Malibu Boats (MBUU) 30 Jan 242024 Q2 Earnings call transcript

Good morning, everyone, and welcome to Malibu Boats conference call to discuss Second Quarter Fiscal Year 2024 results. At this time, Later, we will conduct a question-and-answer session. Instructions will follow at that time. Please be advised that reproduction of this call in whole or in part is not permitted without written authorization of Malibu Boats.

As a reminder, today's conference call is being recorded.

from Mr. today call the management are On Jack Executive Officer; Mr. Springer, Chief Chief Bruce Mr. Officer; and Beckman, Financial Anderson, Ritchie Officer. Operating Chief I'll now turn the call over to Mr. started. Beckman get to Please go ahead, sir.

good and everyone. you, Thank morning,

on will On business, financials. of provide Jack the XXXX commentary call, fiscal year and our discuss I second quarter will the

section today's also the issued want release considered this or then will forward-looking predictions, Relations to actual those today, I remind management's call. the copy be that press remarks on differ estimates covering and and forward-looking be everyone website. statements, call call second found on quarter Investor A that could other press for expectations, a might the We from fiscal questions. results XXXX certain may can in the that that information contain release materially including projected open company's company's of results was of

to I EBITDA GAAP income also the net financial our financial non-GAAP We'd margin, distributed adjusted now financial undue You new detailed in that factors. Reconciliations only and as future adjusted discussed note of to income our today, measures release. speak distributed filings adjusted should certain encourage over these EBITDA share. included update referring fully results to and you the SEC might adjusted fully not measures filings will of be in of more for we risk which on and measures these call undertakes for to place review turn that non-GAAP we forward-looking description earnings events. to SEC statements. such are Factors Jack as or obligation today's call, Springer. future per our them company a and reliance are the affect on with these no will net information any

norms. thank are driven remains challenging all historical uncertainty for channel reverting Thank suppressed and inventories navigated continued and you, by the retail call. quarter MBI to Bruce, joining economic you a as

fiscal to $XX.X second million. net Net to million XX% fell compared XX% the to while For XX% $XX.X million $XXX.X EBITDA year. prior decreased quarter, the adjusted decreased sales income to

margins Gross margin adjusted basis basis decreased XX%. to and XX% approximately points decreased EBITDA to by XXX approximately XXX points

slowest year. have a say a as confluence We continue our we norms of important like resulted return prolonged high we, our seasonal historical events and experience The a retail of off uncertainty of the inventories set to retail or versus things would the in soft higher in demand in to entered than channel environment quicker built due but tough to dealers have time imagined market anyone it least, coming elevated to and level economic pandemic is perspective norms. much It see. rate than keep is interest channel to to inventories

factor comparison the environment is While a the of channel inventory. tough is biggest compressed, year-over-year the retail normalization to contributing

on as have the last have Today, on brought focused low challenges channels recovered. and channels chain the demand pandemic. Over X fiscal level our shifted on years, setting these is by the rebuilding been supply historically we going the and dynamics fully unprecedented lingering during levels have inventory from

market We highly to is to dynamics are back natural match retail wholesale to on and production demand. focused recalibrating MBI

begins dealer to up committed brands levels growing set reducing retail quickly inventories and to more that channel once very recover again. very, are lower the to We MBI

that it. levels into recession. as we production season. with normal are will the and welcome inventory I A do the season shy selling of an head approach the aggressive reduce calendar not selling We We in by expect to monitor We order channel from opportunities a with as levels the kicks end to and the take downturn move downward the continue channel QX. presented

market possible profitability to it well operational and cost business, The and features, the structure invest new the and share be the in comes commitment. will the continue in capabilities execute example is Tennessee the expansion whether great retail to set Rome us capacity extremely County, variable up realization of investment in quickly or products integration world-class investment increases for vertical higher most Our and business. drive Cobalt margins The revenues of driving in a back. and this once

demand are The know than They when be and has were lens, available, being retail consumer added very sense being Demand even well more the of for revenue addition positioned build from Had until stronger it models quickly the of X customers we for all MBI From years waited inventory disappeared. our this we sacrificing able capability. to our we cruisers looking demand coming. to to as we entering as address best to year patient. buy retail and and for be the is Cobalt both exit our X fee capacity. with urgency earlier over working brands. Malibu This introduced downturn access we of is largely downturn outpaced the exit the entry-level XX-foot has and expansion of at an the we've couple and growth And month would over early program environment, which this years growth. introduce they new last production and past on latter the positions consistently of be downturn, to a bill. pricing. this been will more the since to a To we XXXX to

