to order a boat from the dealer stock, but orders a boat with the exact details and specifications that they desire. The order still comes to Malibu from the dealer base.

Memorial Day is the unofficial kickoff of the boating season and customers who want to be on the water with a customized boat by that time must generally place their orders by 1 April. As a result, the end of our fiscal third quarter and the beginning of our fourth fiscal quarter is the time when we are building those boats needed by Memorial Day.

We were also very pleased with all of our new product that we introduced for 2015. Largely, this has just been seen by the consumer in the last three months at the boat shows.

The performance of our new and redesigned models was strong coming out of the boat shows. The A22 by Axis is our number one selling Axis model historically and it is also for this year. It is doing very well. The Malibu Wakesetter VLX is historically our second best-selling model in the Malibu brand and the new 22 VLX continues that trend. The T23 is our second traditional bow Axis model introduced and the demand for that boat has been as strong as we had expected it to be.

And lastly, the new Response LXR entry-level ski boat that we launched in January has performed better than we expected, since we consider that boat to be for a niche market and at a lower volume rate.

It is also very exciting to see the strong demand for our flagship Malibu 23 LSV Wakesetter. It's in its second year since its complete remodel. Normally, the second year sees about the same demand as year one, but in this case, the 23 LSV is on a pace to set a new annual shipment record. Given that the 23 LSV is the best-selling performance sports boat of all time, this achievement is very encouraging to us.

As we have previously told you, Malibu has launched more new features and innovations this year than any other time in the Company's history. Normally, there is a six-month lag before new product, new features begins to take root. And this occurs simultaneously when consumers see this new product at boat shows, when everything is on display.

The boat shows confirmed that the new dash with a 12 inch touchscreen and the Viper 2 technology platform are being very well accepted. Our integrated surf system combining SURF GATE and the new Power Wedge II is also in high demand, and the new G4 tower is a premium must-have for our Malibu Wakesetter boat.

The Power Wedge II is rapidly becoming a feature that is gaining attention and we expect the Power Wedge II to be a strong selling point for Malibu as we go forward. With its rapid planing ability and full integration into our proprietary SURF GATE system, it lowers fuel costs while providing a level of surf wave control that has never been seen before in the industry. We believe our integrated surf system is well ahead of any other commodity on the market and reinforces our position as the market leader when it comes to performance and innovation.

Let me speak for a minute about our Australian business. The integration of our Australian business continues to move along nicely and this business is performing in line or better than our plan. In the third fiscal quarter, Australia delivered 80 boats and we continued to see the strong demand.

Manufacturing in Australia gives us a strategic advantage over our US export competitors. Not only are we capable of being three to four times faster to market, we do not face the currency headwinds to the same extent. We continue to believe we are very well-positioned in Australia and excited about the longer term growth opportunities in that market.

Last quarter, we told you about the next phase of our vertical integration strategy, the in-house manufacturing of our trailers for our boats. This quarter, I am very pleased to tell you that our new trailer shop is operational and we have built our first trailers in April. It remains our goal to deliver a better value trailer to our dealers and, over time, bring innovations to the trailers just as we have with our boats.

As you all know, since 2008, we've increased our market share dramatically among manufacturers in performance sports boats. This has been driven by a combination of new product development, redesigned models, innovative features, and improved distribution. The good news is when December trailing 12 month market share was released, our 2013 market share was revised upward by 20 basis points to 33%. This has happened for each of the past three years.

However, this contributed to a modest share decline that we saw during 2014 as our competitors became more aggressive in their product introductions, increased their distribution and began to compete more with our patented SURF GATE system. We continue to maintain an incredibly strong lead of over 1,100 basis points of share to our nearest competitor, and we believe that we are well-positioned to maintain and grow our market share, given our industry-leading dealer network and a robust new product pipeline that we will continue forward with.

