MALIBU BOATS, INC. Q3 FY2025 earnings call

• Solid execution in a challenging environment with Q3 sales and adjusted EBITDA margins exceeding guidance. - Dealer inventories at the start of the selling season are healthy, aligning with historical levels and below last year's. - Pursuit brand received the Marine Industry Customer Satisfaction Award; Cobalt saw a 380 basis points gain in market share. - Innovation is crucial, with new models driving sales at boat shows. - Tariffs not expected to significantly impact fiscal '25 cost structure; proactive supply chain management in place. - Agile operating model supported by a strong balance sheet and robust cash flow.

Net sales for the third quarter of fiscal 2025 were $228.7 million, an increase of 12.4% compared to Q3 of fiscal 2024. Unit volume rose 12.8% to 1,431 units. The Malibu and Axis brands accounted for approximately 52% of unit sales, Saltwater Fishing made up 22.8%, and Cobalt constituted the remaining 25.2%. Gross profit increased 13.4% to $45.7 million, with gross margin at 20.0%. Adjusted EBITDA for Q3 was $28.3 million, up 16.0%, and the adjusted EBITDA margin was 12.4%.

• Revised full-year net sales to be down 3% to down 5%. - Adjusted EBITDA margins expected to be between 9% and 10%. - CapEx expectations tightened to $25 million to $30 million. - Modestly reducing the pace of share repurchases from the $10 million executed in Q3.

• Macroeconomic uncertainty impacting consumer spending and discretionary purchases. - Tariff-related potential price increases and supply chain risks. - Variable cost structure and potential cost pressures affecting the business.

Q: What would the goal be by the end of June with respect to dealer inventory and relative to last June?

A: Expect to bring dealer inventories down in the mid-teens percent, which will put them below last year's levels. Dealers want to take inventories below historical levels due to macroeconomic uncertainty.

Q: Do you have insights into the behavior of the boat customer, including repeat and first-time buyers?

A: Repeat cash buyers are returning, but new buyers are still a small percentage of overall retail. The percent of sales to first-time buyers has held steady over time.

Q: Any way to think about tariff risk for fiscal year '26 and beyond?

A: Source about 18%-20% of cost of sales from outside the U.S., with a team focused on mitigation strategies like reshoring and buying ahead.

Q: How did demand trend in the quarter and in April?

A: Demand had the seasonal ramp as expected but didn't have the robust punch hoped for a few quarters ago. New products are doing well in April too.

Q: How are you thinking about cost levers if things were to deteriorate?

A: Rely on the highly variable cost structure (80%-90% variable above the gross margin line) and can free up cash from the balance sheet to manage a downturn.

Q: Comment on the saltwater segment performance?

A: Saw improvement in the saltwater segment, particularly in Florida, but it didn't bounce back to growth, just returned to the overall market trend.

Q: What's behind the adjusted EBITDA pressure in the upcoming quarter?

A: Revised market expectations led to adjusting production levels, which impacts overall financial projections for the year and quarter.

Q: Thoughts on capital allocation and share repurchases given the environment?

A: Remain committed to capital allocation priorities but may modify tactics; modifying share repurchase pace in Q4 but still expect share repurchases as part of the strategy to maximize shareholder value.