$XX,XXX, TXX first many be larger The under boat can Malibu in of with were time a a $XXX,XXX or is Malibu a Axis advertised the LXR The purchased is XX-foot XX-foot nationally years. R $XX,XXX. that offered at price

to and this draw will the these dealer. been go sidelines, purchase. shows boat oil goal or to have on pricing waiting the customer expect who've We dealerships is The boats exit for prices to our customers X

optimal cost-conscious With these also boats, we smaller enthusiasts. the for and less are targeting wake sports jet boats

brand. to Lake is X than great at a ] a [ or this a price a believe a for opportunity access consumer we Malibu X Finally, a get Tier less Tier

will into other the that dealers our by to sell driven features and desires they further more for we models, believe also but opportunities not lead consumers' boats, upsell these options. to only We will

have January seen We place already occurring far. have taken thus that this in shows boat the

that has remained Our future premium for the the who buyers segment, cash boat. are looking rich customer in premium larger, segment strong

several have offerings targeting we excited consumers new that are these about. We

on XX Pursuit BCXXX, new has and Our are both most Malibu, new the M XXX premium Cobalt [ through premium shows a the OS focusing boats and introduced line. new the brands boat the RXX-Servecruiser in over feet. ] XXX will both leverage Malibu

by the see offshore you are Pursuit. models their segments outboard for dual category console these important As saltwater and in the names, targeting

measuring 'XX. is and of rest year stick the boat always, important very fiscal the show As season for be will the

from consensus or shift selling retail be the rate that and at are is to general side bottom the we forecasted interest first While the for of will subside, trajectory. data as near are season the demand, the pressures [indiscernible]

informally. we've We further Axis sales saw been Sweden last the doing event, expected. of our better are brands. demonstrates and already performing Malibu which resiliency the our following for X.X than seeing of This year-end This strength premium positive signs decades had we

the the for [ reported of we records a January. calendar week also last was was That began position focus shows As to ] good for our the very year. on a and call, exceeding first year XXXX Pursuit, last that Cobalt show Lauderdale fantastic all-time setting Fort show

important show partner, was Singleton run a show, OneWater, and Malibu for by place. was weekend of good Atlanta guidepost. freshwater another for last Group Cobalt. which That first This show a Marine our and always spot of The was boat New weekend, their through an both and Minneapolis the Malibu well for saltwater year Last is is is January, show, ahead bright took it the was Axis. boat especially show. York

shows previous a higher compared and back the Cobalt show. years, the Looking preponderance end excellent MBI of course, After both sales are but X were was brands, the our for cruisers for all making years, had XX-foot to par were possible. XXXX. previous have results the of been at on been good show focus sales will summary, have very we have of was first X the X the they over for of not record-breaking weeks, a and been with decent. bad composition In the They brands also shows. shows, show Not that market. but over only Miami, show we unit this best not lot of saltwater are of the a for be the brands our to the and placing at Miami Cobalt All brands. for good, the an due on volume sales included very bellwether

are position for outlook to marine are the increases pricing Cost favorable creating macro the XXXX. industry. entry-level the we with drive we occur an we with marine. remain rate a look relieve environment deliver help to Despite optimistic faced lower a coupled conditions stabilizing, Overall, interest this, in will as fiscal more about year on predicted ahead, a results. is to environment, we which in optimal buyer Looking today, the recovery and are pressure