As I had said in my commentary earlier, there's a minimum of a six-month lag between the time our dealers showcase our new products and features, and this really begins to take root in the marketplace as of the boat show season. We've launched a number of incredible innovations over the past two years, but more importantly, we have fully integrated those offerings into one comprehensive system that provides unparalleled performance and convenience to our customers. A fully integrated, open-ended system that can be upgraded and expended over time is something our industry has never seen before and we are blazing the trail here.

We think that this is a very powerful differentiator over our competitors. We continue to state that we believe we will gain incremental market share over time.

In the last 18 months, we have delivered three new Axis models to market and built the Axis brand into a full brand with five models. During the past 18 months, Axis has also moved from the number six market share position to the number four market share position. There is no doubt in our mind that this was the right strategic objective for Malibu. We know this has been a huge addition to our long-term business and has provided another competitive advantage for Malibu as a whole.

Our dealers continue to tell us that the ability to offer both Malibu and Axis is a powerful combination which allows them to sell to just about any customer in the marketplace. Now that we have Axis as a full brand, we will be focusing future new model development more to the Malibu brand side of our Company.

It's still a little early to provide details on our new product introductions for next year but I can tell you that we are very excited about the offerings. We are currently targeting another four newer completely remodeled boats in fiscal 2016.

Three of those four models will be Malibu. The first two Malibu models are slated to begin production in July and August for shipments to dealers and we look forward to providing you with more details on our next earnings call.

We are also introducing new features again this year, some which have never been seen before in the marine market.

In closing, let me say again how pleased we were with our third-quarter results. We feel like that we are very well-positioned to close out this year and head into the new 2016 model year on a strong note. The continued integration and development of Australia, the launch of our four new or remodeled boats, a heavier mix of Malibu products next year, and further development and penetration of our fully integrated platforms should all bode well for our business, despite the international environment.

I now turn the call over to Wayne to take you through the quarterly results in more detail.

Thanks, Jack. Net sales in the third quarter increased 29% to $64.8 million. Unit volume increased 24% to 980 units and included 80 units from the Australia acquisition. Both Malibu and Axis performed well in the quarter and the unit breakdown was 269 Axis boats and 711 Malibu Boats.

We told you last quarter that we expected Malibu would represent over 70% of the unit mix in the third quarter and that's exactly what we saw.

Overall net sales per unit increased 3.5% to $66,084 and was primarily driven by increased prices and higher mix of Malibu units. I?m sorry, higher average selling price than our Axis brand. Excluding the Australian units and the incremental sales resulting from our recent acquisition, net sales per unit in the US increased 6.7% and was in line with our plan.

Gross profit in the quarter increased 33.5% to $17.9 million and gross margin increased approximately 100 basis points to 27.6%. The increase was driven by a higher mix of Malibu sales and lower labor per unit in the quarter. Partially offsetting the increase was $300,000 of integration-related expenses in gross profit. When adjusting for the $300,000 of acquisition-related expenses in the quarter, gross margin would've been 28.1% for the three-month period.

Selling and marketing expense increased 9.6% to $1.7 million in the third quarter. As a percentage of sales, selling and marketing decreased 40 basis points to 2.6%.

General and administrative expenses, excluding amortization, decreased 41% to $6.1 million. The decrease was primarily driven by $4.5 million of management fees paid in the third quarter of last year. Excluding nonoperating expenses that we add back to adjusted EBITDA from both periods, G&A expenses increased to $6.1 million from $5.1 million last year. The increase was primarily driven by the addition of Australia and incremental costs related to being a public company.

Adjusted EBITDA for the quarter increased 32% to $13.3 million and adjusted EBITDA margin increased 50 basis points to 20.5%. This was slightly below our internal forecast due to slightly higher-than-expected costs associated with being a public company. However, having anniversaried the IPO in the quarter, we believe we have moved substantially up that learning curve with less room for variance going forward.

Third-quarter non-GAAP adjusted fully distributed net income totaled $7.7 million or $0.34 per share. This is calculated using a normalized C Corp tax rate of 35.5% and a fully distributed diluted share count of approximately 22.7 million shares. For a reconciliation of adjusted EBITDA and adjusted fully distributed net income to GAAP metrics, please see the tables in our earnings release.

