| | | | | | | | | | | | | | | | | | | | | | |
| As of March 31, 2025 | | As of June 30, 2024 |
| Assets | | | |
| Malibu | $ | | | | $ | | |
| Saltwater Fishing | | | | | |
| Cobalt | | | | | |
| Total assets | $ | | | | $ | | |
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the unaudited interim condensed consolidated financial statements and notes thereto included herein.
Malibu Boats, Inc. is a Delaware corporation with its principal offices in Loudon, Tennessee. We use the terms “Malibu,” the “Company,” “we,” “us,” “our” or similar references to refer to Malibu Boats, Inc., its subsidiary, Malibu Boats Holdings, LLC, or the LLC, and its subsidiary Malibu Boats, LLC, or Boats, LLC and its consolidated subsidiaries, including Cobalt Boats, LLC, PB Holdco, LLC, through which we acquired the assets of Pursuit, and MBG Holdco, Inc., through which we acquired all of the outstanding stock of Maverick Boat Group, Inc.
Overview
We are a leading designer, manufacturer and marketer of a diverse range of recreational powerboats, including performance sport boats, sterndrive and outboard boats. Our product portfolio of premium brands are used for a broad range of recreational boating activities including, among others, water sports, general recreational boating and fishing. Our passion for consistent innovation, which has led to proprietary technology such as Surf Gate, has allowed us to expand the market for our products by introducing consumers to new and exciting recreational activities. We design products that appeal to an expanding range of recreational boaters and water sports enthusiasts whose passion for boating and water sports is a key component of their active lifestyle and provide consumers with a better customer-inspired experience. With performance, quality, value and multi-purpose features, our product portfolio has us well positioned to broaden our addressable market and achieve our goal of increasing our market share in the expanding recreational boating industry.
We currently sell our boats under eight brands as shown in the table below, and we report our results of operations under three reportable segments, Malibu, Saltwater Fishing and Cobalt. See Note 16 to our unaudited interim condensed consolidated financial statements for more information about our reporting segments. | | | | | | | | | | | | | | |
| | % of Net Sales |
| Segment | Brands | Nine Months Ended March 31, 2025 | | Fiscal year ended June 30, 2024 |
| Malibu | Malibu | 38.7% | | 33.7% |
| Axis | |
| | | | |
| Saltwater Fishing | Pursuit | 34.4% | | 39.5% |
| Maverick | |
| Cobia | |
| Pathfinder | |
| Hewes | |
| | | | |
| Cobalt | Cobalt | 26.9% | | 26.8% |
Our Malibu segment participates in the manufacturing, distribution, marketing and sale throughout the world of Malibu and Axis performance sports boats. Our flagship Malibu boats offer our latest innovations in performance, comfort and convenience, and are designed for consumers seeking a premium performance sport boat experience. We are the market leader in the United States in the performance sport boat category through our Malibu and Axis boat brands. Our Axis boats appeal to consumers who desire a more affordable performance sport boat product but still demand high performance, functional simplicity and the option to upgrade key features. Retail prices of our Malibu and Axis boats typically range from $80,000 to $300,000.
Our Saltwater Fishing segment participates in the manufacturing, distribution, marketing and sale throughout the world of Pursuit boats and the Maverick Boat Group family of boats (Maverick, Cobia, Pathfinder and Hewes). Our Pursuit boats expand our product offerings into the saltwater outboard fishing market and include center console, dual console and offshore models. In December 2020, we acquired Maverick Boat Group and added Maverick, Cobia, Pathfinder and Hewes to our brands. Our Maverick Boat Group family of boats are highly complementary to Pursuit, expanding our saltwater outboard offerings with a strong focus in length segments under 30 feet. We are among the market leaders in the fiberglass outboard fishing boat category with the brands in our Saltwater Fishing segment. Retail prices for our Saltwater Fishing boats typically range from $45,000 to $1,400,000.
Our Cobalt segment participates in the manufacturing, distribution, marketing and sale throughout the world of Cobalt boats. Our Cobalt boats consist of mid to large-sized luxury cruisers and bowriders that we believe offer the ultimate experience in comfort, performance and quality. As of March 31, 2025, we are the market leader in the United States in the 20’ - 40’ segment of the sterndrive boat category through our Cobalt brand. Retail prices for our Cobalt boats typically range from $75,000 to $625,000.
We sell our boats through a dealer network that we believe is the strongest in the recreational powerboat category. As of June 30, 2024, our worldwide distribution channel consisted of over 400 dealer locations globally. Our dealer base is an important part of our consumers’ experience, our marketing efforts and our brands. We devote significant time and resources to find, develop and improve the performance of our dealers and believe our dealer network gives us a distinct competitive advantage. We had one dealer that represented more than 10% of our consolidated net sales in fiscal year 2024 and the first nine months of fiscal year 2025, OneWater Marine, Inc. In fiscal year 2023, we had two dealers that represented more than 10% of our consolidated net sales, OneWater Marine, Inc. and Tommy's Boats. During fiscal year 2024, we informed Tommy's Boats that we would not be renewing any of their dealer agreements that had expired as of June 30, 2023 and we terminated two dealer agreements in Texas that had not expired. Tommy's Boats subsequently filed for bankruptcy protection. We subsequently entered into dealer agreements with dealers in 14 of the 15 markets previously served by Tommy's Boats. During the nine months ended March 31, 2025, we repurchased 22 units that were subject to repurchase agreements, including 19 boats from the inventory of Tommy's Boats that were subject to our repurchase agreement with M&T Bank, the floor plan financing lender for Tommy's Boats. Those repurchases were reflected in our June 30, 2024 consolidated financial statements and those boats were subsequently resold during the three months ended September 30, 2024 above cost. With respect to boats held by Tommy's Boats and not subject to the Repurchase Agreement, the bankruptcy trustee retained Gordon Brothers to sell the remaining inventory as part of the liquidation of Tommy's inventory. As of December 31, 2024, we believe none of our new model year 2023 and 2024 boats were remaining in the inventory of Tommy's Boats.
On a consolidated basis, we achieved third quarter fiscal 2025 net sales, gross profit, net income and Adjusted EBITDA of $228.7 million, $45.7 million, $13.2 million and $28.3 million, respectively, compared to $203.4 million, $40.3 million, $(67.8) million and $24.4 million, respectively, for the third quarter of fiscal 2024. For the third quarter of fiscal 2025, net sales increased 12.4%, gross profit increased 13.4%, net income increased 119.4% and Adjusted EBITDA increased 16.0% as compared to the third quarter of fiscal 2024. For the definition of Adjusted EBITDA and a reconciliation to net income, see “GAAP Reconciliation of Non-GAAP Financial Measures.”
Outlook
The recreational power boat industry continues to be challenged by macro-economic factors, including high inflation and high interest rates, that have increased the cost of production and taken many interest rate sensitive buyers out of the market. In recent months, tariffs have also been introduced, as discussed below, and we are monitoring the impact they may have on cost of production and demand. Simultaneously, less price sensitive buyers have been purchasing larger, more feature-rich boats with higher average selling prices.
Due to high dealer flooring costs and a continued soft retail environment, we expect our dealers to reduce their inventories further in fiscal 2025. Additionally, we expect the retail market to continue to decline in fiscal 2025.
We aim to increase our market share across the boating categories in which we compete through new product development, improved distribution, new models, and innovative features. We believe our strong brands, new product pipeline, strong dealer network and ability to increase production will allow us to maintain, and potentially expand, our leading market positions.
Our financial results and operations have been, and will continue to be, impacted by events outside of our control, including trade policies and tariffs, inflationary pressures, interest rates, material shortages, weather events and global economic uncertainty. The current international trade and regulatory environment is subject to significant ongoing uncertainty. The U.S. presidential administration has recently announced substantial new tariffs affecting a wide range of products and jurisdictions and has indicated an intention to continue negotiating trade policies. In response, some countries have implemented, and other countries may implement, countermeasures in response to U.S. tariffs. We estimate that 18-20% of our cost of sales are sourced
from outside the United States and thus we have the potential to be materially impacted by tariffs in future periods. We are continuing to monitor the potential long-term impact of tariffs and are taking a proactive approach to mitigating material supply chain risks. We, however, do not anticipate tariffs materially impacting our cost structure for the remainder of fiscal year 2025.
