Malibu Boats announces second quarter fiscal 2021 results

Malibu Boats © Malibu Boats

Malibu Boats, Inc. (Nasdaq: MBUU) today announced its financial results for the second quarter ended December 31, 2020.

Fiscal Second Quarter 2021 Highlights Compared to Fiscal Second Quarter 2020:

• Net sales increased 8.6% to $195.6 million
• Unit volume declined 3.4%
• Gross profit increased 24.1% to $49.5 million
• Net income increased 25.8% to $22.1 million
• Adjusted EBITDA increased 27.5% to $39.1 million
• Adjusted fully distributed net income per share increased 31.2% to $1.22 on a fully distributed weighted average share count of 21.6 million shares of Class A Common Stock

"We further extended our leadership position in our second fiscal quarter, leveraging the strong retail environment and our industry-leading operational excellence to deliver ahead of plan sales, very strong gross margins and historic adjusted EBITDA results for our second quarter. Our larger and new boats are performing very well with several models ahead of our initial expectations, including the 23 LSV, 24 MXZ, and M220 at Malibu, and the new A24 at Axis. Similarly, Cobalt's new R6 Standard and Surf, R8 Standard and Surf, and the R6 Outboard drove record retail sales orders for our fiscal second quarter, further establishing our position as the innovator. We continue to optimize our production plans to deliver more boats to meet the unwavering demand for our products. With a historic backlog of orders, increasing ASPs and unparalleled execution, we yielded a 326-basis point year-over-year improvement in gross margins for the quarter," commented Jack Springer, Chief Executive Officer of Malibu Boats, Inc.

"Underscoring our strong M&A track record, at the end of the fiscal second quarter, we welcomed Maverick Boat Group and its complementary line-up of brands - Cobia, Pathfinder, Maverick and Hewes - to the Malibu family. This transaction adds a strong player in the center console, dual console and bay boat space with a distinguished reputation and enhances our breadth of saltwater outboard offerings. As we look to the balance of the fiscal year, we continue to see demand for our premium brands and upgraded features and options, and for several of our brands, we are building more boats than we have seen in the history of the Company. We remain incredibly optimistic for the second half of fiscal year 2021 to capture market share while serving our loyal and growing customer base. Given our performance, we have increased our full year fiscal 2021 guidance, which we believe will support increasing value to our shareholders," concluded Mr. Springer.

Fiscal Second Quarter 2021 Results (Unaudited) - photo © Malibu Boats

Net sales for the three months ended December 31, 2020 increased $15.5 million, or 8.6%, to $195.6 million as compared to the three months ended December 31, 2019. The increase in net sales was driven primarily by a favorable model mix in our Malibu segment and increased unit volumes in our Saltwater Fishing segment. Our acquisition of Maverick Boat Group closed on the last day of the quarter and therefore did not impact our net sales for the three months ended December 31, 2020. Unit volume for the three months ended December 31, 2020, decreased 62 units, or 3.4%, to 1,742 units as compared to the three months ended December 31, 2019. Our unit volume decreased primarily due to continued lower production levels in our Cobalt segment.

Net sales attributable to our Malibu segment increased $11.3 million, or 11.6%, to $108.6 million for the three months ended December 31, 2020, compared to the three months ended December 31, 2019. Unit volumes attributable to our Malibu segment remained flat for the three months ended December 31, 2020, compared to the three months ended December 31, 2019. The increase in net sales was driven primarily by strong demand for our new, larger models and optional features.

Net sales attributable to our Cobalt segment decreased $1.5 million, or 3.1%, to $47.4 million for the three months ended December 31, 2020, compared to the three months ended December 31, 2019. Unit volumes attributable to Cobalt decreased 72 units for the three months ended December 31, 2020 compared to the three months ended December 31, 2019. Our unit volumes, and as a result our net sales, for our Cobalt segment decreased during the three months ended December 31, 2020 driven by our lower production levels for our Cobalt segment. The planned lower production rates were driven by our investment in the plant to optimize efficiency and expand capacity, the introduction of two new Cobalt models during the quarter, and challenges around labor and supply as a result of the pandemic. While we are ahead of our planned production levels, we do not expect unit volume in this segment will result in year-over-year gains until the second half of this fiscal year. The decrease in our unit volumes for Cobalt was partially offset by a favorable product mix of our Cobalt models impacting our net sales per unit.

