Malibu Boats announces fourth quarter and fiscal 2020 results

Malibu Boats © Malibu Boats

Malibu Boats, Inc. (Nasdaq: MBUU) today announced its financial results for the fourth quarter and fiscal year ended June 30, 2020.

Highlights for the Fourth Quarter of Fiscal Year 2020

• Net sales decreased 39.1% to $118.7 million compared to the fourth quarter of fiscal year 2019.
• Unit volume decreased 43.9% to 1,117 boats compared to the fourth quarter of fiscal year 2019.
• Net sales per unit increased 8.6% to $106,232 per unit compared to the fourth quarter of fiscal year 2019.
• Gross profit decreased 50.7% to $23.6 million compared to the fourth quarter of fiscal year 2019.
• Net income decreased 68.2% to $6.5 million, or $0.30 per share, compared to the fourth quarter of fiscal year 2019.
• Adjusted EBITDA decreased 56.8% to $15.5 million compared to the fourth quarter of fiscal year 2019.
• Adjusted fully distributed net income decreased 64.2% to $8.4 million compared to the fourth quarter of fiscal year 2019.
• Adjusted fully distributed net income per share decreased 63.0% to $0.40 on a fully distributed weighted average share count of 21.5 million shares of Class A Common Stock as compared to the fourth quarter of fiscal year 2019.

Highlights for Fiscal Year 2020

• Net sales decreased 4.5% to $653.2 million compared to fiscal year 2019.
• Unit volume decreased 12.5% to 6,444 boats compared to fiscal year 2019.
• Net sales per unit increased 9.1% to $101,360 per unit compared to fiscal year 2019.
• Gross profit decreased 10.2% to $149.3 million compared to fiscal year 2019.
• Net income decreased 7.2% to $64.7 million, or $2.98 per share, compared to fiscal year 2019.
• Adjusted EBITDA decreased 11.9% to $110.9 million compared to fiscal year 2019.
• Adjusted fully distributed net income decreased 13.3% to $71.2 million compared to fiscal year 2019.
• Adjusted fully distributed net income per share decreased 12.5% to $3.29 on a fully distributed weighted average share count of 21.6 million shares of Class A Common Stock as compared to fiscal year 2019.

"Our superior execution, combined with the strength of our brands, supported better-than-expected results in an incredibly volatile environment during our fiscal fourth quarter. After temporarily suspending production prior to the start of the quarter and extending the shutdowns into the fourth quarter, we moved quickly to reopen our plants to meet the demand for our boats at the beginning of the summer season. Due to our planning and adaptable operations, we were able to reopen all brand production at pre-shutdown levels. Our ability to resume the same production on day one of our reopening is a testament to our vertical integration strategy, operational expertise and supply chain management," commented Jack Springer, Chief Executive Officer of Malibu Boats Inc.

"Moving into fiscal year 2021, we remain incredibly well-positioned. Our decision to roll out our model year 2021 products earlier than in years past and expand our innovative portfolio of boats across all of our brands gives us an edge with both loyal Malibu customers and first time boat buyers. Our new Malibu Wakesetter 23 LSV, the best-selling boat in the history of performance boats, the Axis Wake A24, the Malibu Wakesetter 24 MXZ and Cobalt R6 have all generated overwhelmingly positive feedback from dealers and customers, and each will meaningfully improve the customer experience and drive continued demand. While tremendous uncertainty remains as a result of the COVID-19 pandemic, we are laser-focused on executing our proven strategy to deliver long-term value for our shareholders, including new product development, innovation and our vertical integration initiatives," concluded Mr. Springer.