Numerous other variables also have the potential to impact our volumes, both positively and negatively. In the near term, we expect to continue to experience reduced retail consumer demand for our product and on-going pressure from dealers to reduce dealer inventories. However, we expect to continue to successfully navigate a challenging economic environment and anticipate delivering higher sales in the second half of fiscal 2025 relative to the same period in fiscal 2024 and relative to the first half of fiscal 2025.
Factors Affecting Our Results of Operations
We believe that our results of operations and our growth prospects are affected by a number of factors, such as the economic environment and consumer demand for our products, our ability to develop new products and innovate, our product mix, our ability to manage manufacturing costs, sales cycles and inventory levels, the strength of our dealer network, our ability to offer dealer financing and incentives and our vertical integration efforts. We discuss each of these factors in more detail under the heading “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations--Factors Affecting Our Results of Operations” in our Form 10-K for the year ended June 30, 2024. While we do not have control of all factors affecting our results from operations, we work diligently to influence and manage those factors which we can impact to enhance our results of operations.
Components of Results of Operations
Net Sales
We generate revenue from the sale of boats to our dealers. The substantial majority of our net sales are derived from the sale of boats, including optional features included at the time of the initial wholesale purchase of the boat. Net sales consists of the following:
•Gross sales from:
•Boat and trailer sales—consists of sales of boats and trailers to our dealer network. Nearly all of our boat sales include optional feature upgrades purchased by the consumer, which increase the average selling price of our boats; and
•Parts and other sales—consists of sales of replacement and aftermarket boat parts and accessories to our dealer network; and consists of royalty income earned from license agreements with various boat manufacturers, including Nautique, Chaparral, Mastercraft, and Tige related to the use of our intellectual property.
•Net sales are net of:
•Sales returns—consists primarily of contractual repurchases of boats either repossessed by the floor plan financing provider from the dealer or returned by the dealer under our warranty program; and
•Discounts, rebates and free flooring—consists of discounts, rebates and free flooring, we provide to our dealers based on sales of eligible products. For our Malibu, Cobalt and Saltwater Fishing segments, if a domestic dealer meets its quarterly commitment volume, as well as other terms of the dealer performance program, the dealer is entitled to a specified discount off invoice for eligible wholesale volume purchased during the period. If a dealer meets its semi-annual or annual retail volume goals, the dealer is entitled to a specific rebate applied to their wholesale volume purchased. For Malibu, Cobalt and select Saltwater Fishing models, our dealers that take delivery of current model year boats may also be entitled to have us pay the interest to floor the boat for a period of time, which incentive we refer to as "free flooring". From time to time, we may extend the flooring program to eligible models beyond the offseason period.
Cost of Sales
Our cost of sales includes all of the costs to manufacture our products, including raw materials, components, supplies, direct labor and factory overhead. For components and accessories manufactured by third-party vendors, such costs represent the amounts invoiced by the vendors. Shipping costs and depreciation expense related to manufacturing equipment and facilities are also included in cost of sales. Warranty costs associated with the repair or replacement of our boats under warranty are also included in cost of sales.
Operating Expenses
Our operating expenses include selling and marketing, general and administrative costs, amortization costs, and impairment costs. Each of these items includes personnel and related expenses, supplies, non-manufacturing overhead, third-party professional fees and various other operating expenses. Further, selling and marketing expenditures include the cost of advertising and various promotional sales incentive programs. General and administrative expenses include, among other things, salaries, benefits and other personnel related expenses for employees engaged in product development, engineering, finance, information technology, human resources and executive management. Other costs include outside legal and accounting fees, investor relations, risk management (insurance) and other administrative costs. General and administrative expenses also include product development expenses associated with our vertical integration initiative and acquisition or integration related expenses. Amortization expenses are associated with the amortization of intangibles.
Other Expense, Net
Other expense, net consists of interest expense and other income or expense, net. Interest expense consists of interest charged under our outstanding debt and amortization of deferred financing costs on our credit facilities. Other income or expense can include adjustments to our tax receivable agreement liability and sublease income.
Income Taxes
Malibu Boats, Inc. is subject to U.S. federal and state income tax in multiple jurisdictions with respect to our allocable share of any net taxable income of the LLC. The LLC is a pass-through entity for federal purposes but incurs income tax in certain state jurisdictions. Maverick Boat Group is separately subject to U.S. federal and state income tax with respect to its net taxable income.
Net Income (Loss) Attributable to Non-controlling Interest
As of March 31, 2025 and 2024, we had a 98.4% and a 98.5%, respectively, controlling economic interest and 100% voting interest in the LLC and, therefore, we consolidate the LLC's operating results for financial statement purposes. Net income (loss) attributable to non-controlling interest represents the portion of net income (loss) attributable to the non-controlling LLC members.
Results of Operations
The table below sets forth our unaudited interim consolidated results of operations, expressed in thousands (except unit volume and net sales per unit) and as a percentage of net sales, for the periods presented. Our unaudited interim consolidated financial results for these periods are not necessarily indicative of the consolidated financial results that we will achieve in future periods. Certain totals in the table below will not sum to exactly 100% due to rounding. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, | | Nine Months Ended March 31, |
| 2025 | | 2024 | | 2025 | | 2024 |
| $ | | % Revenue | | $ | | % Revenue | | $ | | % Revenue | | $ | | % Revenue |
| Net sales | 228,662 | | | 100.0 | % | | 203,419 | | | 100.0 | % | | 600,522 | | | 100.0 | % | | 670,323 | | | 100.0 | % |
| Cost of sales | 182,938 | | | 80.0 | % | | 163,086 | | | 80.2 | % | | 489,171 | | | 81.5 | % | | 535,721 | | | 79.9 | % |
| Gross profit | 45,724 | | | 20.0 | % | | 40,333 | | | 19.8 | % | | 111,351 | | | 18.5 | % | | 134,602 | | | 20.1 | % |
| Operating expenses: | | | | | | | | | | | | | | | |
| Selling and marketing | 6,832 | | | 3.0 | % | | 6,552 | | | 3.2 | % | | 17,681 | | | 2.9 | % | | 17,914 | | | 2.7 | % |
| General and administrative | 19,849 | | | 8.7 | % | | 18,608 | | | 9.1 | % | | 73,634 | | | 12.3 | % | | 54,753 | | | 8.2 | % |
| Goodwill and other intangible asset impairment | — | | | — | % | | 88,389 | | | 43.5 | % | | — | | | — | % | | 88,389 | | | 13.2 | % |
| Amortization | 1,676 | | | 0.7 | % | | 1,686 | | | 0.8 | % | | 5,104 | | | 0.8 | % | | 5,114 | | | 0.8 | % |
| Operating income (loss) | 17,367 | | | 7.6 | % | | (74,902) | | | (36.8) | % | | 14,932 | | | 2.5 | % | | (31,568) | | | (4.7) | % |
| Other expense, net: | | | | | | | | | | | | | | | |
| Other (income), net | (7) | | | — | % | | (14) | | | — | % | | (26) | | | — | % | | (33) | | | — | % |
| Interest expense | 525 | | | 0.2 | % | | 296 | | | 0.1 | % | | 1,506 | | | 0.3 | % | | 1,851 | | | 0.3 | % |
| Other expense, net | 518 | | | 0.2 | % | | 282 | | | 0.1 | % | | 1,480 | | | 0.2 | % | | 1,818 | | | 0.3 | % |
| Income (loss) before provision (benefit) for income taxes | 16,849 | | | 7.4 | % | | (75,184) | | | (37.0) | % | | 13,452 | | | 2.2 | % | | (33,386) | | | (5.0) | % |
| Provision (benefit) for income taxes | 3,676 | | | 1.6 | % | | (7,425) | | | (3.7) | % | | 3,005 | | | 0.5 | % | | 3,459 | | | 0.5 | % |
| Net income (loss) | 13,173 | | | 5.8 | % | | (67,759) | | | (33.3) | % | | 10,447 | | | 1.7 | % | | (36,845) | | | (5.5) | % |
| Net income (loss) attributable to non-controlling interest | 283 | | | 0.1 | % | | (928) | | | (0.5) | % | | 242 | | | — | % | | (154) | | | — | % |
| Net income (loss) attributable to Malibu Boats, Inc. | 12,890 | | | 5.6 | % | | (66,831) | | | (32.9) | % | | 10,205 | | | 1.7 | % | | (36,691) | | | (5.5) | % |
| | | | | | | | | | | | | | | |
| Three Months Ended March 31, | | Nine Months Ended March 31, |
| 2025 | | 2024 | | 2025 | | 2024 |
| Unit Volumes | | % Total | | Unit Volumes | | % Total | | Unit Volumes | | % Total | | Unit Volumes | | % Total |
| Volume by Segment | | | | | | | | | | | | | | | |
| Malibu | 744 | | | 52.0 | % | | 452 | | | 35.6 | % | | 1,653 | | | 45.0 | % | | 1,862 | | | 42.9 | % |
| Saltwater Fishing | 326 | | | 22.8 | % | | 381 | | | 30.0 | % | | 943 | | | 25.6 | % | | 1,277 | | | 29.4 | % |
| Cobalt | 361 | | | 25.2 | % | | 436 | | | 34.4 | % | | 1,081 | | | 29.4 | % | | 1,201 | | | 27.7 | % |
| Total units | 1,431 | | | 100.0 | % | | 1,269 | | | 100.0 | % | | 3,677 | | | 100 | % | | 4,340 | | | 100.0 | % |
| | | | | | | | | | | | | | | |
| Net sales per unit | $ | 159,792 | | | | | $ | 160,299 | | | | | $ | 163,318 | | | | | $ | 154,452 | | | |
Comparison of the Three Months Ended March 31, 2025 to the Three Months Ended March 31, 2024
Net Sales
Net sales for the three months ended March 31, 2025 increased $25.2 million, or 12.4%, to $228.7 million as compared to the three months ended March 31, 2024. The increase in net sales was driven primarily by increased unit volumes in the Malibu segment, a favorable model mix across all segments and inflation-driven year-over-year price increases, partially offset by decreased unit volumes in the Cobalt and Saltwater Fishing segments and an unfavorable segment mix. Unit volume for the three months ended March 31, 2025, increased 162 units, or 12.8%, to 1,431 units as compared to the three months ended March 31, 2024. Our unit volume increased primarily due to higher wholesale shipments across the Malibu segment, partially offset by lower volumes in the Cobalt and Saltwater Fishing segments due to our dealers' desire to hold less inventory.
