Malibu Boats Inc (MBUU) 2025 Q1 法說會逐字稿

I would like to comment on the hardships caused by the two hurricanes goes out to all of those effectively at Malibu.

Safety of our people, customers and dealers and communities is always paramount.

Our Fort Pierce facilities experienced some delays, but we have if there's to minimize any disruptions to production and district fusion.

However, some of our partners have asked to delay shipments for a short amount of time as they work through operational challenges.

We have incorporated that into our plan and expect no impact on our outlook for the fiscal year.

Turning to the first fiscal quarter.

As expected, we navigated a challenging market environment driven by continued macro economic factors and slower retail demand.

Net sales decreased by approximately 33% year over year as we maintained our focus on reducing channel inventories.

While we are encouraged by the recent moves, we will need a sustained cycle of rate cuts, bring back payment buyers into the market.

Retail demand remains Changyou will likely remain challenging until payments.

As stated, our key focus has been undisciplined control over dealer inventories.

We ended Q1 showed sequential improvements in inventory aligned compare alignment compared to Q4, positioning us well for the coming quarters.

In addition, our margin performance in the first quarter compared to prior quarter, which aligned with our expectations as promotional support return to more normalized levels.

This tailwind, coupled with our resilient business model, highlighted by our variable cost structure, enables us to adapt quickly to changing market conditions and maintain financial stability.

Adding to the stability of our business, we are bringing the Tommy's matters to closure.

The trustee has liquidated nearly all of their remaining new Malibu and Axis inventory, as mentioned in prior discussions, are newly authorized dealers are up and running selling boats and providing great customers.

And following the legal settlement announced earlier this month, which covers impacted locations, we are now turning our full attention to supporting our dealers and what ultimately improving our market share in these important markets where we will showcase our newest models, including the recently launched all new Malibu m. to 30 full par 31, the all new end to 30 exemplifies our commitment to luxury and advanced functionality model features the state-of-the-art Malibu command center with the new Malibu operating system, which allows for seamless way of control and process water sport options.

Notable design elements include the easiest dashboard Locker and Max relax, OnDeck water sport enthusiasts.

We are also thrilled to introduce the all new cobalt, our 31st, the latest addition to our cobalt lineup.

This luxury day vote is designed to embody the exceptional quality and innovative features that have become the hallmark of the cobalt Brent forward to showcasing our lineup at the Fort Lauderdale International Boat Show.

Early feedback from dealers has been very positive, reinforcing our confidence in our industry leading innovation, further solidifying our leadership in printers and customer experience separately as a testament eating innovation, we are pleased to announce that our 2020 for Malibu wake center, Steve, this honor.

This award reflects our consistent delivery of performance and quality that our customers have come to expect a reinforcing our leadership position.

In the towboats segment, we can continue to see positive across our brands.

On a trailing 12-month basis through June, total continues to gain share side buyer Stern Drive segment gaining 200 basis points.

Within Cobalt's 22 to 24 foot model segment, which introduced our new road County, Tennessee facility, we have gained over 250 basis points of share.

And lastly, Pathfinder, which is represented by our bare boat segment, has gained 400 basis points of share.

We continue to make great strides in our vertical integration initiatives recently completed the move of Malibu electronics and are now fully producing wiring harnesses out of our new Roan County facility.

This fully integrated and footprint enhances our operational efficiency and positions us for the growth as market conditions recover.

As we discussed two months ago, we have taken the necessary actions to reset the business.

Therefore, we are maintaining our full year guidance.

Dealer inventory with historical averages, allowing us to better align wholesale shipments with retail demand.

Our capacity expansion projects are also complete, giving us the ability to increase shipments to the retail market returned to growth sooner than anticipated.

We expect to see sequential improvement throughout the year in the top and bottom lines as wholesale shipments pickup.

As I continue to engage more deeply with the business, I am pleased to announce that we are planning to host an Investor Day in calendar year 2025.

At the event, we will discuss our long-term strategy and outline our approach to sustain growth, operational excellence, product innovation.

