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Malibu Boats reports 3Q results

Malibu Boats saw third-quarter net sales increase 6.9 percent to $50.3 million and gross profit increased 7.2 percent to $13.4 million compared with the same quarter last year.

“This was the highest third-quarter margins in the company’s history,” CEO Jack Springer said during a conference call with investors. “I will remind you that our third quarter a year ago was also very strong, so this was a challenging comparison for us.”

The Axis T22 model, which Springer described as a high-performance boat at an entry-level price, has exceeded demand expectations and has helped give dealers an edge over their competition, Springer said.

The company plans to introduce three new models that will “further distance ourselves from the competition and continue to gain market share,” Springer said on the call.

“Though premature to discuss details, we are planning to introduce three new models of boats with a number of features and innovations that are designed to deliver never-before-seen features in our segment,” Springer said, adding that he will discuss the models in more detail during the next earnings call.

Unit volume increased 2.9 percent, to 788 boats, during the quarter that ended March 31 and net sales per unit increased 3.9 percent during the same period, to $63,823.

Adjusted EBITDA for the quarter increased 12.9 percent, to $10.1 million, compared with the quarter a year earlier, and adjusted EBITDA margin increased 100 basis points during the same period, to a third quarter record of 20 percent.

Adjusted fully distributed net income for the quarter was $4.4 million, or 20 cents a share.

Wells Fargo analysts said that although U.S. retail data suggest the company lost market share during the first quarter of the calendar year, that didn’t “reveal any material concerns” because the time frame only accounts for about 13.7 percent of annual volume for the industry.

Malibu is positioned for “steady market share gains, EBITDA growth and free cash flow generation,” considering current four dynamics — “U.S. boat market fundamentals and dynamics support a broad market deliver, crossover interest from adjacent boat segments, sustained innovation yielding volume gains in higher unit economics, and largely untapped international markets,” analyst Tim Conder wrote.

The firm is maintaining its outperform rating and is giving the company a $24 to $26 valuation range.

"We had another very strong quarter — delivering on every operating and financial metric across the board,” Springer said in a statement. “Throughout the quarter, deliveries and orders remained strong and sales growth was once again driven by increases in both unit volume and average selling price. Both Malibu and Axis performed very well, and our new-product introductions continued to create a lot of excitement with our dealers and customers. The proof was in our adjusted EBITDA margin, which increased to a third-quarter record of 20 percent. This is the highest third-quarter margin in the company's history, and we continue to take a balanced approach to driving profitable growth.”

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