Net sales attributable to our Malibu segment increased $42.0 million, or 69.8%, to $102.2 million for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. Unit volumes attributable to our Malibu segment increased 292 units for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily due to lower wholesale shipments during the three months ended March 31, 2024, as a result of elevated dealer inventory levels. The increase in net sales was driven by an increase in units, a favorable model mix and inflation-driven year-over-year price increases.
Net sales attributable to our Saltwater Fishing segment decreased $9.4 million, or 11.5%, to $71.9 million, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. Unit volumes attributable to our Saltwater Fishing segment decreased 55 units for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to lower wholesale shipments driven by lower retail activity during the period and our dealers' desire to hold less inventory. The decrease in net sales was driven by a decrease in units and partially offset by a favorable model mix and inflation-driven year-over-year price increases.
Net sales attributable to our Cobalt segment decreased $7.4 million, or 12.0%, to $54.6 million for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. Unit volumes attributable to Cobalt decreased 75 units for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to lower wholesale shipments driven by our dealers' desire to hold less inventory. The decrease in net sales was driven primarily by a decrease in units, partially offset by favorable model mix and inflation-driven year-over-year price increases.
Overall consolidated net sales per unit decreased (0.3)% to $159,792 per unit for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The decrease in overall consolidated net sales per unit was driven primarily by an unfavorable segment mix partially offset by favorable model mix across all segments and inflation-driven year-over-year price increases. Net sales per unit for our Malibu segment increased 3.2% to $137,417 per unit for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, driven by favorable model mix and inflation-driven year-over-year price increases. Net sales per unit for our Saltwater Fishing segment increased 3.4% to $220,454 per unit for the three months ended March 31, 2025 driven by favorable model mix and inflation-driven year-over-year price increases. Net sales per unit for our Cobalt segment increased 6.3% to $151,125 per unit for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, driven by favorable model mix and inflation-driven year-over-year price increases.
Cost of Sales
Cost of sales for the three months ended March 31, 2025 increased $19.9 million, or 12.2%, to $182.9 million as compared to the three months ended March 31, 2024. The increase in cost of sales was primarily driven by a 12.4% increase in net sales due to higher unit volumes, a more expensive product mix and partially offset by lower per unit labor costs due to fixed cost leveraging.
Gross Profit
Gross profit for the three months ended March 31, 2025 increased $5.4 million, or 13.4%, to $45.7 million compared to the three months ended March 31, 2024. The increase in gross profit was driven by higher net sales partially offset by increased cost of sales for the reasons noted above. Gross margin for the three months ended March 31, 2025 increased 20 basis points from 19.8% to 20.0% driven primarily by the decrease in cost of sales as a percentage of revenue driven by lower per unit labor costs due to fixed cost leveraging.
Operating Expenses
Selling and marketing expenses for the three months ended March 31, 2025 increased $0.3 million, or 4.3% to $6.8 million compared to the three months ended March 31, 2024. The increase was driven primarily by an increase in certain marketing events and travel. As a percentage of sales, selling and marketing expenses decreased 20 basis points to 3.0% for the three months ended March 31, 2025 compared to 3.2% for the three months ended March 31, 2024. General and administrative expenses for the three months ended March 31, 2025 increased $1.2 million, or 6.7%, to $19.8 million as compared to the three months ended March 31, 2024 driven primarily by legal and professional fees. As a percentage of sales, general and administrative expenses decreased 0.4% to 8.7% for the three months ended March 31, 2025. Amortization expense remained flat at $1.7 million for the three months ended March 31, 2025.
Other Expense, Net
Other expense, net for the three months ended March 31, 2025 increased by $0.2 million, or 83.7% to $0.5 million, compared to the three months ended March 31, 2024. The increase in other expense resulted primarily from net increased interest expense during the three months ended March 31, 2025 compared to the three months ended March 31, 2024.
Provision (Benefit) for Income Taxes
Our provision (benefit) for income taxes for the three months ended March 31, 2025, increased $11.1 million, or 149.5%, to $3.7 million compared to the three months ended March 31, 2024. The increase primarily resulted from increased pre-tax earnings and corresponding state taxes, partially offset by impairment charges related to our Maverick Boat Group reporting unit during the three months ended March 31, 2024. For the three months ended March 31, 2025 and 2024, our effective tax rate was 21.8% and 9.9%, respectively. For the three months ended March 31, 2025, our effective tax rate was reduced by research tax credits. This reduction was partially offset by the impact of U.S. state taxes. For the three months ended March 31, 2024, our effective tax rate was reduced by the impairment charges related to our Maverick Boat Group reporting unit.
Non-controlling Interest
Non-controlling interest represents the ownership interests of the members of the LLC other than us and the amount recorded as non-controlling interest in our unaudited interim condensed consolidated statements of operations and comprehensive income (loss) is computed by multiplying pre-tax income (loss) for the applicable period, by the percentage ownership in the LLC not directly attributable to us. For the three months ended March 31, 2025 and 2024, the weighted-average non-controlling interest attributable to ownership interests in the LLC not directly attributable to us was 1.6% and 1.7%, respectively.
Comparison of the Nine Months Ended March 31, 2025 to the Nine Months Ended March 31, 2024
Net Sales
Net sales for the nine months ended March 31, 2025 decreased $69.8 million, or 10.4%, to $600.5 million as compared to the nine months ended March 31, 2024. The decreased net sales was driven primarily by decreased unit volumes across all segments resulting primarily from decreased wholesale shipments, an unfavorable segment mix, partially offset by a favorable model mix across all segments and inflation-driven year-over-year price increases. Unit volume for the nine months ended March 31, 2025, decreased 663 units, or 15.3%, to 3,677 units as compared to the nine months ended March 31, 2024. Our unit volume decreased primarily due to lower wholesale shipments across all segments driven by lower retail activity and our dealers' desire to hold less inventory.
Net sales attributable to our Malibu segment decreased $9.2 million, or 3.8%, to $232.4 million for the nine months ended March 31, 2025, compared to the nine months ended March 31, 2024. Unit volumes attributable to our Malibu segment decreased 209 units for the nine months ended March 31, 2025, compared to the nine months ended March 31, 2024, primarily due to lower wholesale shipments driven by lower retail activity during the period and our dealers' desire to hold less inventory. The decrease in net sales was driven by a decrease in units, partially offset by a favorable model mix and inflation-driven year-over-year price increases.