I look forward to sharing more details soon and excited about the future of our business.

I'll now turn the call over to Bruce for further remarks on the quarter.

Thanks, Steve.

Our results in the first quarter were slightly above our expectations.

Net sales decreased 32.9% to $171.6 million, and unit volume decreased 39.7% to 1,024 units.

The decrease in net sales was driven primarily by decreased unit volumes across all segments, early from decreased wholesale shipments, partially offset by favorable model mix and modest inflation driven year-over-year price increases.

The Malibu and Axis brands represented approximately 37.5% of unit sales of saltwater fishing represented 29.3%, and cobalt made up the remaining 33.2%.

Consolidated net sales per unit increased 11.2% to $167,559 per unit, primarily driven by favorable model mix and modest inflation driven year over year prior.

The increase in gross profit decreased 50.3% to $28.2 million, and gross margin was 16.4%.

This compares to a gross margin of 22.2% in the prior year period.

The decrease in gross margin was driven primarily by by lower net sales associated with a nearly 40% reduction in unit volume.

Cost of sales decreased 28% in a period where revenues declined 33%, demonstrating our operational excellence and highly variable cost structure in line with our historical range of 80% to 90% sequentially, gross margins improved by 850 basis points, primarily due to a return to more normalized levels of promotional support as a selling and marketing expense decreased 15.4% in the first quarter.

The decrease was driven primarily by lower event costs as a percentage of selling and marketing expense increased versus the prior year by 60 basis points to 2.8%.

General and administrative expenses increased 36% or 6.5 million.

The decrease was driven timing, increased compensation related expenses and higher legal fees, inclusive of the 3.5 million legal settlement.

Steve, for the time you sustain previously mentioned by Steve.

As a percentage of sales, G&A expenses increased 780 basis points versus the prior year to 1.9%.

Gaap net income for the quarter decreased 100.8% versus prior year to a net loss of 5.1 million.

Adjusted EBITDA for the quarter decreased 74.6% to 9.9 million, and adjusted EBITDA margin decreased to 5.8% from 15.2%.

Non-gaap adjusted fully distributed net income per share decreased 92.9% to $0.08 per share.

This is calculated using a normalized C corp rate of 24.5% and a fully distributed weighted average share count of approximately 20.6 million shares.

Ours.

For a reconciliation of GAAP metric, adjusted EBITDA and adjusted fully distributed net income per share.

Please see the tables in our earnings release.

Turning our attention to capital, we continued to execute on our capital allocation priorities by repurchasing 10 million of stock in the quarter.

Capital expenditures in the quarter were 8.6 million, putting us on track to our expected 30 to 35 million in capital expenditure levels for the fiscal year.

Our strong balance sheet and ample liquidity gives us the ability to invest in our core business and pursue value-creating acquisition.

Turning our attention to the full year, our view of the market has not changed since we last updated you during the Q4 earnings call.

Enlist, the market continues to be challenging.

The long anticipated interest rate cuts have begun, which is a positive, but time will tell how many more cuts are required for payment buyers to return to the market.

As discussed previously, we expect there to continued decline in retail demand for the remainder of the fiscal year, albeit at a rate reduced rate of the decline from last year, we ought to expect our dealers to maintain a heightened focus on reducing their inventory below historical levels.

We remain confident in our ability to execute our long-term strategy despite the near-term uncertainties.

Therefore, we are keeping our fiscal year 2020 outlook unchanged for the full fiscal year.

We continue to expect a year over year net sales increase of low single digit percentage points.

For Q2, we expect net sales to be up sequentially and down high single digit percentage points on a year-over-year basis.

Given the challenging prior-year comparison, this is our last challenging comparison of the year.

We expect our sales to return to growth in the back half of the year.

We continue to expect consolidated adjusted EBITDA margin for the full fiscal year to range between 10% to 12%.

For Q2, we expect adjusted EBITDA margins of mid single digit as we maintain auction levels and a focus on dealer inventories.