we times, in that [indiscernible] remain even XXXX, XXX% said of or in we As are above quarter EBITDA to have environment, confident the we many down the margins. fourth [ XX% revenue XX% improved ]

down XX% that our is cost relationship projecting due This remains highly are we While to intact. variable conditions. the more revenue flexes will market line structure with than in finish for the year,

ensuring our have past months, we the throughout spent addition, efficiencies organization. of In couple cost

margin that continue continue forecast, to to operation we revenue, will despite lower-than-anticipated our will we strong maintain deliver conviction profile. on our our with Based that operationally what deliver we

and us. Our winning what differentiates model durable business strategy truly are

we We vertical conditions will opportunities further to market the will operational the ensure capitalize our to on continue Bruce development, and over on excellence now remarks on leverage I product turn stay integration our quarter. for and enhance advance footprint, we'll call top to innovation market initiatives improve. as then remain

volume primarily $XXX.X price In Thanks, decrease was model X,XXX decreased in and across XX.X% The segments decreased quarter, shipments. second all to by decreased demand net and and segments net Jack. year-over-year by lower a soft XX.X% sales driven impact million sales retail resulting wholesale -- offset unit favorable The unit across units. to partially increases. mix volumes all inflation-driven was from the volume

and a brands and variable XX.X% boats favorable segments. was decrease million, The spending. and or and our sales XXX driven Consolidated Malibu XX.X% our or operational unit, highly XXX decreased increased saltwater revenue decreased within of marketing to driven when period fishing and primarily model expense sales by Malibu price the lower represented $XX.X XX% volume The represented to cobalt decreased an flooring Axis XX.X% fishing unit XX.X% Saltwater driven mix net [ XXX unit and primarily points and by basis XX.X% by for boats. of margin mix XX,XXX by ] saltwater per remaining decreased increases and dealer up costs. decreased year-over-year XX.X% made gross inflation in increased Cost of boats. cost Gross profit fishing per to cobalt driven $X.X XX.X%, primarily and structure. sales increased marketing lower million. the to Selling segment by and excellence by demonstrating X.X% and program the XXX

of Selling to driven was and primarily and percentage lower points a increased administrative of XX basis General The to $XX.X sales and lower marketing expense million. volume. As expenses. due decrease sales, decreased XX.X% by personnel-related to expenses X.X%

per of XX.X adjusted average margin quarter by $X.XX fully made $X.X million points [ Non-GAAP As volume. decreased rate X.X% a sales, sales C decreased income from capacity share. a Net to million Adjusted weighted using our preserving while lower increased G&A is decreased to million. operating distributed innovate. million. a In $XX.X $XX.X to of share for EBITDA XXX total, as to XX.X% fully XX.X% EBITDA to the to XX.X% we the to This per to adjustments XX.X% basis and count declined expenses due necessary calculated normalized and for share QX decreased shares. cost percentage approximately XX.X% distributed structure our tax corp of Adjusted quarter XX.X%. income of ] net to expenses

net EBITDA to adjusted For distributed please per in share of a GAAP metrics, release. tables fully income see reconciliation and the our earnings adjusted

we our investment Tennessee Turning outstanding XXX,XXX the cash [ million cash $X.X environment, repurchased our County, net end, invested at manufacturing million down potential the balance of to million operating shares ] our quarter's We balance quarter. the we our and debt, our $XX.X in quarter. increased of a Even $XX.X with in down new and Bone demonstrating million We these to $XX.X by facility. business. of generation million stock in or the quarter, $XX.X in attention strong by bringing paid balance sheet. driven actions CapEx the in in challenging