Net sales attributable to our Saltwater Fishing segment decreased $49.8 million, or 19.4%, to $206.8 million, for the nine months ended March 31, 2025, compared to the nine months ended March 31, 2024. Unit volumes attributable to our Saltwater Fishing segment decreased 334 units for the nine months ended March 31, 2025 compared to the nine months ended March 31, 2024, primarily due to lower wholesale shipments driven by lower retail activity during the period and our dealers' desire to hold less inventory. The decrease in net sales was driven by a decrease in units, partially offset by a favorable model mix and inflation-driven year-over-year price increases.
Net sales attributable to our Cobalt segment decreased $10.8 million, or 6.3%, to $161.4 million for the nine months ended March 31, 2025, compared to the nine months ended March 31, 2024. Unit volumes attributable to Cobalt decreased 120 units for the nine months ended March 31, 2025 compared to the nine months ended March 31, 2024, primarily due to lower wholesale shipments driven by our dealers' desire to hold less inventory. The decrease in net sales was driven primarily by a decrease in units, partially offset by a favorable model mix and inflation-driven year-over-year price increases.
Overall consolidated net sales per unit increased 5.7% to $163,318 per unit for the nine months ended March 31, 2025, compared to the nine months ended March 31, 2024. The increase in overall consolidated net sales per unit was driven primarily by a favorable model mix across all segments, inflation-driven year-over-year price increases and partially offset by an unfavorable segment mix. Net sales per unit for our Malibu segment increased 8.3% to $140,566 per unit for the nine months ended March 31, 2025, compared to the nine months ended March 31, 2024, driven by favorable model mix, inflation-driven year-over-year price increases and non-boat related customer service parts sales. Net sales per unit for our Saltwater Fishing segment increased 9.1% to $219,270 per unit for the nine months ended March 31, 2025 driven by favorable model mix and inflation-driven year-over-year price increases and partially offset by increased dealer incentive costs. Net sales per unit for our Cobalt segment increased 4.2% to $149,301 per unit for the nine months ended March 31, 2025, compared to the nine months ended March 31, 2024, driven by favorable model mix and inflation-driven year-over-year price increases.
Cost of Sales
Cost of sales for the nine months ended March 31, 2025 decreased $46.6 million, or 8.7%, to $489.2 million as compared to the nine months ended March 31, 2024. The decrease in cost of sales was primarily driven by a 10.4% decrease in net sales due to lower unit volumes, partially offset by higher per unit material and labor costs of $9.6 million, $14.8 million and $8.8 million for the Malibu, Saltwater Fishing, and Cobalt segments, respectively. The increase in per unit material and labor costs was primarily driven by increased prices due to fixed cost deleverage, a more expensive model mix and inflationary pressures.
Gross Profit
Gross profit for the nine months ended March 31, 2025 decreased $23.3 million, or 17.3%, to $111.4 million compared to the nine months ended March 31, 2024. The decrease in gross profit was driven primarily by lower net sales partially offset by decreased cost of sales for the reasons noted above. Gross margin for the nine months ended March 31, 2025 decreased 160 basis points from 20.1% to 18.5% driven primarily by higher per unit material and labor costs and fixed cost deleverage due to lower sales.
Operating Expenses
Selling and marketing expenses for the nine months ended March 31, 2025 decreased $0.2 million, or 1.3% to $17.7 million compared to the nine months ended March 31, 2024. The decrease was driven primarily by a decrease in certain marketing events. As a percentage of sales, selling and marketing expenses increased 0.2% to 2.9% for the nine months ended March 31, 2025 compared to 2.7% for the nine months ended March 31, 2024. General and administrative expenses for the nine months ended March 31, 2025 increased $18.9 million, or 34.5%, to $73.6 million as compared to the nine months ended March 31, 2024 driven primarily by a $3.5 million legal settlement along with other related legal fees and increases in stock-based compensation expense, incentive pay and salaries. As a percentage of sales, general and administrative expenses increased 4.1% to 12.3% for the nine months ended March 31, 2025 compared to 8.2% for the nine months ended March 31, 2024. Amortization expense remained flat at $5.1 million for the nine months ended March 31, 2025.
Other Expense, Net
Other expense, net for the nine months ended March 31, 2025 decreased by $0.3 million, or 18.6% to $1.5 million, compared to the nine months ended March 31, 2024. The decrease in other expense resulted primarily from decreased interest expense during the nine months ended March 31, 2025 compared to the nine months ended March 31, 2024.
Provision for Income Taxes
Our provision for income taxes for the nine months ended March 31, 2025, decreased $0.45 million, or 13.1%, to $3.0 million compared to the nine months ended March 31, 2024. The decrease primarily resulted from impairment charges related to our Maverick Boat Group reporting unit for the nine months ended March 31, 2024, partially offset by increased pre-tax earnings and corresponding state taxes. For the nine months ended March 31, 2025, the Company's effective tax rate was reduced by research tax credits. These reductions were partially offset by shortfall expense generated by certain stock-based compensation, certain federal tax code limitations, and the impact of U.S. state taxes. For the nine months ended March 31, 2024, our effective tax rate was reduced by impairment charges related to our Maverick Boat Group reporting unit, as well as certain federal tax code limitations and the impact of U.S. state taxes.
Non-controlling Interest
Non-controlling interest represents the ownership interests of the members of the LLC other than us and the amount recorded as non-controlling interest in our unaudited interim condensed consolidated statements of operations and comprehensive income (loss) is computed by multiplying pre-tax income (loss) for the applicable period, by the percentage ownership in the LLC not directly attributable to us. For the nine months ended March 31, 2025 and 2024, the weighted-average non-controlling interest attributable to ownership interests in the LLC not directly attributable to us was 1.6% and 2.0%, respectively.
GAAP Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA
Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures that are used by management as well as by investors, commercial bankers, industry analysts and other users of our financial statements.
We define Adjusted EBITDA as net income (loss) before interest expense, income taxes, depreciation, amortization, goodwill and other intangible asset impairment expense and non-cash, non-recurring or non-operating expenses, including certain professional fees, litigation settlements and non-cash compensation expense. We define Adjusted EBITDA margin as Adjusted EBITDA divided by net sales. Adjusted EBITDA and Adjusted EBITDA margin are not measures of net income (loss) as determined by GAAP. Management believes adjusted EBITDA and Adjusted EBITDA margin allow investors to evaluate the Company’s operating performance and compare our results of operations from period to period on a consistent basis by excluding items that management does not believe are indicative of our core operating performance. Management uses Adjusted EBITDA to assist in highlighting trends in our operating results without regard to our financing methods, capital structure and non-recurring or non-operating expenses. We exclude the items listed above from net income (loss) in arriving at Adjusted EBITDA because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures, the methods by which assets were acquired and other factors. Adjusted EBITDA has limitations as an analytical tool and should not be considered as an alternative to, or more meaningful than, net income (loss) as determined in accordance with GAAP or as an indicator of our liquidity. Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historical costs of depreciable assets. Our presentation of Adjusted EBITDA and Adjusted EBITDA margin should not be construed as an inference that our results will be unaffected by unusual or non-recurring items. Our computations of Adjusted EBITDA and Adjusted EBITDA margin may not be comparable to other similarly titled measures of other companies.