Our performance in the first quarter came in as expected, underscoring our on reducing channel inventories and normalizing promotional spending.

We expect this progress to continue and provide tailwinds for the remainder of the year, particularly in the back half where comparisons ease.

We are encouraged to see an interest rate cuts.

And given the strength of the innovation we're bringing to market, we are eagerly anticipating the boat show season.

We remain optimistic about our competitive positioning in the industry and are prepared to support a resurgence in demand when the market recovers.

Until then our rebuilt resilient business model, flexible cost structure and vertical integration strategies allow us to generate strong cash flow low and execute on our capital allocation priorities.

We are confident that our strategies, combined with our strong brand portfolio and dedicated team, will drive long-term growth and value creation for shareholders.

With that, I'd like to open up the call for questions.

Thank you.

As a reminder to ask a question, you will need to press star one on your touch tone telephone.

If your question has been answered or you wish to withdraw your question, please stand by while we compile the Q&A roster.

First question from Eric Wold with B. Riley Securities.

Please go ahead.

Thank you.

Good morning, everyone.

Couple of questions from.

I guess just first of all on, can you maybe dig a little bit more into the strength of AST.s in the quarter and how sustainable you think these levels can be going forward?

I guess your orders from the dealers now that inventories have normalized, are you seeing a kind of upward or downward shift in timing of options and kind of what not baked into the models are ordering?

And then as far as payment and buyers return to the market, how would you expect that to skew ASP.s, digital and have a follow-up?

Yes.

Well, a generic, what I would say is it's really driven a lot by the mix and just where the market is right now.

So it's of the premium cash buyers that are driving the market.

And we have a premium offerings that we're bringing to market right now, particularly this year and Malibu, that the new models that we're introducing are all in the Malibu line, and they're they're very premium models.

And so within the within the quarter, that's really, you know, has been a big driver of our SP.s.

Was that skewing towards towards the mental models?

Tom, Kia and saltwater as well continues to be driven by the by the larger up pursuits.

And we've invested in the Covia product lines as well, which are driving the mix there as well.

So on a pretty strong mix in Q. one guy.

Thank you.

And then I know at this stage of the year, the boat show season right now, as you mentioned that your margins were benefited by your promotional activity kind of returning to more normalized levels, or would you expect to see at the boat shows, are you seeing from competitors in your markets right now in terms of their promotional activity from?

And how do you think that kind of plays out the budget season?

Is there still a little bit too heavy in inventory in their markets?

Hey, Eric.

We expect it to be a competitive.

I mean, we we saw sequentially our promotional spending improved as expected because we invested so heavily in Q4 to get our inventories are in a good spot, Tom, they were lower Q1, but they were not lower on a year-over-year basis.

We continue to expect it to be additive retail market.

Understood.

Thank you.

Thinking.

Next question is from Craig Kennison with Baird.

Please go ahead.

Hey, good morning, and thank you for taking my questions.

Have Steve, it's been about 100 days since you've been Chair.

And I'm just curious what observations you've made about in opportunities or challenges now that you've had a chance to operations really the core of the business?

I think Theodore, if you look at the history of Malibu's, been particularly strong on aspect of our business, being able to jump into it deeper with Ritchie and learning a lot of payments and solidifies what I thought going in in watches, that pillar of strength of our business.

So that was good to see the market dynamics theater or challenge of what the current customers and how we look at payment buyers and so forth as we as we alluded to earlier in the call.

So we'll continue to monitor the the industry, monitor the consumer will look to how do we sharpen our game, you know, on how to drive demand to our stores and help you work with our dealers to maximize retail to the fullest potential.

While we're in this kind of wondering this down cycle a little bit.

And when it returns ITO and the number I think we're in, we're positioned well to do well so far.

So good companies, good, really good position.

I've got more confidence in where we're going to have strengthened.

Our will continue to work our commercial cyber business due to a to meet demand.

And two.

Thanks.

