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Malibu Boats cites its strengths in IPO filing

Malibu Boats’ filing with the Securities and Exchange Commission for an initial public offering says the company has held the No. 1 market share position among U.S. performance sportboat manufacturers for nearly four years.

The company — though unable to comment on the IPO bid — outlined its position, strategies and risks in its filing Friday with the SEC, saying it had grown share from 23.2 percent in 2008 to 30.6 percent in 2012. It included the following breakdown of the four brands that command the lion’s share of the market in the segment.

Malibu market share graph

B. Riley analyst Jimmy Baker said his firm is bullish about recovery prospects in the tournament ski and wakeboard market.

“We believe innovation has been significant in this category, which helps differentiate current product from used alternatives,” Baker told Trade Only Today. “And yet, the category is in such high demand that used tournament ski [and] wakeboard boat prices remain relatively firm.”

It’s a good time to go public in the leisure space, Baker said, since the sector is “very much in vogue and is offering attractive valuations for issuers.”

It’s also “a particularly attractive segment” of the market since three top players — Malibu, MasterCraft and Nautique — control nearly 70 percent of the market, whereas most other powerboat categories tend to be much more fragmented, Baker said. “The concentrated nature of the market lends itself to more favorable pricing, which of course helps profit margins.”

“Malibu’s performance out of the recession is impressive, as it generated a 19 percent adjusted EBITDA (earnings before interest, tax, depreciation and amortization) margin in its most recent fiscal year,” Baker said, adding that, by comparison, the Brunswick Boat Group is generating about a 2 percent margin and Marine Products is generating about 6 percent.

“It’s very impressive that Malibu has already reached this level of profitability, considering the tournament ski/wakeboard boat market is still about 50 percent below pre-recession levels,” he said.

The company cited its strengths as industry-leading product design and innovation, a strong dealer network, highly recognized brands, compelling margins and cash flow and a “highly experienced management team.”

Among its future strategies is to continue to develop new and innovative products in its core markets, capture additional share from adjacent categories, further strengthen its dealer network and accelerate international expansion.

Malibu already has a 40.1 percent market share of performance sportboat exports to international markets, the highest among U.S. manufacturers, according to the filing.

“We believe our addressable market also includes similar and adjacent powerboat categories identified by the [National Marine Manufacturers Association], including sterndrive boats, outboard boats and jetboats,” the company wrote in its filing. “For 2012, retail sales of new performance sportboats, sterndrive boats, outboard boats and jetboats in the United States were $375 million, $883 million, $2.6 billion and $160 million, respectively. As a result, we believe the total addressable market for our products in the United States alone is over $4 billion.”

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