The following table sets forth a reconciliation of net income (loss) as determined in accordance with GAAP to Adjusted EBITDA and presentation of net income (loss) margin and Adjusted EBITDA margin for the periods indicated (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, | | Nine Months Ended March 31, |
| 2025 | | 2024 | | 2025 | | 2024 |
| Net income (loss) | $ | 13,173 | | | $ | (67,759) | | | $ | 10,447 | | | $ | (36,845) | |
| Provision (benefit) for income taxes | 3,676 | | | (7,425) | | | 3,005 | | | 3,459 | |
| Interest expense | 525 | | | 296 | | | 1,506 | | | 1,851 | |
| Depreciation | 8,201 | | | 6,544 | | | 23,399 | | | 19,211 | |
| Amortization | 1,676 | | | 1,686 | | | 5,104 | | | 5,114 | |
| | |
| | |
Goodwill and other intangible asset impairment 1 | — | | | 88,389 | | | — | | | 88,389 | |
Professional fees 2 | 808 | | | 839 | | | 3,849 | | | 1,986 | |
Litigation settlement 3 | — | | | — | | | 3,500 | | | — | |
| | |
Stock-based compensation expense 4 | 264 | | | 1,839 | | | 4,297 | | | 3,162 | |
| | |
| | |
| | |
| | |
| Adjusted EBITDA | $ | 28,323 | | | $ | 24,409 | | | $ | 55,107 | | | $ | 86,327 | |
| Net Sales | $ | 228,662 | | | $ | 203,419 | | | $ | 600,522 | | | $ | 670,323 | |
Net Income (Loss) Margin 5 | 5.8 | % | | (33.3) | % | | 1.7 | % | | (5.5) | % |
Adjusted EBITDA Margin 5 | 12.4 | % | | 12.0 | % | | 9.2 | % | | 12.9 | % |
| | | | | |
|
| (1) | For the three and nine months ended March 31, 2024, represents impairment of goodwill and trade names related to our Maverick Boat Group reporting unit in the amounts of $49.2 million and $39.2 million, respectively. |
| (2) | For the three and nine months ended March 31, 2025, represents legal and advisory fees related to ongoing litigation with our insurance carriers related to the Batchelder matters and ongoing litigation with Tommy's Boats and Matthew Borisch for fiscal year 2025. For the three and nine months ended March 31, 2024, represents legal and advisory fees related to ongoing litigation with our insurance carriers related to Batchelder matters for fiscal year 2024 and legal and advisory fees related to product liability cases that were settled for $100.0 million in June 2023. |
| (3) | Represents the amount we have agreed to pay pursuant to a settlement agreement with the Chapter 11 trustee (the "Trustee") for Tommy's Fort Worth LLC and its affiliate debtors. The Settlement Agreement was approved by United States Bankruptcy Court of the Northern District of Texas Fort Worth Division (the "Bankruptcy Court") on November 19, 2024, but has not gone effective because the Bankruptcy Court has not yet decided whether Mr. Borisch’s claims are property of the Tommy’s Boats bankruptcy estates. The Trustee’s request for that finding and an injunction against Mr. Borisch is still pending before the Bankruptcy Court. |
| (4) | Represents equity-based incentives awarded to employees under our long-term incentive plans and profit interests issued under the previously existing limited liability company agreement of the LLC. |
| (5) | We calculate net income (loss) margin as net income (loss) divided by net sales, and we define Adjusted EBITDA margin as Adjusted EBITDA divided by net sales. |
Adjusted Fully Distributed Net Income
We define Adjusted Fully Distributed Net Income as net income (loss) attributable to Malibu Boats, Inc. (i) excluding income tax expense (benefit), (ii) excluding the effect of non-recurring or non-cash items, (iii) assuming the exchange of all LLC Units into shares of Class A Common Stock, which results in the elimination of non-controlling interest in the LLC, and (iv) reflecting an adjustment for income tax expense (benefit) on fully distributed net income (loss) before income taxes at our estimated effective income tax rate. Adjusted Fully Distributed Net Income (Loss) is a non-GAAP financial measure because it represents net income (loss) attributable to Malibu Boats, Inc., before non-recurring or non-cash items and the effects of non-controlling interests in the LLC.
We use Adjusted Fully Distributed Net Income to facilitate a comparison of our operating performance on a consistent basis from period to period that, when viewed in combination with our results prepared in accordance with GAAP, provides a more complete understanding of factors and trends affecting our business than GAAP measures alone.
We believe Adjusted Fully Distributed Net Income assists our board of directors, management and investors in comparing our net income (loss) on a consistent basis from period to period because it removes non-cash or non-recurring items, and eliminates the variability of non-controlling interest as a result of member owner exchanges of LLC Units into shares of Class A Common Stock.
In addition, because Adjusted Fully Distributed Net Income is susceptible to varying calculations, the Adjusted Fully Distributed Net Income measures, as presented in this Quarterly Report, may differ from and may, therefore, not be comparable to similarly titled measures used by other companies.
The following table shows the reconciliation of the numerator and denominator for net income (loss) available to Class A Common Stock per share to Adjusted Fully Distributed Net Income per Share of Class A Common Stock for the periods presented (in thousands except share and per share data): | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, | | Nine Months Ended March 31, |
| 2025 | | 2024 | | 2025 | | 2024 |
| Reconciliation of numerator for net income (loss) available to Class A Common Stock per share to Adjusted Fully Distributed Net Income per Share of Class A Common Stock: | | | | | | | |
| Net income (loss) attributable to Malibu Boats, Inc. | $ | 12,890 | | | $ | (66,831) | | | $ | 10,205 | | | $ | (36,691) | |
| Provision (benefit) for income taxes | 3,676 | | | (7,425) | | | 3,005 | | | 3,459 | |
Goodwill and other intangible asset impairment 1 | — | | | 88,389 | | | — | | | 88,389 | |
Professional fees 2 | 808 | | | 839 | | | 3,849 | | | 1,986 | |
Acquisition and integration related expenses 3 | 1,641 | | | 1,659 | | | 4,995 | | | 5,013 | |
| | |
Stock-based compensation expense 4 | 264 | | | 1,839 | | | 4,297 | | | 3,162 | |
Litigation settlement 5 | — | | | — | | | 3,500 | | | — | |
| | |
Net income (loss) attributable to non-controlling interest 6 | 283 | | | (928) | | | 242 | | | (154) | |
| Fully distributed net income before income taxes | 19,562 | | | 17,542 | | | 30,093 | | | 65,164 | |
Income tax expense on fully distributed income before income taxes 7 | 4,793 | | | 4,298 | | | 7,373 | | | 15,965 | |
| Adjusted fully distributed net income | $ | 14,769 | | | $ | 13,244 | | | $ | 22,720 | | | $ | 49,199 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, | | Nine Months Ended March 31, |
| 2025 | | 2024 | | 2025 | | 2024 |
| Reconciliation of denominator for net income (loss) available to Class A Common Stock per share to Adjusted Fully Distributed Net Income per Share of Class A Common Stock: | | | | | | | |
| Weighted-average shares outstanding of Class A Common Stock used for basic net income (loss) per share: | 19,557,572 | | | 20,399,018 | | | 19,776,527 | | | 20,453,951 | |
| Adjustments to weighted-average shares of Class A Common Stock: | | | | | | | |
Weighted-average LLC units held by non-controlling unit holders 8 | 321,419 | | | 347,529 | | | 321,419 | | | 420,052 | |
Weighted-average unvested restricted stock awards issued to management 9 | 241,931 | | | 287,221 | | | 273,562 | | | 259,719 | |
| Adjusted weighted-average shares of Class A Common Stock outstanding used in computing Adjusted Fully Distributed Net Income per Share of Class A Common Stock: | 20,120,922 | | | 21,033,768 | | | 20,371,508 | | | 21,133,722 | |
The following table shows the reconciliation of net income (loss) available to Class A Common Stock per share to Adjusted Fully Distributed Net Income per Share of Class A Common Stock for the periods presented: | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, | | Nine Months Ended March 31, |
| 2025 | | 2024 | | 2025 | | 2024 |
| Net income (loss) available to Class A Common Stock per share | $ | 0.66 | | | $ | (3.28) | | | $ | 0.52 | | | $ | (1.79) | |
| Impact of adjustments: | | | | | | | |
| Provision (benefit) for income taxes | 0.19 | | | (0.36) | | | 0.15 | | | 0.17 | |
Goodwill and other intangible asset impairment 1 | — | | | 4.32 | | | — | | | 4.32 | |
Professional fees 2 | 0.04 | | | 0.04 | | | 0.19 | | | 0.10 | |
Acquisition and integration related expenses 3 | 0.08 | | | 0.09 | | | 0.25 | | | 0.25 | |
| | |
Stock-based compensation expense 4 | 0.01 | | | 0.09 | | | 0.22 | | | 0.15 | |
Litigation settlement 5 | — | | | — | | | 0.18 | | | — | |
| | |
| | |
| | |
| | |
| | |
Net income (loss) attributable to non-controlling interest 6 | 0.01 | | | (0.04) | | | 0.01 | | | (0.01) | |
| Fully distributed net income per share before income taxes | 0.99 | | | 0.86 | | | 1.52 | | | 3.19 | |
Impact of income tax expense on fully distributed income before income taxes 7 | (0.25) | | | (0.21) | | | (0.37) | | | (0.78) | |
Impact of increased share count 10 | (0.02) | | | (0.02) | | | (0.03) | | | (0.08) | |
| Adjusted Fully Distributed Net Income per Share of Class A Common Stock | $ | 0.72 | | | $ | 0.63 | | | $ | 1.12 | | | $ | 2.33 | |
| | | | | |
|
| (1) | For the three and nine months ended March 31, 2024, represents impairment of goodwill and trade names related to our Maverick Boat Group reporting unit in the amounts of $49.2 million and $39.2 million, respectively. |