Net sales attributable to our Saltwater Fishing segment increased $5.7 million, or 17.0%, to $39.6 million, for the three months ended December 31, 2020, compared to the three months ended December 31, 2019. The increase was driven primarily by sales of larger, more expensive models and unit volumes which increased ten units for the three months ended December 31, 2020 compared to the three months ended December 31, 2019.

Overall consolidated net sales per unit increased 12.5% to $112,312 per unit for the three months ended December 31, 2020, compared to the three months ended December 31, 2019. Net sales per unit for our Malibu segment increased 11.6% to $98,653 per unit for the three months ended December 31, 2020, compared to the three months ended December 31, 2019, driven by higher sales of new, more expensive models and optional features. Net sales per unit for our Cobalt segment increased 11.2% to $97,092 per unit for the three months ended December 31, 2020, compared to the three months ended December 31, 2019, driven by higher sales of larger, more expensive models. Net sales per unit for our Saltwater Fishing segment increased 9.3% to $260,211 per unit for the three months ended December 31, 2020 driven primarily by sales of larger, more expensive models.

Cost of sales for the three months ended December 31, 2020 increased $5.9 million, or 4.2%, to $146.2 million as compared to the three months ended December 31, 2019. The increase in cost of sales was driven by higher costs related to higher net sales in our Malibu and Saltwater Fishing segments. In the Malibu segment, higher per unit material and labor costs contributed $4.5 million to the increase in cost of sales and were driven by an increased mix of larger product that corresponded with higher per unit revenue. Within our Saltwater Fishing segment, higher volumes drove $2.0 million of increase in cost of sales which was also modestly impacted by higher per unit costs. Both the Malibu and Saltwater Fishing segment cost of sales increases were partially offset by a decrease in cost of sales at Cobalt that was driven by decreased volume, but offset by per unit cost of sales increases driven by a mix of larger, more expensive product.

Gross profit for the three months ended December 31, 2020 increased $9.6 million, or 24.1%, to $49.5 million compared to the three months ended December 31, 2019. The increase in gross profit was driven primarily by higher sales revenue with a more favorable product mix partially offset by the increased cost of sales for the reasons noted above. Gross margin for the three months ended December 31, 2020 increased 320 basis points from 22.1% to 25.3%.

Selling and marketing expenses for the three months ended December 31, 2020 decreased $0.7 million, or 14.3% to $4.0 million compared to the three months ended December 31, 2019 primarily driven by decreased travel and promotional events due mostly to restrictions imposed by COVID-19. As a percentage of sales, selling and marketing expenses decreased 60 basis points compared to the same period in the prior fiscal year. General and administrative expenses for the three months ended December 31, 2020, increased $5.0 million, or 49.2%, to $15.0 million as compared to the three months ended December 31, 2019 driven primarily by acquisition related costs and higher legal expenses related to intellectual property litigation. As a percentage of sales, general and administrative expenses increased 210 basis points to 7.7% for the three months ended December 31, 2020 compared to the three months ended December 31, 2019. Amortization expense for the three months ended December 31, 2020 remained flat at $1.5 million compared to the three months ended December 31, 2019.

Operating income for the second quarter of fiscal year 2021 increased to $28.9 million from $23.6 million in the second quarter of fiscal year 2020. Net income for the second quarter of fiscal year 2021 increased 25.8% to $22.1 million from $17.6 million and net income margin increased to 11.4% from 9.7% in the second quarter of fiscal year 2020. Adjusted EBITDA in the second quarter of fiscal year 2021 increased 27.5% to $39.1 million from $30.7 million, while Adjusted EBITDA margin increased to 20.0% from 17.0% in the second quarter of fiscal year 2020.

Fiscal 2021 Guidance

For the fiscal full year 2021, Malibu anticipates revenue growth greater than 35% year-over-year and Adjusted EBITDA margins of approximately 20.5%.

The Company has not provided reconciliations of guidance for Adjusted EBITDA margin, in reliance on the unreasonable efforts exception provided under Item 10(e)(1)(i)(B) of Regulation S-K. The Company is unable, without unreasonable efforts, to forecast certain items required to develop meaningful comparable GAAP financial measures. These items include acquisition and integration related expenses, costs related to the Company's vertical integration initiatives and litigation expenses that are difficult to predict in advance in order to include in a GAAP estimate.

Conference Call and Webcast

The Company will host a webcast and conference call to discuss second quarter of fiscal year 2021 results on Tuesday, February 9, 2021, at 8:30 a.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 #1130808. 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.

For more information, visit www.malibuboats.com.