Results of Operations for the Fourth Quarter and Fiscal Year 2020 (Unaudited)

Results of Operations for the Fourth Quarter and Fiscal Year 2020 (Unaudited) - photo © Malibu Boats

Comparison of the Fourth Quarter Ended June 30, 2020 to the Fourth Quarter Ended June 30, 2019

Net sales for the three months ended June 30, 2020 decreased $76.2 million, or 39.1%, to $118.7 million, compared to the three months ended June 30, 2019. Unit volume for the three months ended June 30, 2020 decreased 875 units, or 43.9%, to 1,117 units compared to the three months ended June 30, 2019. The decrease in net sales and unit volumes was driven primarily by the temporary shutdown of our facilities for a portion of the fourth quarter ended June 30, 2020 as a result of the COVID-19 pandemic. As a result of our suspension of operations, we were not able to ship boats to our dealers during the period of shut-down, which negatively impacted our net sales for the fourth quarter of fiscal year 2020. In addition to the pandemic, but to a lesser effect, we also had planned lower production rates at Cobalt to reduce wholesale shipments and dealer inventories that negatively impacted sales versus the prior year period. This decrease in net sales was partially offset by a higher average selling price due primarily to model mix.

Net sales attributable to our Malibu segment decreased $33.0 million, or 32.4%, to $69.0 million for the three months ended June 30, 2020 compared to the three months ended June 30, 2019. Unit volumes attributable to our Malibu segment decreased 478 units for the three months ended June 30, 2020 compared to the three months ended June 30, 2019. The decrease in net sales and unit volumes was driven by the temporary shutdown of our Loudon, Tennessee facility for a portion of the fourth quarter ended June 30, 2020 as a result of the COVID-19 pandemic. This decrease in Malibu net sales was partially offset primarily by our product mix of new, larger Malibu and Axis models.

Net sales from our Cobalt segment decreased $26.9 million, or 47.6%, to $29.6 million for the three months ended June 30, 2020 compared to the three months ended June 30, 2019. Unit volumes attributable to Cobalt decreased 332 units for the three months ended June 30, 2020 compared to the three months ended June 30, 2019. The decrease in net sales and unit volumes was driven primarily by the temporary shutdown of our Neodesha, Kansas facility for a portion of the fourth quarter ended June 30, 2020 as a result of the COVID-19 pandemic. In addition to the pandemic, but to a lesser effect, we also had planned lower production rates at Cobalt to reduce wholesale shipments and dealer inventories that negatively impacted sales versus the prior year period. The decrease was partially offset primarily by our product mix of new, larger Cobalt models.

Net sales from our Pursuit segment decreased $16.3 million, or 44.8%, to $20.1 million, for the three months ended June 30, 2020, compared to the three months ended June 30, 2019. Unit volumes attributable to Pursuit decreased 65 units for the three months ended June 30, 2020 compared to the three months ended June 30, 2019. The decrease in net sales and unit volumes was driven by the temporary shutdown of our Fort Pierce, Florida facility for a portion of the fourth quarter ended June 30, 2020 as a result of the COVID-19 pandemic.

Our overall net sales per unit increased 8.6% to $106,232 per unit for the three months ended June 30, 2020 compared to the three months ended June 30, 2019. Net sales per unit for our Malibu segment increased 12.2% to $94,983 per unit for the three months ended June 30, 2020 compared to the three months ended June 30, 2019, primarily driven by strong demand for new models and optional features. Net sales per unit for our Cobalt segment increased 9.7% to $97,352 per unit for the three months ended June 30, 2020 compared to the three months ended June 30, 2019, primarily driven by a favorable mix of R series models which have a higher average selling price. Net sales per unit for our Pursuit segment decreased 3.5% to $231,126 for the three months ended June 30, 2020 compared to the three months ended June 30, 2019, primarily driven by lower average selling price due to the mix of models sold.

Cost of sales for the three months ended June 30, 2020 decreased $52.0 million, or 35.3%, to $95.1 million as compared to the three months ended June 30, 2019. The decrease in cost of sales was driven primarily by lower unit volumes associated with the temporary shutdown of our facilities for a portion of the fourth quarter ended June 30, 2020 as a result of the COVID-19 pandemic.

Gross profit for the three months ended June 30, 2020 decreased $24.2 million, or 50.7%, compared to the three months ended June 30, 2019. The decrease in gross profit was driven primarily by lower unit volumes in the businesses mentioned above. Gross margin for the three months ended June 30, 2020 decreased 470 basis points from 24.5% to 19.8% over the same period in the prior fiscal year due primarily to the reduction of sales resulting in decreased leverage of manufacturing fixed costs and other costs associated with the COVID-19 pandemic.