| (2) | For the three and nine months ended March 31, 2025, represents legal and advisory fees related to ongoing litigation with our insurance carriers related to the Batchelder matters and ongoing litigation with Tommy's Boats and Matthew Borisch for fiscal year 2025. For the three and nine months ended March 31, 2024, represents legal and advisory fees related to ongoing litigation with our insurance carriers related to Batchelder matters for fiscal year 2024 and legal and advisory fees related to product liability cases that were settled for $100.0 million in June 2023. |
| (3) | For the three and nine months ended March 31, 2025 and 2024, represents amortization of intangibles acquired in connection with the acquisitions of Maverick Boat Group, Pursuit and Cobalt. |
|
| (4) | Represents equity-based incentives awarded to employees under our long-term incentive plans and profit interests issued under the previously existing limited liability company agreement of the LLC. |
|
|
| (5) | Represents the amount we have agreed to pay pursuant to a settlement agreement with Trustee for Tommy's Fort Worth LLC and its affiliate debtors. The Settlement Agreement was approved by the Bankruptcy Court on November 19, 2024, but has not gone effective because the Bankruptcy Court has not yet decided whether Mr. Borisch’s claims are property of the Tommy’s Boats bankruptcy estates. The Trustee’s request for that finding and an injunction against Mr. Borisch is still pending before the Bankruptcy Court. |
| (6) | Reflects the elimination of the non-controlling interest in the LLC as if all LLC members had fully exchanged their LLC Units for shares of Class A Common Stock. |
| (7) | Reflects income tax expense at an estimated normalized annual effective income tax rate of 24.5% and 24.5% of income before income taxes for the three and nine months ended March 31, 2025 and 2024, respectively, assuming the conversion of all LLC Units into shares of Class A Common Stock. The estimated normalized annual effective income tax rate for fiscal year 2025 is based on the federal statutory rate plus a blended state rate adjusted for the research and development tax credit, the foreign derived intangible income deduction, and foreign income taxes attributable to our Australian subsidiary. |
| (8) | Represents the weighted-average shares outstanding of LLC Units held by non-controlling interests assuming they were exchanged into Class A Common Stock on a one-for-one basis. |
| (9) | Represents the weighted-average unvested restricted stock awards included in outstanding shares during the applicable period that were convertible into Class A Common Stock and granted to members of management. |
| (10) | Reflects impact of increased share counts assuming the exchange of all weighted-average shares outstanding of LLC Units into shares of Class A Common Stock and the conversion of all weighted-average unvested restricted stock awards included in outstanding shares granted to members of management. |
Liquidity and Capital Resources
Overview and Primary Sources of Cash
Our primary uses of cash have been for funding working capital and capital investments, repayments under our debt arrangements, acquisitions, cash distributions to members of the LLC, cash payments under our tax receivable agreement and stock repurchases under our stock repurchase program. For both the short term and the long term, our sources of cash to meet these needs have primarily been operating cash flows, borrowings under our revolving credit facility and short and long-term debt financings from banks and financial institutions. We believe that our cash on hand, cash generated by operating activities and funds available under our revolving credit facility will be sufficient to finance our operating activities for at least the next twelve months and beyond.
Material Cash Requirements
Our typical uses of cash are for capital expenditures, debt service obligations, payments under our tax receivables agreement, our lease obligations and return of capital to our stockholders, which has typically been accomplished through our stock repurchase programs.
Capital Expenditures. For fiscal year 2024, we incurred approximately $76.0 million in capital expenditures primarily related to the purchase and completion of our Roane County, Tennessee facility as well as new models, capacity enhancements and vertical integration initiatives. We expect capital expenditures between $25.0 million and $30.0 million for fiscal year 2025 (of which we have incurred approximately $21.0 million through the first nine months of fiscal year 2025), primarily for investments in new models, capacity enhancements and vertical integration initiatives. Other investment opportunities, such as potential strategic acquisitions, may require additional funding.
Principal and Interest Payments. Our Third Amended and Restated Credit Agreement (the “Credit Agreement”) provides us with a revolving credit facility in an aggregate principal amount of up to $350.0 million. As of March 31, 2025, we had $28.0 million outstanding under our revolving credit facility and $1.7 million in outstanding letters of credit, with $320.3 million available for borrowing. The revolving credit facility matures on July 8, 2027. Assuming no additional repayments or borrowings on our revolving credit facility after March 31, 2025, our interest payments would be approximately $2.2 million within the next 12 months based on the interest rate at March 31, 2025 of 7.75%. See below under “Revolving Credit Facility” for additional information regarding our revolving credit facility, including the interest rate applicable to any borrowing under such facility.
Tax Receivable Agreement. We entered into a tax receivable agreement with our pre-IPO owners at the time of our initial public offering. Under the tax receivables agreement, we pay the pre-IPO owners (or any permitted assignees) 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax or franchise tax that we actually realize, or in some circumstances are deemed to realize, as a result of an expected increase in our share of tax basis in LLC’s tangible and intangible assets, including increases attributable to payments made under the tax receivable agreement. These obligations will not be paid if we do not realize cash tax savings. We estimate that no amounts will be due under the tax receivable agreement within the next 12 months. In accordance with the tax receivable agreement, the next payment is anticipated to occur once net operating losses are utilized and there is sufficient taxable income.
Operating Lease Obligations. Lease commitments consist principally of leases for our manufacturing facilities. Our expected operating lease payments due within the next 12 months are $2.7 million and our total committed lease payments are $8.5 million as of March 31, 2025. Additional information regarding our operating leases is available in Note 10 of our unaudited interim condensed consolidated financial statements included elsewhere in this Quarterly Report.
Purchase Obligations. In the ordinary course of business, we enter into purchase orders from a variety of suppliers, primarily for raw materials, in order to manage our various operating needs. The orders are expected to be purchased throughout fiscal year 2025 and into fiscal year 2026. We or the vendor can generally terminate the purchase orders at any time. These purchase orders do not contain any termination payments or other penalties if cancelled. As of March 31, 2025, we had purchase orders in the amount of $80.2 million due within the next 12 months.
Return of Capital/Stock Repurchase Program. We previously announced that we intend to return capital of at least $10.0 million per quarter through May 2025 through either the repurchase of Class A Common Stock or through dividend payments. To date, we have returned capital to our stockholders through the repurchase of our stock and have not declared any dividends. Our Board of Directors authorized a stock repurchase program (the "2023 Repurchase Program") for the repurchase of up to $100.0 million of our Class A Common Stock and the LLC's LLC Units for the period from November 8, 2023 to November 8, 2024. Between July 1, 2024 and November 8, 2024, we repurchased 519,466 shares of Class A Common Stock for $20.2 million in cash including related fees and expenses under the 2023 Repurchase Program which expired on November 8, 2024.
On October 23, 2024, our Board of Directors authorized a new stock repurchase program (the "2024 Repurchase Program") for the repurchase of up to $50.0 million of our Class A Common Stock and the LLC's LLC Units for the period from November 9, 2024 to June 30, 2025. Between November 9, 2024 and March 31, 2025, we repurchased 279,340 shares of Class A Common Stock for $10.1 million in cash including related fees and expenses under the 2024 Repurchase Program. As of March 31, 2025, $39.9 million was available to repurchase shares of Class A Common Stock and LLC Units under the 2024 Repurchase Program. We may repurchase shares of our common stock at any time or from time to time, without prior notice, subject to market conditions and other considerations. We have no obligation to repurchase any shares of our common stock under the share repurchase program. We intend to fund repurchases under the repurchase program from cash on hand.
