Malibu Boats announces record second quarter fiscal 2023 results

Malibu Wakesetter 21 LX © Malibu Boats

Malibu Boats, Inc. (Nasdaq: MBUU) today announced its financial results for the second quarter ended December 31, 2022.

Second quarter fiscal 2023 highlights compared to second quarter fiscal 2022:

• Net sales increased 28.4% to $338.7 million
• Unit volume increased 17.7% to 2,439 units
• Gross profit increased 19.0% to $75.7 million
• Net income increased 17.5% to $36.4 million
• Adjusted EBITDA increased 19.7% to $57.6 million
• Net income available to Class A Common Stock per share (diluted) increased 22.0% to $1.72 per share
• Adjusted fully distributed net income per share increased 22.0% to $1.83 per share on a fully distributed weighted-average share count of 21.3 million shares of Class A Common Stock

"We once again delivered a fantastic quarter as our momentum continued with net sales increasing 28.4%, net income rising 17.5%, and Adjusted EBITDA growing 19.7% compared to the prior year. Our performance further solidifies our position as a trailblazer and innovator, while also demonstrating our ability to adapt and grow in the current environment," commented Jack Springer, Chief Executive Officer of Malibu Boats, Inc.

"We are also encouraged by the resilient consumer appetite for large, feature-rich boats, which is evidenced by the strong demand we are seeing for our saltwater segment at regional boat shows across the country. While macro conditions remain uncertain, we are beginning to see incremental improvements across the supply chain, which we believe will allow channel inventory to normalize in the second half of the fiscal year for our Malibu and Cobalt segments and in the first half of fiscal 2024 for our Saltwater Fishing segment. We remain confident in our ability to execute in any macro environment, and we will continue to leverage the horsepower of our unmatched operational capabilities, vertical integration efforts, and visionary team to deliver profitable growth and long-term value for our shareholders," continued Mr. Springer.

Second Quarter Fiscal 2023 Results (Unaudited)

Second Quarter Fiscal 2023 Results (Unaudited) - photo © Malibu Boats

Net sales for the three months ended December 31, 2022 increased $74.8 million, or 28.4%, to $338.7 million as compared to the three months ended December 31, 2021. The increase in net sales was driven primarily by increased unit volumes across all three segments and inflation-driven year-over-year price increases, slightly offset by increased dealer flooring program costs resulting from higher interest rates and increased inventory levels as inventory levels began to move towards pre-Covid levels. Unit volume for the three months ended December 31, 2022, increased 366 units, or 17.7%, to 2,439 units as compared to the three months ended December 31, 2021. Our unit volume increased primarily due to strong wholesale restocking demand across all segments.

Net sales attributable to our Malibu segment increased $24.7 million, or 18.5%, to $158.1 million for the three months ended December 31, 2022, compared to the three months ended December 31, 2021. Unit volumes attributable to our Malibu segment increased 139 units for the three months ended December 31, 2022, compared to the three months ended December 31, 2021. The increase in net sales was driven by increased volume, inflation-driven year-over-year price increases and a favorable model mix, slightly offset by increased dealer flooring program costs.

Net sales attributable to our Saltwater Fishing segment increased $30.3 million, or 40.3%, to $105.6 million, for the three months ended December 31, 2022, compared to the three months ended December 31, 2021. Unit volume increased 124 units for the three months ended December 31, 2022 compared to the three months ended December 31, 2021. The increase in net sales was driven by increased volume, inflation-driven year-over-year price increases and a favorable model mix.

Net sales attributable to our Cobalt segment increased $19.8 million, or 35.9%, to $75.0 million for the three months ended December 31, 2022, compared to the three months ended December 31, 2021. Unit volumes attributable to Cobalt increased 103 units for the three months ended December 31, 2022 compared to the three months ended December 31, 2021. The increase in net sales was driven primarily by increased volume and inflation-driven year-over-year price increases, partially offset by increased dealer flooring program costs.