As be Jeff uncertainty retail by the environment challenged interest rate earlier, the broader and economic mentioned continues environment. prolonged to

levels As a down looking to their lower. consequence, dealers bring inventories to are pre-covid or

channel for end quarter, the we recede year. be to now inventories expect levels will in the of time shipments lower to persist expect wholesale through started of the inventory more to the fully While needed fiscal We normalize. sales

our from mind, to fiscal are in revising year-over-year outlook. percentage We in we anticipate this decline a decrease. ranging net With mid- XXs XXXX point sales annual a high

mid-XX We basis. year, is be with to revenues XXX to a EBITDA QX XXX but margin points percentage expect QX points. adjusted decline basis down expected for percentage slightly due QX Consolidated margin below the to on

the to despite I how company. our am of up for to potential joining about the say excited opening call growth Before I'm Malibu, I questions, near-term our be challenges, excited for want

long-term questions. in open Malibu We balance the value. to Jack look have sheet avenues team industry, the forward market-leading of drive strong company to the With team and partnering for for with to the brands, growth. create like call I'd the best a up forward operations rest the that, and and many I

at begin Ladies and time, question-and-answer this the gentlemen, we'll session.

[Operator Instructions]

morning Craig Kennison from Baird. first from And this our question comes

ask to excess wanted a in channel dealer there way I about that see number to Is the you to boats the I guess, see inventory. come out. you'd frame like of

talk and that I basis, level. hand seeing inventory, we dependent of think the weeks about not think hand necessarily and too X from a on get hand always weeks little the overall thing but to terms in we consensus hard it's same upon that's around to It's But of about industry segment, to a weeks it and the down use. on bit much we're a is it units. on Craig,

] ASP of promotions through ASP Okay. some and prices. And segment some [ you coming wondering going your have given help sharper that also mentioned that could got you you've product some if had at , out you us then the in lower-priced forward I'm product place? think by

to of that past, that the on There's size, act. lower typical a which be little the the is market sidelines. they're balancing sitting going What less feature seen missing a in bit we've segment. link is is appointed

had so the series, side is that [indiscernible] market. the is the ASPs. And our that's to ASPs. the and consumer in bring you tell see What on that been it's a I positive from on -- NR on impact I would a missing downward of back don't that objective with addition push

What seeing same bit we are largely at level, perhaps premium our a there. little about the buyer being ASPs and higher. a out is are maintaining

Riley comes Wold Our next Eric Securities. question from B. from

pressuring hand that we what -- Jeff, So you kind seeing kind where a finance given be deals? too may in to specific you And actions? peers that at the demand that how are? your the of X other mentioned Is your on is leading playing the inventories their of our are And was competitors in dealer little Malibu? bit much. that into of space further, Are weeks then price you seeing with

Yes.

that seen have fall. the We especially during

their dealers look I hand. across OEMs think much on and inventory channel marine we landscape if had the internal and too

a lower think are that's we to environment. at They're a and promotional trying promotional of a that inventories type to for And expect So combat locked have hand Obviously, also when going you environment continue. seen see dealer to would into that. have competitors the level, that. continue to either. been We it's it's environment I

the buying points get until become ahead a their lower do later? reality your willing dealers And What down could voting wait they're potential of think it's before hearing just season to question. the likely they little adjusting it come the to expectation you in probably early rates trigger? for buyers? then Or more are -- rates last but we Are see know obviously rate that loans 'XX. a with from declines likely by this actually I

No.

we're that's seeing us, think most what the of frankly. I

it retail soft show, about back What at seeing the boat tier things think least promotionally dealers have either the has is some You success. been more are environment, we're to buy. billing today coming the in

get rate doing dealers, the believe lowest F&I may we're trying to Our interest can, view job have. I great point a numerous resources an possibly of from that they of

entire to entities X for second the at expectation we the depending , for of go X%. the talk of environment And rate basis and the the waiting XXX I generally year. following the is the back rates speaking, 'XX banks to, look decreases, to think, As that the primarily on X [indiscernible] calendar to points year, you XXX course over consumer is in half. to not various

I think and have -- there's be first a But the any near advantage to rate on more psychological you then that there's couple a realization they're there not a going time decrease of to that. in top future.