During fiscal year 2024, we had a one-time payment of $100.0 million with respect to a settlement agreement entered in connection with the settlement of all Batchelder-related product liability matters. We borrowed $75.0 million under the revolving credit facility to fund a portion of that payment. We maintain liability insurance applicable to the Batchelder-related matters with coverage up to $26.0 million. As of March 31, 2025, we had received approximately $21.0 million in insurance coverage proceeds, subject in certain cases to reservation of rights by the insurance carriers. We contend that the insurance carriers are responsible for the entirety of the $100.0 million settlement amount and related expenses, and therefore the insurers’ payments to date are well below what they should have tendered to Boats LLC. Accordingly, on July 3, 2023, Boats LLC filed a complaint against Federal Insurance Company and Starr Indemnity & Liability Company alleging that the insurers unreasonably failed to comply with their obligations by refusing, negligently and in bad faith, to settle covered claims within their available policy limits prior to trial. On April 8, 2024, the court dismissed Starr, noting that only Chubb had the contractual right and duty to settle the Batchelder matters prior to trial. We intend to vigorously pursue our claims against our insurers to recover the full $100.0 million settlement amount and expenses (less any monies already tendered without reservation by the carriers). However, we cannot predict the outcome of such litigation.
Our future capital requirements beyond the next 12 months will depend on many factors, including the general economic environment in which we operate and our ability to generate cash flow from operations, which are more uncertain as a result of inflation, changing interest rates and volatile fuel prices. Our liquidity needs during this uncertain time will depend on multiple factors, including our ability to continue operations and production of boats, the performance of our dealers and suppliers, potential strategic acquisitions, the impact of the general economy on our dealers, suppliers and retail customers, the availability of sufficient amounts of financing, and our operating performance.
The following table summarizes the cash flows from operating, investing and financing activities (dollars in thousands):
| | | | | | | | | | | |
| | Nine Months Ended March 31, |
| | 2025 | | 2024 |
| Total cash provided by (used in): | | | |
| Operating activities | $ | 35,467 | | | $ | 39,221 | |
| Investing activities | (20,575) | | | (64,092) | |
| Financing activities | (2,855) | | | (6,875) | |
| Impact of currency exchange rates on cash balances | (269) | | | (75) | |
| Increase (decrease) in cash | $ | 11,768 | | | $ | (31,821) | |
Operating Activities
Net cash provided by operating activities was $35.5 million for the nine months ended March 31, 2025, compared to $39.2 million for the nine months ended March 31, 2024, a decrease of $3.8 million. The decrease in cash from operating activities resulted from a decrease of $34.6 million in net income (after consideration of non-cash items included in net income (loss), primarily related to depreciation, amortization, deferred tax assets and non-cash compensation) offset by a net increase in operating assets and liabilities of $30.8 million. The increase in net operating assets and liabilities was primarily driven by a one-time payment of $100.0 million with respect to a settlement agreement entered in connection with all Batchelder-related product liability matters during the nine months ended March 31, 2024, offset by $21.0 million in insurance coverage proceeds received during the nine months ended March 31, 2024 that are subject in certain cases to reservations of rights by the insurance carriers, as well as the timing of collections of accounts receivables, payments for accruals and payables, and purchases of inventory.
Investing Activities
Net cash used in investing activities was $20.6 million for the nine months ended March 31, 2025, compared to net cash used in investing activities of $64.1 million for the nine months ended March 31, 2024, a decrease in net cash used of $43.5
million. The decrease in net cash used in investing activities for the nine months ended March 31, 2025 was primarily related to decreased capital expenditures compared to the nine months ended March 31, 2024. We had increased capital expenditures for the nine months ended March 31, 2024 due to our purchase of our Roane County, Tennessee facility and related capital improvements.
Financing Activities
Net cash used in financing activities was $2.9 million for the nine months ended March 31, 2025 compared to net cash used in financing activities of $6.9 million for the nine months ended March 31, 2024, a decrease in cash used of $4.0 million. During the nine months ended March 31, 2025, we borrowed $28.0 million, net of repayments, under our revolving credit facility and repurchased $30.3 million of our Class A Common Stock under our current stock repurchase program. During the nine months ended March 31, 2024, we borrowed $15.0 million, net of repayments, under our revolving credit facility and repurchased $19.7 million of our Class A Common Stock under our prior stock repurchase program.
Revolving Credit Facility
On July 8, 2022, Boats LLC entered into the Third Amended and Restated Credit Agreement (the “Credit Agreement”) which provides Boats LLC with a revolving credit facility in an aggregate principal amount of up to $350.0 million. As of March 31, 2025, the Company had $28.0 million outstanding under its revolving credit facility and $1.7 million in outstanding letters of credit, with $320.3 million available for borrowing. The revolving credit facility matures on July 8, 2027. Boats LLC has the option to request that lenders increase the amount available under the revolving credit facility by, or obtain incremental term loans of, up to $200.0 million, subject to the terms of the Credit Agreement and only if existing or new lenders choose to provide additional term or revolving commitments.
Our indirect subsidiary, Malibu Boats, LLC, is the borrower under the Credit Agreement and its obligations are guaranteed by the LLC and, subject to certain exceptions, the present and future domestic subsidiaries of Malibu Boats, LLC, and all such obligations are secured by substantially all of the assets of the LLC, Malibu Boats, LLC, and such subsidiary guarantors. Malibu Boats, Inc. is not a party to the Credit Agreement.
All borrowings under the Credit Agreement bear interest at a rate equal to either, at our option, (i) the highest of the prime rate, the Federal Funds Rate plus 0.5%, or one-month Term SOFR plus 1% (the “Base Rate”) or (ii) SOFR, in each case plus an applicable margin ranging from 1.25% to 2.00% with respect to SOFR borrowings and 0.25% to 1.00% with respect to Base Rate borrowings. The applicable margin will be based upon the consolidated leverage ratio of the LLC and its subsidiaries. We are required to pay a commitment fee for the unused portion of the revolving credit facility, which will range from 0.15% to 0.30% per annum, depending on the LLC and its subsidiaries’ consolidated leverage ratio.
The Credit Agreement contains certain customary representations and warranties, and notice requirements for the occurrence of specific events such as the occurrence of any event of default or pending or threatened litigation. The Credit Agreement also requires compliance with certain customary financial covenants consisting of a minimum ratio of EBITDA to interest expense and a maximum ratio of total debt to EBITDA. The Credit Agreement contains restrictive covenants regarding indebtedness, liens, fundamental changes, investments, share repurchases, dividends and distributions, disposition of assets, transactions with affiliates, negative pledges, hedging transactions, certain prepayments of indebtedness, accounting changes and governmental regulation.
The Credit Agreement also contains customary events of default. If an event of default has occurred and continues beyond any applicable cure period, the administrative agent may (i) accelerate all outstanding obligations under the Credit Agreement or (ii) terminate the commitments, amongst other remedies. Additionally, the lenders are not obligated to fund any new borrowing under the Credit Agreement while an event of default is continuing.
Repurchase Commitments
Our dealers have arrangements with certain finance companies to provide secured floor plan financing for the purchase of our boats. These arrangements indirectly provide liquidity to us by financing dealer purchases of our products, thereby minimizing the use of our working capital in the form of accounts receivable. A majority of our sales are financed under similar arrangements, pursuant to which we receive payment within a few days of shipment of the product. In most cases, we have agreed to repurchase products repossessed by the finance companies if a dealer defaults on its debt obligations to a finance company and the boat is returned to us, subject to certain limitations. Our financial exposure under these agreements is limited to the difference between the amounts unpaid by the dealer with respect to the repossessed product plus costs of repossession and the amount received on the resale of the repossessed product. During the nine months ended March 31, 2025, we repurchased 22 units that were subject to repurchase agreements, including 19 boats that were related to the ongoing bankruptcy with Tommy's Boats totaling $2.5 million. The repurchases of the boats in the inventory of Tommy's Boats was reflected in our June 30, 2024 consolidated financial statements and those boats were subsequently resold during the three months ended
September 30, 2024 above cost. With respect to boats held by Tommy's Boats and not subject to the repurchase agreement, the Trustee retained Gordon Brothers to sell the remaining inventory as part of liquidation sales. As of December 31, 2024, we believe none of our new model year 2023 and 2024 boats were remaining in the inventory of Tommy's Boats. For fiscal year 2023, we did not repurchase any boats under our repurchase agreements. An adverse change in retail sales could require us to repurchase repossessed units upon an event of default by any of our dealers, subject to the annual limitation. Refer to Note 15 to the unaudited interim condensed consolidated financial statements included elsewhere in this Quarterly Report for further information on repurchase commitments.
