MBUU - Earnings call transcript Q2 2025

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Operator

Good morning, and welcome to the Malibu Boats Conference Call to discuss Second Quarter Fiscal Year 2025 Results. [Operator Instructions] Please be advised that reproduction of this call in whole or in part is not permitted without written authorization of Malibu Boats. And as a reminder, today's call is being recorded. [Operator Instructions]

On the call today from management are Mr. Officer; Executive Chief Menneto, and Mr. Steve Chief Beckman, Financial Officer. Bruce

call Mr. go Beckman I will get to the turn Please now to over it ahead. started.

Bruce Beckman

and you, morning, Thank good everyone.

our on Steve call me is Joining Menneto. today's CEO,

will Steve will fiscal on and quarter On the discuss financials. provide second call, our XXXX the commentary business, I year of

the questions. then We open will call for

in section press covering the press results the and today, issued of release company's that XXXX Relations A a can release the company's website. found be was of fiscal second Investor copy quarter

also this today's want results actual and considered forward-looking call. predictions, to remarks I be remind everyone on that estimates call statements, could management's that differ expectations, other on might and certain information materially that may from contain forward-looking projected including those

not might the affect future statements, reliance results them of that should no place as more in only we company factors. or forward-looking update for discussed obligation and of to review speak information SEC events. these today, new detailed on are to and which description the for a these you any filings SEC, undertakes undue Factors our risk filings with future our encourage You

of in that are call, GAAP margin, net measures non-GAAP to be release. will measures on these financial adjusted fully adjusted financial financial and income measures earnings non-GAAP included per today's Please referring Reconciliations adjusted income note such also share. EBITDA, we adjusted distributed to as certain EBITDA our fully net distributed

over I to Steve? turn will Steve. now the call

Steven Menneto

for Thank call. you, the joining all Bruce, thank you and

a year. been slightly fiscal expected quarter what than traditionally has time second came slower in of higher Our results during

more the forecasted the retail full-year. remain challenging we than initially market for However, broader marine trends

Axis strong a quarter our in performance, of segment assumptions. our benefited indicators the mix favorable are below demand While and original ASP from Malibu

retail purchases from lagging continued pressures, season. to the on market consumer sustained driven to attribute we largely we environment, stemming the effects quarter, rate coupled challenging this with which demand navigate muted by the During interest hurricane

result, decline a the down market low mid-single which tracking had digit double-digits planned we is for. year-to-date, the As originally is below

is particularly focus sales channel decreased levels in the due maintaining to year-over-year to with in our regional modest Florida. softness quarter Retail Saltwater line by production inventories. impacts evident approximately Overall, due in on in X.X% net the lingering lower

lower prioritize remainder Disciplined production dealer Shifting and our will as early to channel year the continue inventories brand we and for the be boat health to shows. focus season fiscal of the strength.

had to know, staying all insights to our across XXXX new you showcase for provide these in apart. confidence the opportunity continues these willingness Dealer customers' set brands. feature to into of which many and lineup our models, leading edge commitment As purchase us of innovation, reaffirmed important our to we events the rich our introductions on enthusiasm

but not in been season Results have in do retail a half the rebound heading early strong decent, into activity the the year. second shows suggest of

to as evidence February the we we closely the the Boat Saltwater and until within continue will of Show for see We watch market. signals Miami major disciplined firmer in segment improvement remain head into

Year Axis with higher compared our tradition and sell-through retail Sales early the promotional overall End were maintained up Along with participation XX We wrapped last a the in required. levels by Malibu for the quarter. season to encouraged good shows, support year of we've years, event, earlier moderating

to continue of environment. the the underscore strength to our and current resonate in with continues customers brands This how they

mind top focused this However, units, while non-current to note discipline it moving across sign that remains dealers positive, of inventory that activity channel. the important many is a is on

year. continue in of the ahead, especially look the we will we recognize a market, half sustained fiscal that saltwater, in softening As in the second likely

mid-single-digit it anticipate original a market decline to enough year. market with align to is do unlikely assumption seasonal we the for While some our lift, for lift the

to margins of outlook down reflect year with our weaker adjusted low adjusting for sales approximately retail EBITDA to to reality the the top-line and be to single-digits Therefore, trends we flat XX%. expected reflect are

clear As materializes ramping term monitor preserving in I demand stated a prematurely earlier, set we as Meeting our success environment. continue will focus remains position path. and up on and our health brand maintaining it retail the as for without production dealer long the us to not

I us market and and ability our team's to am normalizes. dealer Overall, these thrive innovation with on health confident when weather positioning to in to our commitment conditions demand emphasis

on to over remarks quarter. I will for Bruce now the turn the call further

Bruce Beckman

Thanks, Steve.