And I'm wondering, you know, and you came from the powersports world, just the nature of that distribution channel that seemed to be there seem to be an incentive to for OEM.s to take up as much showroom space is possible, otherwise they would lose share.

Is that dynamic similar in both?

Or do you feel like you have more partnership arrangements with your with your boat dealers such that if you've got a key brand in a category, you don't have to act irrationally with respect to how you plan inventory for that dealer?

Yes, I think that there is the difference between marine and power sports.

Clearly the size of the unit itself, right, create for a share of floor.

But the other relationships of how present the brands, some of the some of the marine segments of the dealers are only carrying one brand in that particular segment.

So for so the data mix or different partnership is that the core in both industries right at partnering with the dealers is that the core.

And that's what we plan on doing and or heading to our Malibu dealer by dealer show here in a couple of days.

And with the dealer council and continue to meet dealers across the business.

So eventually pursue dealer meeting sent to the cobalt dealer meeting and continue to really engage dealers and learn and understand what challenges and what opportunities there are in their businesses and how we can be a better OEM.

So it's been educational.

It's been different in power sports rights.

As noted, we'll continue to work to make sure in the marine space.

We're AAOEM. that dealers want to be part of our business and be a partner with as we grow our business together.

The next question comes from Joe Altobello with Raymond James.

Please go ahead.

Thanks.

Hey, guys.

Good morning.

I guess first question for you, Steve, in your prepared remarks, you mentioned the quarter was a little better than you expected, kind of at a high level.

What drove that?

It seemed like sales were better margins better.

I assume that's related, but what was the positive surprise in the quarter?

The positive, the head of the new product's been doing really well.

Innovation continues to pay off in terms of driving share, satisfying customers.

Those those are the both both Malibu.

What we've seen in our pursuit had been helping us in the first quarter, and it's again been the core of this business.

And so that's kind of really where it mainly has been.

Got it.

And just to follow-up on that, I was surprised to hear that the promotional environment sounds like it's even a little bit on how much of that is seasonal.

I think it is a little bit seasonal.

It's also, you know, us having our inventories under control smartly, what the dealers to get those in the right physicians.

And as we're entering the boat show season, as we said, we'll monitor where promotional.

We're encouraged.

Fort Lauderdale.

We're optimistic about the the boat show, but time will tell you over the weekend.

So right now, I think it's a little seasonal.

I think at some other competitors work it through reduction of their inventories, but we're in pretty good shape.

And I think we're a little will continue to monitor what's necessary to be competitive.

Okay, super.

Thank you.

Supply.

The next question from Noel Atkinson with KeyBanc Capital Markets.

Please go ahead.

Hi, thanks for taking my question.

Maybe just one on the kind of M&A front.

I guess the thought process kind of remain the same or changed around potentially kind of pursuing content the good numbers, but go ahead, Steve.

I thought process hasn't changed.

It remains an option for us.

The what we've said previously is that we're looking for value creating M&A opportunities.

If we get the right opportunity, we'll take a look at if it makes sense for our business, we may move forward, but pontoons continue to be in.

Are you not an option for us if it makes sense.

Thanks.

And not put too fine.

A point on it.

Have you given on kind of like unit in terms of industry retail units?

And then I guess I guess, relatedly, like maybe within your plan, how you're thinking about rate cuts and magnitudes?

Thanks.

Yes, we don't give specific unit guidance and but we have shared that we expect the retail markets that we participate in to be down mid single digit range.

We have shared that, and that's what we continue to use.

Thanks.

And then just I'm just not big cuts in the plan on how you're kind of thinking about.

Yes.

What I'd say we don't we don't speculate on the interest rate cuts.

We don't build the forecast on interest rate cuts from.

So we just deal with with the cards that we have visible in our hands, and that's factoring into that industry down in the mid single digit percentage range.

We would love to be pleasantly surprised the future.

As you know, there is enough cuts to kind of re rekindle that at the activity of the payment buyers.