back helps backwards. I come come we think that market the and

from comes Raymond question next Joe Altobello from James. Our

-- the the of XXXX if implies margin EBITDA is when guidance, shifted which guidance. your a has questions fixed guess, look several similar margin bit and that quarter production I was take, EBITDA versus on an decline or a little unit A I around on shut revenue year structure first, Why for June the you give delivered it variable? couple this down below of in at more cost weeks. your XX%,

we the [ a hasn't, plants mean really our down weeks. we was from a shut XXXX, It John. did there against QX there cost perspective I for if in of ] difference comparison X that

And for to continue exiting are the so We're and to prepare downturn. going continue to going invest. to company we run

on shutting you, it completely. I that's not had a And what would different down being that. we're significant So tell than impact

of year year. Okay. that looks to, costs at it like variable last Because it, from call our are XX% I'm went and this the looking your percentage XX% slide,

decline. about So basis point a it's XXX

I continuing take that's reality. I mean I operations think that fair, just but

half, in margin you're much higher is And that how at, promotions maybe of second from the decline discounting? looking then the and coming

it XXX What MBI points. second level. from bigger half. we an impact is change that at under basis largely is don't activity said, expect the The perspective promotional in the to Yes, we

from our supplement aspect, were fall of to but promotional will X- and margins dealers a X-year on help they're we will coming off where them. extremely high. And environment largely the a a So

sharpened. the so have And pencils there

comes from Our Jamie Katz from next question Morningstar.

I line XXXX, because with of actually only been margin has EBITDA maybe this on think a maybe low want EBITDA to implied decade. that bad don't over relative margin to does the cost the but structure not on carry questioning flexible in I look the

So react? investing can the it to items fast factory sort it the are there really was and the of you that change? like of just that the Is a reconcile conditions of margin too decline are magnitude in EBITDA little Or then where onetime structure other sort bit. be saying compression a cost -- leading that going generating is adjusted margins to because there's flexible that EBITDA they're in to complex maybe

to, I pointed a couple are Yes, think accurate. you things Jamie, of

You are channel to occurred. a very inventory of high that here one The low in environment we moving quickly. very rapidly very, did retail let hyper But is change and focused. from softness chime a thing, see of production wholesale left Bruce I'll

mean at come the year, I what if this look rest our channel are for in inventories of you line. goals to have

more And get think to our were I right so appetite can anybody have And probably they now. to support And significantly honestly, we are but be taken ascertained going are inventory where production or levels predicted. than we dealers. down have to need dealers

least little would be they bit inventory little inventory. want historically. it channel lower for a while, I than general be think like a historic They at to to

deleverage the margin in remainder down, It still it's our above that XX% to really seen we is complicated be year-to-date variable year, see we XX% cost Yes. cost range really about of And talked for the previously. margin a fixed are gross coming to that and from story. to an not line the structure expecting EBITDA perspective,

that's of change the EBITDA about it So driving is really decline. magnitude revenue margin guidance the the

Yes.

I'll point One important too, is out of make really to we think the that understand. Jamie, I things

points that and driving Cobalt, you've and long NBG, We and now Malibu history margins the is the And Malibu there differential Access more not seen the between have difference. basis impacted. are a entity of long, a with the flip Malibu of margins, Pursuit, hundreds of

of total. on the down we're now think XX% a I well part the under as

you. across And board, it makes so the is to margin were that even impact than that going if if aspect from greater a to sense be

this leverage? Sure. really rationally. the up fiscal Does would algorithm, I back go OEMs to and that early cleaning and helpful. to normal about that is some recapture of Or XXXX you back the as of think to that sort like growth flow there easier And back That's -- channel, assuming know then are sort is behaving it some get were. to to transitory would other much that ] inventory some normal be [ where imply of we operating

I Well, dealers. hearing is we're people you, That's responsible I'm were exactly thank saying what for what that's Nils. for. we're Even that's -- channel And being positioning with very our right. and what inventories, think

we are think if will even recapture this that, get a But I as else being we so not growth than responsible anyone much absent to out that that they're we we can continue. quicker come as have are. positioning that ourselves and is But [indiscernible] of challenge the