Our third-quarter results were consistent with our expectations and our outlook for the rest of the year is unchanged. While we do not provide detailed earnings guidance, our fiscal 2015 outlook is based on the following factors. An increase in our US segment unit volume in the mid- to high single-digit plus over 180 units for Australia. Excluding Australia, we expect unit volume growth to be essentially flat in Q4, given the growth we have seen through fiscal Q3. From a mix perspective, Axis is still expected to represent a little more than 30% of total unit volume for the full year.

For the nine months of the fiscal year, our US net sales per unit is up 5.4%. We expect net sales per unit in the US will be up in the mid-single digits.

For the year, net sales per unit on a consolidated basis with Australia is expected to increase at a low single digit rate. We have seen and continue to expect to see a modest improvement in gross margin domestically, driven by productivity gains in the quarters with the highest year-over-year volume growth. Consolidated gross margin for Q4 will be challenged by Australia where we will see the impact of currency changes on input costs and where we won't feel the impact of our price increases until the last month of the quarter.

Legal expenses relating to PCMW and Nautique litigation, net of settlement income, are expected to be about $3 million. Adjusted EBITDA margin, including the impact of Australia, is expected to be nearly flat despite the fact that this will be our first year with a complete 12 months of public company expenses. The consolidation of the Australia license business is expected to add approximately over 180 units, $8 million in net sales, and over $1 million to adjusted EBITDA and $0.01 or $0.02 to fully distribute[d] net income per share.

Finally, regarding capital expenditures, we are still budgeting around $6 million which includes a little less than $1 million for the trailer business which we recently brought in house.

In April, we closed our amended and restated credit facility with a group of banks led by SunTrust. We drew $80 million on our term loan at closing and left our new $25 million revolver unfunded and available for use. Interest rates on our credit facility range from LIBOR plus 200 basis points to 275 basis points. We plan to fix a portion of that floating rate interest exposure in the near future.

On April 15, we closed on the purchase of 3.3 million shares of Class A common stock pursuant to our reverse Dutch auction tender. 2.6 million of those shares were tendered from holders that exchanged LLC units in Malibu Boats Holdings, LLC at the time of the tender offer. This has reduced the amount of noncontrolling interest attributable in Malibu Boats Holdings, LLC to other unitholders to 22.8% as of April 15.

In closing, let me reiterate that we were pleased by the third-quarter results and underlying trends in the business. The results were in line with our expectations and our outlook for fiscal 2015 is largely unchanged.

With that, we would like to open the call for questions. Operator?

(Operator Instructions) Tim Conder, Wells Fargo Securities.

Jack, if you could just clarify all your commentary on the new units, is that existing sellthrough or is that sell-in, number one? And then, number two, clearly the Upper Midwest is an important region for you and a year ago, you had a lot of snow, a lot of rain; and then this year, it's almost been the opposite, really dry for them. Any color how that -- here in the early season, up through this week or so has been helping or if that much and if you can quantify it in any way?

Yes, to your first question, Tim -- by the way, good morning. To your first question, you're asking about wholesale versus retail?

Yes. In your commentary regarding how you were on the new models, and how those were trending versus your plan, I think again, most of them, you said they were either on plan or in one case, in year two, when the one model was tracking above plan. Yes, is that wholesale or retail sellthrough?

That's going to be wholesale. Because retail, as we know, comes much after and we are measuring ourselves on that wholesale and then balancing that against the inventory levels. The way that I would comment on that is my commentary was around the wholesale numbers, what we have sold to our dealers. At the same time, I will tell you that I am more comfortable with inventory levels this year than I probably was last year at this time. We are in very good shape in that regard, and a lot of the GE data that we're seeing is also showing that. And Wayne can discuss that.