Critical Accounting Policies
As of March 31, 2025, there were no significant changes in the application of our critical accounting policies or estimation procedures from those presented in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Refer to our Annual Report on Form 10-K for the year ended June 30, 2024, for a complete discussion on the Company’s market risk. There have been no material changes in market risk from those disclosed in the Company's Form 10-K for the year ended June 30, 2024.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
As of the end of the period covered by this Quarterly Report, we carried out an evaluation under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures. Based upon this evaluation, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2025.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting during the quarter ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Part II - Other Information
Item 1. Legal Proceedings
The discussion of legal matters under this section entitled "Legal Proceedings" is incorporated by reference from Note 15 of our unaudited interim condensed consolidated financial statements included elsewhere in this Quarterly Report.
The pending lawsuits described in Note 15 of our unaudited interim consolidated financial statements and any other related lawsuits are subject to inherent uncertainties, and the actual defense and disposition costs will depend upon many unknown factors. The outcomes of the pending lawsuits and any other related lawsuits are necessarily uncertain. We could be forced to expend significant resources in the defense of the pending lawsuits and any additional lawsuits, and we may not prevail. In addition, we may incur substantial legal fees and costs in connection with such lawsuits. We currently are not able to estimate the possible cost to us from these matters, as the pending lawsuits are currently at an early stage, and we cannot be certain how long it may take to resolve the pending lawsuits or the possible amount of any damages that we may be required to pay. Such amounts could be material to our financial statements if we do not prevail in the defense of the pending lawsuits and any other related lawsuits, or even if we do prevail. We have not established any reserve for any potential liability relating to the pending lawsuits and any other related lawsuits. It is possible that we could, in the future, incur judgments or enter into settlements of claims for monetary damages.
Item 1A. Risk Factors
During the quarter ended March 31, 2025, there were no material changes to the risk factors discussed in Part I, Item 1A. "Risk Factors” of our Annual Report on Form 10-K for the year ended June 30, 2024.
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities
Unregistered Sales of Equity Securities
None.
Repurchase of Class A Common Stock
This table provides information with respect to purchases by us of shares of our Class A Common Stock under our stock repurchase program during the quarter ended March 31, 2025 (in thousands except share and per share data). | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Period | | Total Number of Shares Purchased | | Average Price Paid Per Share | | Total Number of Shares Purchased as Part of Publicly Announced Plans | | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan (1) |
| January 1, 2025 through January 31, 2025 | | 122,710 | | | $ | 36.64 | | | 122,710 | | | $ | 45,459 | |
| February 1, 2025 through February 28, 2025 | | 118,077 | |
| 36.20 | | | 118,077 | | | 41,142 | |
| March 1, 2025 through March 31, 2025 | | 38,553 | | | 31.90 | | | 38,553 | | | 39,900 | |
| | | |
| Total | | 279,340 | | | $ | 35.94 | | | 279,340 | | | $ | 39,900 | |
(1) On October 23, 2024, our Board of Directors authorized a stock repurchase program to allow for the repurchase of up to $50.0 million of its Class A Common Stock and the LLC's LLC Units (the “2024 Repurchase Program”) for the period from November 8, 2024 to June 30, 2025. During the three months ended March 31, 2025, we repurchased 279,340 shares of Class A Common Stock for $10.1 million in cash including related fees and expenses under our 2024 Repurchase Program. As of March 31, 2025, $39.9 million was available to repurchase shares of Class A Common Stock and LLC Units under the 2024 Repurchase Program. Our share repurchase programs do not obligate us to repurchase a minimum amount of shares. Under the programs, shares of Class A Common Stock may be repurchased in privately negotiated or open market transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
.
Item 6. Exhibits | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Incorporated by Reference |
| Exhibit No. | | Description | | Form | File No. | | Exhibit | | Filing Date |
| | Certificate of Incorporation of Malibu Boats, Inc. | | S-1 | 333-192862 | | 3.1 | | January 8, 2014 |
| | Second Amended and Restated Bylaws of Malibu Boats, Inc. | | 8-K | 001-36290 | | 3.1 | | October 28, 2024 |
| | Certificate of Formation of Malibu Boats Holdings, LLC | | S-1 | 333-192862 | | 3.3 | | January 8, 2014 |
| | First Amended and Restated Limited Liability Company Agreement of Malibu Boats Holdings, LLC, dated as of February 5, 2014 | | 8-K | 001-36290 | | 10.1 | | February 6, 2014 |
| | First Amendment, dated as of February 5, 2014, to First Amended and Restated Limited Liability Company Agreement of Malibu Boats Holdings, LLC | | 10-Q/A | 001-36290 | | 3.5 | | May 13, 2014 |
| | Second Amendment, dated as of June 27, 2014, to First Amended and Restated Limited Liability Company Agreement of Malibu Boats Holdings, LLC | | 8-K | 001-36290 | | 3.1 | | June 27, 2014 |
| | Description of Class A Common Stock | | 10-K | 001-36290 | | 4.1 | | August 29, 2024 |
| | Form of Class A Common Stock Certificate | | S-1 | 333-192862 | | 4.1 | | January 8, 2014 |
| | Form of Class B Common Stock Certificate | | S-1 | 333-192862 | | 4.2 | | January 8, 2014 |
| | Exchange Agreement, dated as of February 5, 2014, by and among Malibu Boats, Inc. and Affiliates of Black Canyon Capital LLC and Horizon Holdings, LLC | | 8-K | 001-36290 | | 10.2 | | February 6, 2014 |
| | Exchange Agreement, dated as of February 5, 2014, by and among Malibu Boats, Inc. and the Members of Malibu Boats Holdings, LLC | | 8-K | 001-36290 | | 10.3 | | February 6, 2014 |
| | Tax Receivable Agreement, dated as of February 5, 2014, by and among Malibu Boats, Inc., Malibu Boats Holdings, LLC and the Other Members of Malibu Boats Holdings, LLC | | 8-K | 001-36290 | | 10.4 | | February 6, 2014 |
| | Certificate of the Chief Executive Officer of Malibu Boats, Inc. pursuant to Rule 13a-14 or 15d-14 of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | | | | | | |
| | Certificate of the Chief Financial Officer of Malibu Boats, Inc. pursuant to Rule 13a-14 or 15d-14 of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | | | | | | |
| | Certification of the Chief Executive Officer and Chief Financial Officer of Malibu Boats, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | | | | | | |
| 101 | | The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 were formatted in Inline XBRL: (i) Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), (ii) Condensed Consolidated Balance Sheets, (iii) Condensed Consolidated Statements of Stockholders’ Equity, (iv) Condensed Consolidated Statements of Cash Flows, and (v) the Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed tags. | | | | | | | |
| 104 | | The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, formatted in Inline XBRL (Included as Exhibit 101). | | | | | | | |
* Management contract or compensatory plan or arrangement.
++ Filed herewith
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | | | | | | | | | | |
| May 8, 2025 | | MALIBU BOATS, INC. | |
| | | |
| | By: | /s/ Steven D. Menneto |
| | | Steven D. Menneto, Chief Executive Officer |
| | | (Principal Executive Officer) |
| | By: | /s/ Bruce W. Beckman |
| | | Bruce W. Beckman, Chief Financial Officer |
| | | (Principal Financial Officer and Principal Accounting Officer) |
Similar companies
See also GENERAL DYNAMICS CORP -
Annual report 2022 (10-K 2022-12-31)
Annual report 2023 (10-Q 2023-10-01)
See also HUNTINGTON INGALLS INDUSTRIES, INC. -
Annual report 2022 (10-K 2022-12-31)
Annual report 2023 (10-Q 2023-09-30)
See also MasterCraft Boat Holdings, Inc. -
Annual report 2023 (10-K 2023-06-30)
Annual report 2023 (10-Q 2023-10-01)
See also MARINE PRODUCTS CORP -
Annual report 2022 (10-K 2022-12-31)
Annual report 2023 (10-Q 2023-09-30)
See also Vision Marine Technologies Inc.
Open main menu