Malibu Boats, Inc. announces Q4 and FY 2014 results

LOUDON, Tenn. — Malibu Boats, Inc. (Nasdaq:MBUU) today announced its financial results for the fourth quarter and fiscal year ended June 30, 2014.

Highlights for the Fourth Quarter of Fiscal 2014

  • Net sales increased 9.0% to $53.4 million compared to the fourth quarter of fiscal 2013. Unit volume increased 5.8% to 799 boats and net sales per unit increased 3.0% during the same period to $66,834.
  • Gross profit increased 5.3% to $14.7 million compared to the fourth quarter of fiscal 2013.
  • Adjusted EBITDA was $10.3 million and Adjusted EBITDA margin was 19.4%.
  • Adjusted fully distributed net income was $5.5 million, or $0.24 per share, on a fully distributed weighted average share count of 22.5 million shares of Class A Common Stock.

Highlights for the Fiscal Year 2014

  • Net sales increased 14.3% to $190.9 million compared to fiscal year 2013. Unit volume increased 8.9% to 2,910 boats and net sales price per unit increased approximately 5.0% during the same period to $65,613.
  • Gross profit increased 16.5% to $50.8 million and gross margin increased 50 basis points to 26.6% compared to the fiscal year 2013.
  • Adjusted EBITDA increased 17.4% to $37.3 million and Adjusted EBITDA margin increased 50 basis points to 19.5% compared to the fiscal year 2013.
  • Adjusted fully distributed net income was $17.6 million, or $0.78 per share, on a fully distributed weighted average share count of 22.5 million shares of Class A Common Stock.

Jack Springer, Chief Executive Officer, stated, “We had another solid quarter, and delivered strong financial and operating results across the board. Orders remained strong despite a late breaking season from the cold weather and new products continued to fuel demand. Our revenue growth was again driven by increases in both unit volume and average selling price and our adjusted EBITDA margin was the highest we have experienced in any fiscal year.”

Mr. Springer continued, “We are proud of our 30-year track record of introducing industry-leading products and innovation. In the upcoming model year, we are increasing the number of new boats, innovations and features. We believe it is important to remain aggressive with new product. Our lineup will include four new or completely remodeled boats, with the first two of these being the completely new Malibu 22 VLX and remodeled Axis A22. Other new industry-leading products and innovations this fiscal year will include a G4 Tower, a re-engineered Power Wedge II that works with Surf Gate for an even better surf wave, and a redesigned dash board that includes the first 12-inch touch-screen. We believe Malibu continues to offer the most advanced surfing solution on the market today. From our patented Surf Gate and Power Wedge II systems to our optimized hulls and digital control system, every feature of our boats has been engineered and integrated to offer what, we believe, is the industry’s only truly integrated surfing system, while maintaining the best wake for wakeboarding in the industry. Our product and distribution should continue to drive our performance.”

Results of Operations for the Fourth Quarter and Fiscal Year 2014

Three Months Ended

 June 30,

Fiscal Year Ended

 June 30,

 

2014

2013

2014

2013

 

(In thousands, except unit volume)

Net sales

$53,400

$48,973

$190,935

$167,012

Cost of sales

38,724

35,035

140,141

123,412

Gross profit

14,676

13,938

50,794

43,600

Operating expenses:

Selling and marketing

1,644

1,144

6,098

4,937

General and administrative

4,652

2,875

19,974

14,177

Amortization

1,294

1,295

5,177

5,178

Operating income

7,086

8,624

19,545

19,308

Other income (expense):

Other

2

9

10

Interest expense

18

(250)

(2,962)

(1,334)

Other income (expense), net

18

(248)

(2,953)

(1,324)

Net income before provision for income taxes

7,104

8,376

16,592

17,984

Provision for income taxes

1,742

1,818

Net income

5,362

8,376

14,774

17,984

Net income attributable to non-controlling interest

3,594

8,376

13,376

17,984

Net income attributable to Malibu Boats, Inc.