Our from comes Davidson. D.A. Rolle from next question Brandon

of what bar being updated in kind Just conservative the gives upside reset is of year? for year? the Or is on this you you the the a X of for last you remainder guide? baked any your say quarters would guidance, there confidence fully And the

imagine, any discussion year on as back it's had I is not -- of We of conservative There a us. we've got. half would lot upside tell it. we've you for into the you a had can the baked

tailwinds welcome certainly. be be it that positive would tell. if But is we say, that will that as this, that there's We beneficial. see believe some nothing we So in to conservative

Our next Markets. Noah from from comes question KeyBanc Raskin Capital Zack

just any might have terms process? maybe but around in just particularly maybe just that of there? Pontoon or kind terms updates of a anything acquiring capital greenfielding changed brand? of Most deployment, answered, Has of and in And been wondering asked

the the we allocation as changed. priorities let facility. capital I such initiatives upon a standpoint, looked But capital on from maybe comment growth I'll priority first, Ron Tennessee mean Jack haven't allocation the moon. organic Well, County, our

timing you dictate move And do. strong able out when can are our when for not those -- always share to active an opportunities. look going opportunity us of as present understand, the quickly balance themselves, program gives to We M&A buyback the sheet to we're opportunities have we and they

I guess, an would rather little in option about. it on an for that much than Expanding Yes, make greenfield dealing bit a commenting in general, what M&A consistent talked on [indiscernible] with. I've been the consistent. We've this. greenfield something acquisition us. Ponte absolutely We Brandon, we've been with we're market is ,

I potential think to to don't market. want from come go the through that sellers They this. to

more And the we're it's board. and across so seeing activity

that an not attention attention I tell paying a that pontoons, we're but the M&A So outboard of like to. would in you from of get and we point ] outboard of today view, lot paying it that to categories we lot only through that, we're [ a are not could market saltwater

And our Research. question comes Fred from from Wightman next Wolfe

have wanted to as I points. pointed as almost mix online half in of a of some fiscal year, out, question. mean, the would percentage the sort it the I come capacity Malibu I you coming XX the do trending given just mean, back mix to access guys the How was of back just helpful. was be That of the for down see that that you brands? other

trending probably in a towards the the or it range half of XX-ish year. more second little see We down that bit

Cobalt think really strong that that for tell to I would pointed the been going But that is out influence what you surprisingly you things I are us. has that.

boat York again. it show We think be. the continues mentioned, saw as to I New I in it,

more think little expect share. notes. to we be so from the all going perspective, a the than motor then And fresh capture to brand I a of continue stronger water And bit they're to

was makes will than comment of XQ? That Was comment? lower actual And sense. year-over-year absolute was XQ. reported slightly a Or margins just below the clarification. that a slightly margin about comment for a There EBITDA then it XQ EBITDA be an being

versus than QX, was It so QX. slightly lower

closing to this ladies any back ending and session. today's over Jack question-and-answer And floor be like we'll remarks. I'd to turn Springer the gentlemen, time, at for

and boat position much. Thank in the retail sales success serve. our durability the our and our we you see year-end demand shows every in continue a a market very event business dominant testament slow as being to season, we a Despite softening and in to

than to into next While are X we the over higher see, movement the want to and we selling that normalize the course as get inventory expect levels downward months. we see of season

driving and on down channel norms will or to production focused that sort to accordingly to continue are up We inventories occur. make adjust

planning, margin build. support to the operational challenges, the positioned excellence chain optimistic continues Our year, remain our And enabled this grow and vertical has management we integration at back us resilient. of we and supply our strategic half we're to and to Despite as look remain as We strong for model, not and XXXX is market even stronger realize downturn only our and than environment. recovery we capturing when exiting This fine-tune recover We recovers. driving demand positioned through retail this 'XX, a share the we it recovery. before. did back in but

us and do, a always I support for As your today. day. I Have want to for great you thank joining

participating. today's concludes for We thank you conference this gentlemen, and call. Ladies

You may your disconnect now lines.