To your second question on the Upper Midwest, I think that we've actually seen a benefit from that dryer weather. It has not been quite as cold as it was last year. So I can't quantify it yet in terms of retail sales, but we are seeing an uplift and the deliveries of the boats are going out sooner. Where we have been hampered somewhat is on the East Coast and there were a couple of snowstorms that have occurred that have slowed that market down a little bit.

Okay. And any color on the very early uptake or reception to the new models at the retail level?

They've been extremely strong and one of the things we are hearing from our dealers and from our salespeople is that the acceptance of those models, the acceptance of the features have been very strong, and they seem to be closing a lot of sales in that March, April timeframe. If I rated it, I would say that I would put that 23 LSV, 22 VLX, A22 and then P23 kind of in that order, but they are all performing at or above our expectation.

Okay. And then last question, gentlemen, in general, we haven't heard too much fallout from the oil patch except with the exception of Polaris did allude to it on their conference call in Texas, in particular, and then Western Canada, but they did bring up Texas. Any color you can give us on that from what you're seeing early on at the retail level?

Yes. I've been mildly surprised. I think that, as we discussed on our last call, it is both a positive and a negative -- a positive on the retail side for the consumer, perhaps a negative on the manufacturing side. But the mild surprise comes from I have really not seen an impact in Texas other than West Texas, and that's a very small market for us. And then, the other area that you would logically look at would be Canada and I've not heard a lot of noise about Canada at all. Really, the driver in Canada is concentrated around the currency.

Okay, okay. Thank you, gentlemen.

Joe Hovorka, Raymond James.

A couple of quick questions. First, there's $1.6 million of other income. Can you explain what that is there?

Yes, there's a couple of things that are flowing into that line item, but the largest portion of that is our settlement of litigation.

The Nautique settlement?

Yes.

And you are including that in EBITDA?

No, that gets -- the portion of that related to settlement is flowing through the professional fees and litigation settlement addback of both EBITDA and adjusted fully distributed net income.

Okay, maybe I misread it. It looked like it was all being added back but that's incorrect?

No, it's -- that addback -- so the addback of the litigation expense is reduced by the recognition of that income.

Okay. So how much of that is added to the EBITDA then? Maybe I'll ask it that way.

I think we are flowing that through net and we aren't going to be talking specifically about what's disclosed or what is specifically being recognized on that because I think there's some competitive reasons that we want to avoid it.

Okay. And then, based on the unit sales that you gave for Australia and the revenue numbers, I was surprised to see that the average selling price in Australia is a couple hundred dollars higher than the US. A, am I doing that right? And B, what is accounting for that? I thought Australia didn't sell some of the larger boats or at least in volumes that they do in the US?

So in terms -- partially in the quarter, that would have been impacted by mix specifically there. We just had the price increase for them on a year-over-year basis. So -- and in general, the prices there are going to be a little bit higher than here in the US just given the cost of production, etc.

So, in terms of incremental dollars, to us, the reason why it's a drag on the P&L is obviously because we are recognizing revenue previously when we sold them parts. So that's why it's a drag on the overall ASP.

Okay. It looks like it's the other way actually. It looks like it's pulling up the ASP.

No, it's not, because we recognized a quarter of that -- over a quarter of that revenue previously through selling them parts. So, in terms of the true additive nature of what that revenue looks like when we consolidate, you are only actually adding to our P&L. You're adding a true unit of volume, but you are reducing -- the actual revenue increase is only about $40,000 per unit.

Okay, great. That's all I had for now. Thanks.

Mike Swartz, SunTrust.

Just wanted to talk about gross margin as the year kind of -- giving us a little caution for the fourth quarter, just given some of the moving parts. But can you talk about some of the puts and takes to gross margin as we think about going forward? I know that we've got kind of a product mix benefit with Malibu, and maybe talk about in terms of production efficiencies, trailer manufacturing, some of the uptake rates on the new accessories, just how we think about gross margin over the next maybe three or four quarters.

I think largely, Mike, it's going to be the same story as what we've lived with historically. We believe that we very well are able to position the features and innovations and the uptake on those have demonstrated that they are much higher. So as we break down the gross margin, the first one that we will point to is that mix between Malibu and Axis.

