MALIBU BOATS, INC. Q1 FY2025 earnings call

• Commented on hardships from hurricanes, noting Fort Pierce facilities had delays but measures in place to minimize disruptions. • First quarter results saw net sales decrease due to challenging market and reduced retail demand, but sequential improvement in inventory alignment. • Margin performance improved as promotional support normalized. • Bringing Tommy matters to closure, with trustee liquidating remaining inventory and newly authorized dealers operating. • Model year 2025: Excited for boat show season, showcasing new models like Malibu M230 and Cobalt R31. • 2024 Malibu Wakesetter 22 LSV recognized as Wake Surf and Wake Board Boat of the Year for fifth consecutive year. • Positive market share gains across brands: Cobalt Sterndrive segment gained 200 basis points, Cobalt 22-24-foot model segment gained over 250 basis points, and Pathfinder Bay Boat segment gained 400 basis points. • Completed move of Malibu Electronics, enhancing vertical integration and operational efficiency. • Planning to host Investor Day in 2025 to discuss long-term strategy.

In the first quarter, net sales decreased 32.9% to $171.6 million and unit volume decreased 39.7% to 1,024 units. The Malibu and Axis brands represented approximately 37.5% of unit sales, saltwater fishing 29.3%, and Cobalt 33.2%. Gross profit decreased 50.3% to $28.2 million, with a gross margin of 16.4% compared to 22.2% in the prior year period. Cost of sales decreased 28% despite a 33% revenue decline, demonstrating operational excellence. Sequentially, gross margins improved by 850 basis points due to normalized promotional support.

• Maintained full year guidance. • Expect sequential improvement in top and bottom lines throughout the year as wholesale shipments pick up. • For the full fiscal year, expect a year-over-year net sales increase of low single-digit percentage points. • Q2 net sales expected to be up sequentially but down high single-digit percentage points year-over-year. • Full year adjusted EBITDA margin expected to range between 10% to 12%. • Q2 adjusted EBITDA margins expected to be mid-single digit.

• Impact of hurricanes causing delays and some dealer shipments to be delayed. • Macroeconomic factors and slower retail demand posing challenges. • Competitive retail environment with potential heavy inventory issues for competitors. • Uncertainty around timing of insurance claims related to hurricanes affecting dealer destocking.

Q: Can you dig in more into the strength of ASPs in the quarter and sustainability, incoming orders, and impact of payment buyers returning?

A: ASPs driven by mix, premium cash buyers and premium offerings like new Malibu models. Premium models in Malibu and larger pursuits in saltwater driving mix.

Q: What to expect at boat shows regarding promotional activity and competition?

A: Expect competitive environment, promotional spending expected to be competitive with others working through inventory reduction.

Q: Observations since joining, opportunities/challenges?

A: Operations are strong pillar, market dynamics challenging with payment buyers, but positioned well for recovery.

Q: Similarities/differences in distribution channel with powersports?

A: Marine different from powersports, but partnership with dealers core. Engaging with dealers at shows.

Q: Strength of ASPs, seasonality of margins at boat shows?

A: ASPs driven by mix, seasonal promotional spending, competitive retail market.

Q: M&A thoughts on pontoons?

A: Thought process remains looking for value-creating M&A, pontoons remain an option if makes sense.

Q: Unit expectations and rate cuts in plan?

A: Don't give specific unit guidance, expect retail markets down mid-single digit, don't build forecast on interest rate cuts.

Q: Hurricane impact on shipments and Tommy’s markets share?

A: Minimal shift in shipments, Tommy’s markets starting to see liquidation tailwind as boats flush through SSI.