Selling and marketing expenses for the three months ended June 30, 2020 decreased $1.0 million, or 21.0%, to $3.6 million compared to the three months ended June 30, 2019 as a result of the COVID-19 pandemic, including a reduction in variable discretionary and non-essential spending. As a percentage of sales, selling and marketing expenses increased 70 basis points to 3.0% for the three months ended June 30, 2020 compared to the three months ended June 30, 2019. General and administrative expenses for the three months ended June 30, 2020 decreased $2.2 million, or 18.8%, to $9.5 million as compared to the three months ended June 30, 2019, due primarily to a decrease in variable discretionary and non-essential spending. As a percentage of sales, general and administrative expenses increased 200 basis points to 8.0% for the three months ended June 30, 2020 compared to the three months ended June 30, 2019. Amortization expense for the three-month period ended June 30, 2020 decreased $0.1 million, or 4.2%, when compared to the three months ended June 30, 2019.

Operating income for the fourth quarter of fiscal year 2020 decreased to $8.9 million from $29.9 million in the fourth quarter of fiscal year 2019. Net income for the fourth quarter of fiscal year 2020 decreased 68.2% to $6.5 million from $20.5 million and net income margin decreased to 5.5% from 10.5% in the fourth quarter of fiscal year 2019. Adjusted EBITDA in the fourth quarter of fiscal year 2020 decreased 56.8% to $15.5 million from $35.8 million, while Adjusted EBITDA margin decreased to 13.1% from 18.4% in the fourth quarter of fiscal year 2019.

Comparison of the Fiscal Year Ended June 30, 2020 to the Fiscal Year Ended June 30, 2019

Net sales for fiscal year 2020 decreased $30.9 million, or 4.5%, to $653.2 million, compared to fiscal year 2019. Unit volume for fiscal year 2020 decreased 918 units, or 12.5%, to 6,444 units compared to fiscal year 2019. The decrease in net sales and unit volumes was driven primarily by the temporary shutdown of our facilities in the second half of fiscal year 2020 as a result of the COVID-19 pandemic. As a result of our suspension of operations, we were not able to ship boats to our dealers during the period of shut-down, which negatively impacted our net sales for the second half of fiscal year 2020. In addition to the pandemic, but to a lesser effect, we also had planned lower production rates at Cobalt to reduce wholesale shipments and dealer inventories that negatively impacted sales versus the prior year period. This decrease in net sales was partially offset by a higher average selling price due to model mix and an increase in sales at Pursuit from a full year of results in fiscal year 2020 compared with nine months in fiscal year 2019 since its acquisition date on October 15, 2018.

Net sales attributable to our Malibu segment decreased $19.9 million, or 5.3%, to $354.8 million for fiscal year 2020 compared to fiscal year 2019. Unit volumes attributable to our Malibu segment decreased 567 units for fiscal year 2020 compared to fiscal year 2019. The decrease in net sales and unit volumes was driven by the temporary shutdown of our Loudon, Tennessee facility in the second half of fiscal year 2020 as a result of the COVID-19 pandemic. This decrease in Malibu net sales was partially offset primarily by our product mix of new, larger Malibu and Axis models.

Net sales from our Cobalt segment decreased $31.8 million, or 15.4%, to $174.8 million for fiscal year 2020 compared to fiscal year 2019. Unit volumes attributable to Cobalt decreased 453 units for fiscal year 2020 compared to fiscal year 2019. The decrease in net sales and unit volumes was driven primarily by the temporary shutdown of our Neodesha, Kansas facility in the second half of fiscal year 2020 as a result of the COVID-19 pandemic. In addition to the pandemic, but to a lesser effect, we also had planned lower production rates at Cobalt to reduce wholesale shipments and dealer inventories that negatively impacted sales versus the prior year period. The decrease was partially offset by year-over-year price increases on our Cobalt models.

