- Revenue: Fiscal Q4 net sales decreased 57.4% to $158.7 million; full year net sales decreased 40.3% to $829.0 million.
- Unit Volume: Fiscal Q4 unit volume decreased 59% to 1,045 boats; full year unit volumes decreased 45.4% to 5,385 units.
- Net Sales per Unit: Fiscal Q4 net sales per unit increased 4% to $151,878; full year net sales per unit increased 9.4% to $153,953.
- Gross Profit: Fiscal Q4 gross profit decreased 87.8% to $12.5 million; full year gross profit decreased 58.1% to $147.1 million.
- Gross Margin: Fiscal Q4 gross margin percentage was 7.9%, down from 27.5% in the prior year period.
- Net Income: Fiscal Q4 net loss increased 8.6% to a loss of $19.6 million; full year net loss was $56.4 million.
- Adjusted EBITDA: Fiscal Q4 adjusted EBITDA decreased 104.5% to a loss of $4.1 million; full year adjusted EBITDA decreased 71.0% to $82.2 million.
- Adjusted EBITDA Margin: Fiscal Q4 adjusted EBITDA margin was negative 2.6%, down from positive 24.2% in the prior year period.
- Adjusted Fully Distributed Net Income per Share: Fiscal Q4 decreased by 113.1% to a loss of $0.39 per share; full year decreased 79.1% to $1.92 per share.
- Free Cash Flow: Fiscal Q4 positive free cash flow of $4.5 million; full year free cash flow was approximately $34 million excluding a $55 million legal settlement.
- Capital Expenditures: Fiscal Q4 capital expenditures were $11.9 million; full year capital expenditures were $76 million.
- Debt Repayment and Share Repurchases: Paid off remaining debt and repurchased $10 million of stock in Q4; full year returned $29.8 million to shareholders through share repurchases.
- Market Share: Expanded Cobalt sterndrive market share by over 300 basis points; Pursuit brand market share increased by nearly 300 basis points; Maverick Boat Group market share increased by over 500 basis points.
Release Date: August 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Malibu Boats Inc (MBUU, Financial) successfully reduced dealer inventories to historical levels, showcasing effective inventory management.
- The company generated positive free cash flow during the fourth quarter despite a significant revenue decline.
- Malibu Boats Inc (MBUU) repaid all remaining debt and repurchased $10 million of stock in the quarter, demonstrating strong capital allocation.
- The company introduced several new models across its brands, emphasizing its commitment to innovation and market presence.
- Malibu Boats Inc (MBUU) expanded its market share in key segments, including Cobalt sterndrive and Pursuit, indicating strong brand performance.
Negative Points
- Fiscal fourth quarter net sales decreased by 57.4%, and unit volume decreased by 59%, reflecting a challenging retail environment.
- Gross profit for the fourth quarter decreased by 87.8%, and gross margin percentage dropped significantly to 7.9%.
- Net loss for the quarter increased by 8.6% to a loss of $19.6 million, highlighting financial struggles.
- Adjusted EBITDA for the quarter decreased by 104.5%, resulting in a loss of $4.1 million.
- The company anticipates continued market headwinds and expects dealer inventories to contract below historical levels, indicating ongoing challenges.
Q & A Highlights
Malibu Boats Inc (MBUU) Q4 2024 Earnings Call Highlights
Q: Steve, I'm curious as you've had conversations with dealers in this channel, how you would compare that dynamic with what you've experienced in power sports and what you can say to investors who are concerned that inventory bubbles tend to creep up in these industries and create a really difficult investment environment?
A: Over the last month, I've been able to get out to a few dealers as well as attend the Pursuit dealer meeting. And there are some similarities to both industries and there's some other things that are not similar. Of course, the price points on the units here are a lot higher. The velocity is a little slower. So you have to really pay attention to get the inventories right. We've been focused on that, as Bruce alluded to over the last quarter and we'll continue to keep that in our sights to get -- continue to match the inventory to the retail the best we can.
Q: And I'm wondering with respect to 2025, the fiscal guidance you offered, what's the retail assumption embedded in that? And where do you expect inventory to be at the end of fiscal 2025 relative to fiscal 2024?