Over time, we suspect that it's going to moderate this year. It's been a little bit heavier on the Axis side because of the new models. We expect it will moderate between that 68% and 70% on the Malibu side. That's number one.

Number two, we -- our vertical integration allows us to generate more margins than we believe that our competitors do. We are controlling that design, we are controlling the manufacturer, we are controlling the quality and we are eliminating that middleman, which is additional margin. Many of our options and features, we make ourselves.

Then as we talk about the features and the options, the way that we price those, we want people who -- if they want an option or a feature, they're going to buy that. And so we make that available to them. We don't make it a standard part of the boat. So as a result, we are able to command a little bit higher margin on those items.

As it relates to the trailers going forward, once we get into Q1 and Q2, we think there will be some slight uplift there, but we also want to be very, very careful about being competitive, and Wayne, you might want to talk a little bit more about trailers.

Yes, so in terms of general cadence over the next three, four quarters, next quarter we're talking domestically in the business on a year-over-year basis just given the way our manufacturing -- we've talked a lot historically about how we plan our year. And that's really driven by what that manufacturing cadence unit is going to look like for the volume number we think we need to hit.

And so, as you all have seen, Q2 and Q3 in the domestic business, we are very high growth in the quarters. And so, it makes sense for us in Q4 just the way we are running our production facility for it to be more flat. That naturally is more of a headwind from a margin gain perspective.

In terms of where we've seen benefit, Ritchie has done a great job on the labor front. We've seen improved warranty expense, and those are the two primary areas of benefit.

Heading into next quarter, as part of my comments, I talked a bit about the challenges with Australia where we had orders on the books before we could push through an incremental price increase. Some of those US dollar-denominated costs will not as much as our competitors -- we still had some US dollar-denominated cost there. They are going to be a little bit of headwind in our price increase there, given the exchange rate move will come into effect and stick in the beginning of June. And frankly, it has been well-received there.

So, I think overall, in Q4 -- the challenges there are really the year-over-year growth rate and a little bit of Australia.

Heading into the next year, we will talk more about it when we talk about what our expectations for that year are and it will a little bit depend on what that cadence of manufacturing is. But what I would say heading into next year is that you have some nice tailwinds. You're going to have some incremental royalty income. That will provide a little bit of a lift to gross margin and a little bit of a lift from the trailer business. And I think we've talked about what that ROI looks like and what that incremental profitability on a per boat basis could be.

And so what -- you can calculate what that incremental margin impact is. All that combined, the materials environment has improved and that provides us a lot of input for conversations as we head into next year around content increases, pricing increases, and so we will be balancing the competitive environment versus some of those attractive factors for potential margin.

Okay, thanks a lot for the color. And then just kind of sticking on margins and cost, did you -- maybe I missed it, but I think you said you had about a week of down time in the March quarter due to some ice and some weather. Were there any costs associated with that that you weren't able to kind of recapture? And then, as we think about trailer manufacturing starting up this quarter, should we be modeling in any incremental costs related to that as well?

On the former question, we did lose about a week of production due to the ice and the snow. We made that up. We made that up through working two Saturdays and also adding overtime, so there were some costs involved which I think point to the fact that we were able to manage other areas and come out with a very good quarter. As it relates to the trailer for the Q4, have we planned that?

Yes. On the trailer business, you will see some start-up costs there. Some of it, we're going to be able to capitalize some of it, the fact of the matter is it will get capitalized into inventory and you'll see a little bit of drag from negative variances. You just have start up and relative to what we think our production throughput will be and what our efficiencies will be once it's fully operational. So there will be a little bit of drag there. But I don't think it's going to absolutely drag it all the way down.

Okay, wonderful, thanks a lot.

Gerrick Johnson, BMO Capital Markets.

Good morning, everybody. Maybe you could just recap what retail sales were in the quarter and if you could break that down by geography, level of channel inventory and how that has changed year over year, and then the FX impact to both the top and bottom lines? Thanks.