Net sales from our Pursuit segment increased $20.8 million, or 20.3%, to $123.6 million for fiscal year 2020 compared to fiscal year 2019. Unit volumes attributable to Pursuit increased 102 units for fiscal year 2020 compared to fiscal year 2019. The increase in Pursuit net sales resulted from a full year of sales from Pursuit in fiscal year 2020 compared to a partial nine months in fiscal year 2019 since our acquisition of Pursuit on October 15, 2018. The increase in net sales and unit volumes were partially offset by the lower average selling price due to the mix of models sold and the temporary shutdown of our Fort Pierce, Florida facility in the second half of fiscal year 2020 as a result of the COVID-19 pandemic.

Our overall net sales per unit increased 9.1% to $101,360 per unit for fiscal year 2020 compared to fiscal year 2019. Net sales per unit for our Malibu segment increased 8.2% to $89,138 per unit for fiscal year 2020 compared to fiscal year 2019, primarily driven by higher sales for new, more expensive models and optional features. Net sales per unit for our Cobalt segment increased 4.2% to $89,350 per unit for fiscal year 2020 compared to fiscal year 2019, driven by year-over-year price increases. Net sales per unit for our Pursuit segment decreased 3.9% to $243,358 per unit for fiscal year 2020 compared to fiscal year 2019, primarily driven by lower average selling price due to the mix of models sold.

Cost of sales for fiscal year 2020 decreased $13.9 million, or 2.7%, to $503.9 million compared to fiscal year 2019. The decrease in cost of sales resulted primarily from lower unit volumes for Malibu, Axis and Cobalt. The decrease in costs of sales was partially offset by incremental costs contributed by Pursuit for the full year of fiscal year 2020 compared to only nine months for fiscal year 2019 since its acquisition in October 2018 and increased costs incurred to replace engines during the United Auto Workers' strike against General Motors.

Gross profit for fiscal year 2020 decreased $17.0 million, or 10.2%, compared to fiscal year 2019. The decrease in gross profit was due mainly to lower unit volumes in fiscal year 2020 as described above and increased costs incurred to replace engines during the United Auto Workers' strike against General Motors. Gross margin decreased 150 basis points from 24.3% in fiscal 2019 to 22.8% in fiscal year 2020.

Selling and marketing expense for fiscal year 2020 remained flat at $17.9 million compared to fiscal year 2019. As a percentage of sales, selling and marketing expense increased 20 basis points from 2.6% for fiscal year 2019 to 2.8% for fiscal year 2020. General and administrative expense for fiscal year 2020 decreased $4.3 million, or 9.8%, to $39.9 million compared to fiscal year 2019. The decrease in general and administrative expenses was largely due to expenses related to the acquisition of Pursuit in fiscal year 2019 that were not incurred during fiscal year 2020, partially offset by incremental general and administrative expenses attributable to Pursuit during fiscal year 2020. As a percentage of sales, general and administrative expenses decreased 40 basis points to 6.1% for fiscal year 2020 compared to 6.5% for fiscal year 2019. Amortization expense for fiscal year 2020 increased $0.2 million, or 2.9%, compared to fiscal year 2019, due to additional amortization from intangible assets acquired as a result of the Pursuit acquisition for the full year in fiscal year 2020.

Operating income for fiscal year 2020 decreased to $85.3 million from $98.1 million for fiscal year 2019. Net income for fiscal year 2020 decreased 7.2% to $64.7 million from $69.7 million and net income margin decreased to 9.9% for fiscal year 2020 from 10.2% for fiscal year 2019. Adjusted EBITDA for fiscal year 2020 decreased 11.9% to $110.9 million from $125.9 million, while Adjusted EBITDA margin decreased to 17.0% for fiscal year 2020 from 18.4% for fiscal year 2019.

Webcast and Conference Call Information

The Company will host a webcast and conference call to discuss fourth quarter fiscal year 2020 results on Thursday, August 27, 2020, at 5:00 p.m. Eastern Time. Investors and analysts can participate on the conference call by dialing (855) 433-0928 or (484) 756-4263 and using Conference ID #8361219. Alternatively, interested parties can listen to a live webcast of the conference call by logging on to the Investor Relations section on the Company's website at investors.malibuboats.com. A replay of the webcast will also be archived on the Company's website for twelve months.