Malibu the results Net The primarily decreased expectations. sales to in sales units. in volume primarily million decrease driven model decreased unit to X,XXX partially Saltwater and in segments, and favorable year-over-year were net Malibu price offset the our second above increases. mix our Our in by XX% decreased decreased unit shipments, a was and segments Fishing slightly from resulting X.X% quarter $XXX.X volumes Saltwater and wholesale by inflation-driven

up unit Saltwater Axis per sales per unfavorable The mix. the XX.X%. and and to by favorable the inflation-driven and Malibu in made of sales, net segments brands Saltwater XX% increased driven XX.X% price segment Consolidated represented Cobalt unit offset Fishing and unit, Malibu partially $XXX,XXX primarily year-over-year remaining represented mix by approximately model X.X% increases,

than highly by resilience driven the efficiencies of X.X% increase demonstrating profit mix a model and to operations deleverage, cost the period. was our XX favorable year The basis represents XX.X%. variable more of $XX.X margin in and again, This decreased volume of structure. and an Gross to gross offsetting as million prior points percent plant gross margin sales increase a was compared our

events. the expenses and marketing increase increase quarter. driven an Selling and personnel expenses X.X% increased second certain by primarily The in was marketing in

and marketing percentage a XX selling by X%. of to expenses basis year prior points the As increased versus sales,

XX.X% expenses and by legal primarily compensation-related million. increase or administrative was increased an driven This in fees and $XX.X increase General expenses.

XX.X%. a of As percentage G&A were expenses sales,

million. million, decreased GAAP EBITDA versus prior $XX.X the Adjusted year. net to income for decreased $X.X from the adjusted EBITDA quarter X.X% decreased in for XX.X% the the prior quarter to year XX.X% and to margin XX.X%

normalized of XX.X% distributed share net million to fully This calculated a per income distributed C-Corp fully using share. rate decreased per weighted of average $X.XX adjusted XX.X approximately tax XX.X% shares. and share count Non-GAAP a is

fully and net share, in metrics adjusted For see adjusted a release. per reconciliation tables distributed of earnings the our GAAP EBITDA income to please

demonstrate to million, million generating we Capital our summary, of liquidity sheet to allocation to capital cash operations our priorities. $X.X stock in the and continues continue on over strong, expenditures from have were quarter. the business $XX quarter. execute we million $XX our In We repurchased in and the resilience ample model, in of balance be

full-year. our to Turning attention the

this enable As the us Steve based. market clear original assumption was a guidance maintain in environment that retail do We we a so trend which operate mid-single change to to decline of would on see with described, double-digits down challenging far year. not digit continue markets our upward

for high managing by adjusting Given these expecting dynamics, approach dealer the we market are the maintain to be and production year, fiscal we are inventories. disciplined levels to accordingly our down single-digits the to

on expect remain to inventory historical focused and our to below continue dealers ranges prioritize We to bringing continue levels health. dealer

our With guidance. we that said, updating are

be the growth of we expect with comparisons to in fiscal year-over-year. to to ease. sales For still half year single-digits guidance, to the Even down flat year, as return this full expect we in low now second revision our the full-year modest

increase margin to XX%. We consolidated As net to anticipate such, the sales EBITDA the be full for the for QX, XX% year prior approximately adjusted expect we versus fiscal year. approximately

margins approximately XX%. adjusted XX% expect EBITDA For of QX, we to

our to of channel with demand when the calibrating second and wholesale inventory, will consecutive be this year track will retail This position returns.

a keep even disciplined our the production to turns. on and as tide which demand close will in indicators us will dealer remain eye We stronger approach and health, levels position

stability priorities. balance strong highly our with sheet, execute both allocation our and headwinds, on near-term environments generation us continuing the tough flow market Despite help cost variable flexibility weather capital continued while and to cash provide us to structure

to the call for With that, questions. I'd up like open

Operator

The Craig comes Kennison question instruction] first from [Operator Baird. with

Craig Kennison

to hurricane replacement your to the I there's signal with And just I'm there's wonder start exposure overall longer-term. wanted some wondering of there market? implications, that a demand What's if I'm were activity sure I to any near-term, of in and if Florida. implications in unpack negative way Florida.