Overall consolidated net sales per unit increased 9.1% to $138,882 per unit for the three months ended December 31, 2022, compared to the three months ended December 31, 2021. Net sales per unit for our Malibu segment increased 6.0% to $120,005 per unit for the three months ended December 31, 2022, compared to the three months ended December 31, 2021, driven by inflation-driven year-over-year price increases and a favorable model mix, partially offset by increased dealer flooring program costs. Net sales per unit for our Saltwater Fishing segment increased 11.0% to $178,052 per unit for the three months ended December 31, 2022 driven by inflation-driven year-over-year price increases and a favorable model mix. Net sales per unit for our Cobalt segment increased 9.4% to $142,009 per unit for the three months ended December 31, 2022, compared to the three months ended December 31, 2021, driven by inflation-driven year-over-year price increases, partially offset by increased dealer flooring program costs.

Cost of sales for the three months ended December 31, 2022 increased $62.7 million, or 31.3%, to $263.1 million as compared to the three months ended December 31, 2021. The increase in cost of sales was primarily driven by a 17.7% increase in volumes and increased prices due to inflationary pressures that have impacted prices on parts and components. In the Malibu segment, higher per unit material and labor costs contributed $7.9 million to the increase in cost of sales and were driven by increased prices due to inflationary pressures and by an increased mix of larger models that corresponded with higher net sales per unit. Within our Saltwater Fishing segment, higher per unit material and labor costs contributed $7.3 million to the increase in cost of sales and were driven by increased prices due to inflationary pressures and by an increased mix of larger models that corresponded with higher net sales per unit. In the Cobalt segment, higher per unit material and labor costs contributed $6.7 million to the increase in cost of sales and were driven by increased prices due to inflationary pressures and by an increased mix of larger models that corresponded with higher net sales per unit.

Gross profit for the three months ended December 31, 2022 increased $12.1 million, or 19.0%, to $75.7 million compared to the three months ended December 31, 2021. The increase in gross profit was driven primarily by higher sales revenue partially offset by the increased cost of sales for the reasons noted above. Gross margin for the three months ended December 31, 2022 decreased 180 basis points from 24.1% to 22.3% driven primarily by increased dealer flooring program costs and increased mix of Cobalt and Saltwater Fishing segments and partially offset by better year-over-year performance in our Saltwater Fishing segment.

Selling and marketing expenses for the three months ended December 31, 2022 increased $0.5 million, or 9.5% to $6.2 million compared to the three months ended December 31, 2021. The increase was driven primarily by increased promotional events. As a percentage of sales, selling and marketing expenses decreased 30 basis points to 1.8% for the three months ended December 31, 2022 compared to 2.1% for the three months ended December 31, 2021. General and administrative expenses for the three months ended December 31, 2022 increased $3.1 million, or 19.2%, to $19.1 million as compared to the three months ended December 31, 2021 driven primarily by an increase in compensation and personnel-related expenses, an increase in professional fees and an increase in travel related expenses. As a percentage of sales, general and administrative expenses decreased 50 basis points to 5.6% for the three months ended December 31, 2022 compared to 6.1% for the three months ended December 31, 2021. Amortization expense remained flat at $1.7 million for the three months ended December 31, 2022.

Operating income for the second quarter of fiscal year 2023 increased to $48.7 million from $40.2 million in the second quarter of fiscal year 2022. Net income for the second quarter of fiscal year 2023 increased 17.5% to $36.4 million from $31.0 million and net income margin decreased to 10.7% from 11.7% in the second quarter of fiscal year 2022. Adjusted EBITDA in the second quarter of fiscal year 2023 increased 19.7% to $57.6 million from $48.1 million, while Adjusted EBITDA margin decreased to 17.0% from 18.2% in the second quarter of fiscal year 2022.

Fiscal 2023 Guidance

For the fiscal full year 2023, Malibu anticipates net sales growth percentage in the mid to high single digits year-over-year and Adjusted EBITDA margin down slightly year-over-year.

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.

Webcast and conference call information

The Company will host a webcast and conference call to discuss second quarter of fiscal year 2023 results on Tuesday, February 7, 2023, at 8:30 a.m. Eastern Time. Investors and analysts can participate on the conference call by dialing (844) 763-8274 or (412) 717-9224 and requesting Malibu Boats. 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 here. A replay of the webcast will also be archived on the Company's website for twelve months.