$1,768

$—

$1,398

$—

Other data:

Unit volumes

799

755

2,910

2,672

Net sales price per unit

$66,834

$64,864

$65,613

$62,504

Comparison of the Fourth Quarter Ended June 30, 2014 to the Fourth Quarter Ended June 30, 2013

Net sales for the three month period ended June 30, 2014 increased 9.0% to $53.4 million from $49.0 million for the three month period ended June 30, 2013. The increase in net sales was the result of a 5.8% increase in the number of boats sold to 799 from 755 and a 3.0% increase in net sales price per unit to $66,834 from $64,864 in the comparable fiscal fourth quarter last year. The increase in units sold was attributable to strong, continued consumer demand for our boats, bolstered by the introduction of our new models and features. The increase in net sales price per unit was primarily driven by new boat models and increased sales of larger boats, including the Wakesetter 23 LSV and Axis A24, as well as sales of the Company’s Surf Gate system on Axis models.

Gross profit for the three month period ended June 30, 2014 increased5.3% to $14.7 million from $13.9 million for the three month period ended June 30, 2013. The increase in gross profit resulted primarily from the increase in volumes and higher average selling prices due to options, features, and new boat models. Gross margin decreased 100 basis points to 27.5% from 28.5% in the fiscal fourth quarter of last year.

Selling and marketing expense for the three month period ended June 30, 2014 increased 43.7% to $1.6 million from $1.1 million for the three months ended June 30, 2013. The increase in selling and marketing expense resulted primarily from marketing initiatives associated with the introduction of new boat models for fiscal 2015. As a percentage of net sales, selling and marketing expenses increased 80 basis points to 3.1% from 2.3% of sales in the comparable fiscal fourth quarter of last year.

General and administrative expenses, excluding amortization expense, for the three month period ended June 30, 2014 increased 61.8% to $4.7 million from $2.9 million for the three month period ended June 30, 2013. The increase in general and administrative expenses is due primarily to legal and professional fees, stock compensation charges, and director related expenses, including insurance. Amortization expense was $1.3 million for the three month period ended June 30, 2014 and June 30, 2013.

Operating income for the three month period ended June 30, 2014 decreased to $7.1 million from $8.6 million for the three month period ended June 30, 2013. Adjusted EBITDA margin decreased in the fourth quarter of fiscal 2014 to 19.4% from 21.5% in the fourth quarter of fiscal 2013.

Comparison of the Fiscal Year Ended June 30, 2014 to the Fiscal Year Ended June 30, 2013

Net sales for fiscal year 2014 increased 14.3% to $190.9 million, from $167.0 million for fiscal year 2013. The increase in net sales was the result of an 8.9% increase in the number of boats sold to 2,910 from 2,672 and a 5.0% increase in net sales price per unit to $65,613 from $62,504 in the prior year. The increase in units sold was attributable to strong, continued consumer demand for our boats, bolstered by the introduction of two completely new Axis models. The increase in net sales price per unit was primarily driven by increased sales prices on new boat models and increased sales of larger boats, including the Wakesetter 23 LSV remodeled in fiscal year 2014, and Axis A24, introduced early in fiscal year 2014, as well as increased sales of our Surf Gate system, which became available on the Axis brand during July 2013.

Gross profit for fiscal year 2014 increased 16.5% to $50.8 million from $43.6 million for fiscal year 2013. Gross margin increased 50 basis points to 26.6% for fiscal year 2014 compared to 26.1% for fiscal year 2013. The increase in gross profit and gross margin resulted primarily from the increase in volumes, higher average selling prices driven by price increases and increased sales of larger boats and optional features as well as cost reduction efforts.

Selling and marketing expense for fiscal year 2014 increased 23.5% to $6.1 million from $4.9 million for fiscal year 2013 primarily because of increased marketing costs associated with increased sales volumes. As a percentage of net sales, selling and marketing expenses increased 20 basis points to 3.2% from 3.0% of sales for fiscal year 2013.

General and administrative expense, excluding amortization expense, for fiscal year 2014 increased 40.9% to $20.0 million from $14.2 million for fiscal year 2013. This increase is largely attributable to one time charges incurred in connection with our initial public offering, including termination of our previously existing management agreement, and stock compensation on modified awards as well as additional legal and professional fees associated with our recapitalization and equity offerings during fiscal 2014; offset partially by decreases in incentive compensation and fees paid to our former sponsor under the previously existing management agreement. Amortization expense was $5.2 million for fiscal year 2014 and fiscal year 2013.

Operating income for fiscal year 2014 increased to $19.5 million from $19.3 million for fiscal year 2013. Adjusted EBITDA margin for fiscal year 2014 increased 50 basis points to 19.5% from 19.0% for fiscal year 2013.

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