A: In terms of the market growth, we expect that the headwinds will continue for a while longer. We're expecting mid-single digit down market in our guidance. We're also hearing from our dealers as well as our floor plan finance partners that the dealers are going to want to take the dealer inventories below historical just because of the high flooring costs that they're experiencing. And so we're expecting dealer inventories to contract below historical mid-teens percentage points or kind of down by mid-teens percent.
Q: And then just, I guess, how do you reconcile that with guidance, anticipating sales growth? Is that a mix or price dynamic? It sounds like you would expect units to be down.
A: So we expect units will be flattish, I would say and we're expecting lower promotional spend next year. So we expect to get a little bit of that as well as from some product base and share. We're on a multi-year trend of gain share and we expect gain market share.
Q: Just a follow-up on the acquisition strategy. Obviously, given where your balance sheet is, as you mentioned, you've got plenty of dry powder here. You've talked about pontoons in the past. Is that still top of mind? Or are there other categories you might be looking into at this point?
A: Joe, we had previously mentioned that we're interested in the pontoon sector. And then we're also looking at other ones that make sense to fit our portfolio. And as those arise, we'll entertain them.
Q: We've heard a lot from dealers, just concerns around affordability. So I was just wondering if you could kind of talk through kind of some of the new products that you mentioned rolling out for model year '25. And just any thoughts around addressing maybe some affordability concerns here. Thanks.
A: Well, yes, affordability is certainly an issue based in the industry. We have addressed that over the years by being trying to be more efficient and keep our pricing lower than our competitors and in particular, in the segue segment. Our prices are generally $20,000 to $30,000 a unit lower than the competition. We also have been focused on driving efficiencies in our cost structure to minimize our pricing actions for 2025, and we've taken very modest pricing in aggregate. And in some of our product lines, we've actually held up flat or taken them down slightly.
Q: Just to come back to the dealer inventories. I think last quarter you said you felt like they were four weeks too high. I'm wondering if you could just give us an update on maybe where that stands versus target.
A: Yeah, so we said there were four to five weeks high coming into the quarter, and we exited the quarter in line with historical trends. We made up a lot of ground in the fourth quarter. What we said earlier, I'm not sure if you caught it, but we do expect that dealers will continue to be looking to take their inventories level historical to '25, so we're expecting them to take their dealer inventories down, roughly 15% kind of mid-teen-ish percent, and that's implied in our guidance.
Q: And then just on the 4Q results, the sales were sort of in line with implied guide, but it looks like EBITDA was maybe a little bit light on the margin side. Was the delta just more promo than you had sort of factored in or expected? Or was it something else?
A: No. That's what it was. And yes, we were below our guidance range, but only slightly and our revenue came right in the middle of the range.
Q: And then I guess, just strategically, if we do start to see rate cuts, I know you guys mentioned that you're expecting the market challenges to persist near term, but how quickly do you think that consumers would start to respond to potential rate cuts? Is it immediately? Is it going to take a couple of cuts in a couple of quarters? How quickly do you think that will show up on the consumer side?
A: Fred, we were going to ask you that question. Seriously, we know it's going to be a positive for the long-term, deciphering the inflection point is going to be a challenge. And we're sitting here back in January talking with excitement about pending rate cuts and here we are. So we're hopeful. We think they will be beneficial the exact inflection point pretty hard to call. You probably know better than we do.
Q: I guess my first question is on this normalized industry environment slide. And while we have some time to get there, I think historically, it's been such that even in a difficult environment, the EBITDA margins that would be generated are probably higher than what we're seeing in fiscal 2025. So I guess, what kind of macro fundamentals and maybe top line fundamentals do we need to get back to that sort of mid-teen EBITDA margin? And if you can walk us back how you get there, that would be really helpful.
A: In the past when we talked about that 15% EBITDA, it's been off of a down 25% to down 30% revenue picture off of the fiscal year '23 base. So it gets you roughly in that $1 billion revenue range. And so the difference between our guide, the midpoint of our guidance that and that dollar amount is the revenue logs roughly $150 million. So the leverage between that point and our guide is really what's making the difference.
Q: And then as we think about consumer behavior,
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