Steven Menneto

down some still of challenges Florida, is to there, rearing Yes. as and are course, their Thanks, know, Craig. recover the we you of have trying head.

is us. more than So accelerated in is look we in saltwater, the the do at our has market than low XX% business of for Florida more Florida. total U.S. down across saltwater when that We market overall double-digits.

with us having accelerated with you pretty downtrend see of such the that beyond that So overall impacting there. a heavily us could concentration business U.S. that's market,

Craig Kennison

replacement it its replacement comes and for, And on know, to how maybe I demand a when that, you recovery don't Steve, of sure the have are what if have visibility demand thing lot unfolds. their any is down hey, for mind. way? priorities first signal different their But looking there not on a boat the consumers there's into you I'm

Steven Menneto

Yes.

right X like to new to that get improvements it. affected. as replacement. wholesale dock one back any Roofs type get hard think, that from rebuild in it months your there, don't to all docks, you're going We it's Craig, you're -- if are a months coming right, volume. make see predict, within we indicators just the got to replacement trying said it's now, this there's out to we home to trying X this We I know of get down trying on back you quarter, your where

your just dock takes get get boat. to So got get your looking a dock you long you it in, back how at to before

You got to go insurance. through the

before steps a we start is seeing replacement there So of volume. lot

replacement figure will kind sharp of comeback will And over moment, so just of time. in big volume it one back we come kind not but

Operator

with comes question Raymond James. Joe Altobello next The from

Joseph Altobello

on So guidance. I guess first question the

in implies improvement the in the but get half is second Your mid-XXs. my second growth guide in much call easier, still implies number? have half think do I I modest also here, visibility market a short you how question it, I compares And do trends. it guess revenue that know

Bruce Beckman

Joe, Bruce. it's

have given good stand. for the think where pretty we orders visibility third quarter, I

quarter, I becomes happens the be on fourth really the underlying which market. what in that in think will what always question predicated happens

the will in our prior ease we I third quarters. business and you growth in year, of relates we As the comparisons return to the much fourth deceleration second year. mean, to half lot A of the a saw how last versus that year. really just noted, in

And so certainly is there's-- that major factor. a

place then market, here perspective, the to activity second the of in the year. probably take remains activity XX% there's retail this of a from of half of yet time a retail is the quite year. the retail in that retail And still about our It's bit

as see adjustments, be So the retail play we'll still numbers to out. that sure, there need will I'm some make we

Joseph Altobello

shift And and there? Understood. talk How of little kind of on about should unpack of fairly you couple significantly. a a And bit sort that year? things, think just this mentioned maybe we it Maybe drivers G&A, spending SG&A Okay. think including key you compensation. mentioned to gears, up the I was about

Steven Menneto

Yes.

quarter comparison. second was of difficult comparison. was the first of watermark low the were a -- were was is comparison all, I G&A So last what driven there change year by last would that say for so QX some of very And year. the there

We've where that's historically, elevated footnotes levels been legal that period. wasn't higher in then see mean, to activity. seen in activity. we us year, you and a we're legal forward describing standpoint, Certainly, of behind the in look that the have incentive the you'll our us. cost comparison queue, this at And spend if year having compensation I from compensation we've looking from this

a So driver. that's larger probably

kind we We particularly employee these of say in the that to onetime of are and transition forward. nature, move number legal items as expect a expense would that of expenses. normalize we spend our some There's

moderate to it expect norms. down more second with time, and over our would historical we line the trend in in half So

Operator

comes The Markets. Capital Noah next KeyBanc from with Zatzkin question

Noah Zatzkin

one your industry. of are And on sentiment-wise? the kind now right are just How dealers of broader dealer of Maybe how the you base? kind feeling health about feeling

Steven Menneto

Sure, Noah.

phrase. over actually actually So a weeks, the kind feeling, few is optimistic few retail, is dealer the how of right cautiously the dealers last just talking to

retail of Bruce to As stated, the left happen. about XX%

So relatively market. the about good feeling they're

some moving inventories We just able they've have promo. and those retail their event overspend year-end the inventories. are to couple our been had of shows to some boat activity promo and having without in clearing out been where out our together, still market competitors get They've sales a really able and of clear to accelerated

So they're there. feeling good

get And then keeping into season. them inventories help and the they production disciplined managing the approach production, appreciate selling us to to

unfolds we'll we're forward X it, to the it looking what next over happens quarters. how So and and here see

Noah Zatzkin

maybe I to question. ask tariff And the Great. hate

able share have fairly to any thoughts Or tariff just you exposure, guys there? to and think but potential just you'd I be around impacts that? minimal mitigate how anything

Steven Menneto

Yes.

what our based appreciate, happen. fiscal So be year, stand we've But preliminary our best on I mean, expect a changes on and lot you to be if going year. for share to it will. be guess done of 'XX what us more I'm And tariffs a part our there's look. if exactly of it there's as we you, of what's conversation. there's we this to year might can be, material certainly is we based where in fiscal believe clarity not we to something sure don't that exposure And and the -- on with will our

Operator

from Brandon comes Davidson. question next The with RollÃ© D.A.