Yes, so on the retail level, we estimate that retail is up in the mid- to high single digits and registration data from SSI right now is coming in for the industry in the quarter at the mid-single digits, but we are getting a couple of different numbers from both our internal warranty registration data as well as liquidation data from our largest floor financing provider. That information from GE has shown strong growth, so our estimate is that it's up likely mid- to high single digits.

What that means, though, is I can't break that down for you by geography. It is such a small quarter and those numbers in SSI aren't necessarily correlating with what we're seeing both in our internal warranty registration data and the floor financing data. So I can't break that specifically down.

What we would note is that that April registration data, not out yet, but the liquidation data from GE for April was up substantially year over year. And so we feel good about what's going on at retail, albeit a retail environment that's up mid- to high single digits is a little bit lower than the past three years where you are in the double digits.

Gerrick, what I saw and I will note onto what Wayne has said is that even though he had mentioned the market as a whole being up mid- to high single digits, what we saw internally through our year-end sales event and our boat show promotion, our experience is higher than what the market was. So we feel very good about that and that that's going to translate into the current quarter.

And the reason for that translation in the current quarter is we are one of the only ones or so that have an incentive program -- free flooring program through April 30, so there's little incentive for our dealers to take delivery of boats and deliver them prior to that time. So we see a very, very heavy delivery period during that April timeframe.

To your question on channel inventory, channel inventory this year compared to last year for us is up a little bit. The turns are still very good. About where they were last year.

The reason that that channel inventory is going to be up a little is, if you think about the new models, especially on that Axis side, our dealers are taking those two new models -- in over 18 months, three new models that they never have before, so I'm perfectly happy with where our inventory levels are as a whole. Every single manufacturer is going to have spots that they're going to have to work with the dealer and that's going to go on each year. But as -- on a whole, I am more pleased this year probably than last year.

The other note on channel inventory there is around the cadence of manufacturing for the year. We took the way we wanted to schedule our production to get the most efficiencies that puts more channel inventory in there, but the fact that we're going to be more flattish at wholesale during Q4 will make it de-inventory faster. But we are monitoring that. That's why we have those April statistics at our fingertips and it's doing exactly what we expect it to do.

So on FX, there's two components to that right. FX in terms of demand, Jack talked a bit about, so not translation, but just what is the impact of selling our product in US dollars to foreign markets and that has been an immaterial headwind. And so I think -- and we feel that the dollar rallied last week or a little bit -- makes you feel a little bit better about the possibilities there.

But from a translation perspective, on FX, we don't have translation in the prior period. So there's not a lot of to explain between the translation between year-over-year periods right now. What I would say is that, relative to what we originally expected, that currency conversion has been a little bit more of a headwind for us, but we've been pleasantly surprised by what we've found in the Australian business and we made a slight nuance change to the wording there around Australia saying instead of being 180 units, saying it's over 180 units now because of some of those things that we've seen as we've integrated the business.

Okay. On the translation part, though, on the topline, is there a number -- say like $2 million of impact to the topline or anything like that that could at least help us out on the translation part?

Well, relative to what? So there is not a relative to last year comparison, so is it relative to our expectation? Or --

Well, you were selling internationally last year as well, right?

Yes, but that's not a translation issue. Last year, every single one of our sales was in US dollars. So this year, every single one of the legacy business of Malibu Holdings, LLC is still in US dollars. The FX impact there is a demand impact because we are selling in US dollars. The FX impact of translation for the Australian business doesn't have a comparable in the prior year.

Okay, okay, that makes sense. Thank you.

Thank you. There are no further questions in queue at this time. I will turn the call back over to management for closing remarks.

We thank you very much for attending. We had a very good quarter and, as always, we appreciate your support and, again, I congratulate the Malibu team and our dealers. Thank you very much.

Thank you. Ladies and gentlemen, this concludes today's conference. You may now disconnect. Good day.