And and so that's given how we schedule our factories and how we have the ability to ramp and respond with the cash capacity that we have in place.

We're confident we can we can support an upturn in the environment if that materializes.

Thank you.

Thank you.

The next question comes from Chris and Brian with DA Davidson.

Please go ahead.

I showed it seems like retail specifically within the Seaway category, it looks pretty good relative to the rest of the categories.

I guess kind of like what do you attribute this to have any indication at this continued through October?

Yes.

What I would say is we There always seems to be a little bit of a lag of when we see things covenant, internal warranty registration and when some of the flow through SS., I mean side, I think what you're seeing some of our Q4 promotion activities showing up in the numbers as well as the Tommy's liquidation event really kicked into high gear in September timeframe.

So those boats are starting to flow through the SSI on numbers as well.

Got it.

And then what that hurricane impacts there, any early signs that there will be sizable insurance claims that can help with dealer destocking for your products specifically?

That's that's counting on insurance companies to pay quickly enough to get people to to have the cash in their pocket to find new boat is not something I want to base my my my guidance on that we would we would we hear anecdotally that there will likely be some some activity that takes place, but I wouldn't really want to speculate on the exact timing of that of that activity.

Understood.

Thank you.

Findings from Greg Badishkanian.

Hey, guys, it's Fred Wightman on for Greg.

I just I wanted to come back to the hurricane impact.

I think you made a comment that some of the shipments the dealers had asked for some delays or deferrals in shipments tied to the storms.

I'm wondering if that in any way showed up in the reported 1Q results, if that's more of a shift to the back half of the year versus how you sort of thought the year, what would shake out initially?

And if you could just help us with what, if any timing shift might be bad.

Yes, Red Hat.

Yes, Fred, I would just say is it's minimal, minimal shift from what we might have shifting in Q what into the back half.

So but it's a modest impact.

Okay.

That's helpful.

In the past really last quarter, you had talked about some market share impact from those impacted Tommy's mark.

And wondering if you're still seeing those former Tommy's markets, underperformer lag from a share perspective for fits kind of closer to what you're seeing broadly?

Yes.

I mean, the Tommy's market in are starting now to see that liquidation activity go through those markets.

And up until that time, it's been a pretty big drag on us.

I would expect that it's going to be for the next couple of months as those boats flush through SSI.

And then as when we get back to a more normalized where where our new dealers are, the ones that are in and in share of market share battles in their respective markets, Morningstar, please go ahead.

Hi.

I wanted to ask about the line in your press release story, right, exit the rate that you're seeing signs from a macro perspective.

I think there are actually a little bit different in the commentary.

And now I'm curious if maybe that's something beyond just the start of interest rate?

No, I think it's of interest rate cuts.

I mean, we've been talking about them for a long time.

They've actually now started to happen.

I think that's that was the spirit behind that comment.

We're also like like we've been commenting on the we work hard to help our dealer partners get get their inventories back in line as fiscal year.

And so we feel like we're going into the boat show season where the interest rates now started to come down with a great model lineup and a pretty healthy, pretty healthy inventory going into going into the show.

So that's probably maybe that a little more color on that spirit of optimism comment.

Okay.

And then can you give us some color on input cost inflation?

And I'm thinking about Enagas that improve with higher the back half of the year.

Are there some break points that may be out you have any input cost inflation you guys are seeing and just sort of what you expect there?

Thanks.

Yes.

I mean, I guess what I would say, Jamie, is that when you know, very modest inflation, I mean, certainly has come down quite substantially from where it was a little bit.

I'm not really seen it come down though.

I mean, it's not turned into into deflation.

And I wouldn't I wouldn't expect that that will be where we'll see, you know, tailwinds on margin.

I would say, you know, we'll get as volumes increase.

That will be more of a volume leverage on our on a more fixed costs with within the cost of sales line, we'll see the benefits.

Great.

Thanks.

Thank you.

I am not showing any further questions at this time.

This concludes today's conference call.

Thank you for participating.

You may now disconnect.