Brandon Rollé

the kind versus are in others? of little just which you shows, terms on dive by seeing boat could on seeing maybe of demand demand First, stronger what a segment, you're more segments in

Steven Menneto

were little Sure. Atlanta. flips, you bit. really Fort was But a when show. in move Lauderdale saltwater, little mixed we We we then see a Brandon, a Atlanta, good dive we'll in good. -- bit in you had maybe That to really had

Florida signals Atlanta really We but good little mixed mixed show a very the some there a there, good of Chicago, as on freshwater same really strong well. see you had New was show. and York in strong Minneapolis freshwater. At bit and out the for coming So a time, in

we're head to and be kind things of a said it we going, lot it signals you're a about as your lot through, did up. into those things result. was of That's that why scratching not why of of types excited So lot we decent. all materialize that seeing of better There's adds move there's a when

to there with. show boat when have some into opportunities dealers the that season, think, selling activities, optimism get overall, cautious for work are -- I the So they giving

Brandon Rollé

of retail on inventory do current front, think just destocking in longer if much And your to the months? next out somewhat you X we'll Okay. the a play be phase how expectations over X

Steven Menneto

dealer think the you'll the change retail Brandon, sentiment changes. when Well, I market see

I their cash down be to about think until flow and their concerned concerned then, about they're hunkered exposure. going

from enable healthy well-positioned So able take sure will it to of that market that's there. we to us making part the -- off we be be when keep to turns

Brandon Rollé

you saltwater Okay. weakness on is And saltwater in the seeing the do for on just like 'XX? here the around it's industry feel a just that's your there, your commentary market, finally, weakness saltwater as Or that larger whole early products?

Steven Menneto

Brandon, were what whole we're were the industry those that It's seeing, we talking about.

Operator

comes from with question Albanese Benchmark. next The Michael

Michael Albanese

Appreciate another it. asked Brandon just have question here last around saltwater, but ASPs. actually question my I on

or increases of much idea was just frame any just that kind an I'm Or more if maybe getting by of if helpful. cadence be if you some price product get to saw it? we're driven into annual and that You of wondering frame we're back to can there. would to growth you can versus kind the normalized really X% it to dive that way how really X% close trying mix and of

Steven Menneto

range. very ASP say is our single-digit would Price big I What low performance segments and within respective of mix been our have has overall. increases been Yes. a this driver year, modest

it's So mix. more really

on share Axis the we really segment last and mix year. to this production last We was back pulled greater moderate expect forward of the we just it in year on our a than we the Saltwater because second be half mix go to as expect year, Malibu

So per that has ASP unit. a higher

likely back will half. that the So influence

Michael Albanese

made price keep much being some stepping you is, And it to activity you're that able low also cadence feeling I around Okay. guess at of product. said positive back consumer you'd but just affordability to increases, the to as I are then issue the an where or but of that, how in kind up some from product you aside about just that get a the single-digit? broader to of Or you mean, it you that question talked your going be modest, promotional think have to follow-up price commentary seeing is that mean, is I fair of as to increases? the back mix, moderates,

Steven Menneto

in the Yes. really of term, more I promotional I going think about levels to mean near support. it's be

think industry I that where industry get over to ourselves. the of of of inventory to think levels to When away. you'll And inventories they go the see kind works promotional need the challenges. then through down be, expect discounting We see support promotional some for and I certainly its time as moderating

been over as much really I with in price how along has our inflation, pretty pass play it. which those really consistent think Our minimize just to the industry increases strategy others and as is possible

be We headwinds the concerned market. in affordability have about this to

Operator

The next question with comes from Morningstar. Jaime Katz

Jaime Katz

ones. quick Two

the just First, any had color on of consumer better than it some that unit before other changed? just Cobalt? It segments was was the maybe only it growth? the segment Or quarter? Is the that's inventoried

Steven Menneto

I of performance good seen mean brand. that I we've performer. be share a continued Cobalt has market mean strong in to kind

in a that well. product to very business, And we new models network exciting of they've and that have good quite continued have part some execute dealer We line. our in

Jaime Katz

we maybe the And really haven't on Okay. borrowers. lending then partners, with and the environment your the lending quality touched of borrowing,

So add any color to additional there?

Steven Menneto

You boats? mean? purchase their to credit mean ability on and what the consumers to Is that you access

Jaime Katz

Yes, sir.

Steven Menneto

Yes.

seen-- haven't come where haven't so recently rates the would that really at from they We with peak, down say, they moved moves. were some, but I interest have much Fed

So remain of part reason in why the is consumer yet has say, rates, to opinion. market our stubbornly would which high, I the rebound

Jaime Katz

or you're But that like increase defaults in no anything hearing like about? that,

Steven Menneto

no. seeing, we're that Not

Operator

this time. I'm participating. call. not Thank showing today's further you This questions conference for concludes any at

may now disconnect. You

Malibu Boats (MBUU) 30 Jan 252025 Q2 Earnings call transcript