Malibu Boats, Inc. Announces First Quarter Fiscal 2017 Results
LOUDON, TN -- (Marketwired) -- 11/01/16 -- Malibu Boats, Inc. (NASDAQ: MBUU) today announced its financial results for the first quarter of fiscal 2017 ended September 30, 2016.
Highlights for the First Quarter of Fiscal 2017
- Net sales increased 8.4% to $62.0 million compared to the first quarter of fiscal 2016.
- Unit volume increased 1.0% to 833 boats compared to the first quarter of fiscal 2016.
- Net sales per unit increased 7.3% to $74,455 and net sales per unit in the U.S. increased 7.6% to $77,735 compared to the first quarter of fiscal 2016.
- Gross profit increased 7.6% to $15.8 million compared to the first quarter of fiscal 2016.
- Net income increased 6.2% to $4.2 million, or $0.21 per share compared to the first quarter of fiscal 2016.
- Adjusted EBITDA increased 4.4% to $9.9 million from the same period in fiscal 2016.
- Adjusted fully distributed net income increased 4.1% to $4.9 million compared to the first quarter of fiscal 2016.
- Adjusted fully distributed net income per share increased 4.0% to $0.26 on a fully distributed weighted average share count of 19.2 million shares of Class A Common Stock as compared to the first quarter of fiscal 2016.
Jack Springer, Chief Executive Officer, stated, "Malibu has again had the best first quarter in units, revenue, net income and Adjusted EBITDA in our history. We continue to meet expectations despite various international and economic uncertainties. While we continue to monitor such factors, we believe we have anticipated and positioned Malibu to be successful despite these influences.
The new product we deliver each year has been a critical driver of our success. We are fortunate that the new boats we have brought to market have been well accepted and have propelled our market share to the highest level in our history. Malibu also continues to be the company of innovation and advanced technology. Our new products and features continue to be compelling and drive the advantages of owning a Malibu boat.
Mr. Springer continued, "While the international markets continue to be challenged due to a strong U.S. dollar among other reasons, the domestic markets have been slightly stronger than we had anticipated. This strength has continued into the fall season, driven by the warm temperatures across most of the country. Especially encouraging is the West region, led by California, where we continue to see strong growth with other regions of the country also faring well. While we continue to watch the global environment, we are encouraged by the strength of the domestic market, the strength of our dealers and the strength of our product."
Results of Operations for the First Quarter of Fiscal 2017
Three Months Ended
September 30,
------------------------
2016 2015
----------- -----------
(In thousands, except
unit and per unit data)
Net sales $ 62,021 $ 57,240
Cost of sales 46,198 42,530
----------- -----------
Gross profit 15,823 14,710
Operating expenses:
Selling and marketing 2,423 2,262
General and administrative 6,064 4,626
Amortization 550 547
----------- -----------
Operating income 6,786 7,275
Other income (expense):
Other 17 7
Interest expense (430) (1,316)
----------- -----------
Other expense (413) (1,309)
----------- -----------
Income before provision for income taxes 6,373 5,966
Provision for income taxes 2,147 1,986
----------- -----------
Net income 4,226 3,980
Net income attributable to non-controlling
interest 446 422
----------- -----------
Net income attributable to Malibu Boats, Inc. $ 3,780 $ 3,558
=========== ===========
Unit volumes 833 825
Net sales per unit $ 74,455 $ 69,382
Comparison of the First Quarter Ended September 30, 2016 to the First Quarter Ended September 30, 2015
Net sales for the three months ended September 30, 2016 increased $4.8 million, or 8.4%, to $62.0 million as compared to the three months ended September 30, 2015. Included in net sales for the three months ended September 30, 2016 and September 30, 2015 were net sales of $5.5 million and $4.8 million, respectively, attributable to our Australian business. Unit volume for the three months ended September 30, 2016 increased 8 units, or 1.0%, to 833 units as compared to the three months ended September 30, 2015 due to a demand-driven increase in our daily production rate. Net sales per unit increased 7.3% to $74,455 per unit for the three months ended September 30, 2016 compared to the three months ended September 30, 2015, primarily driven by year over year price increases, lower discount activity, and a mix shift from Axis to Malibu, which carries a higher average selling price than our Axis brand.
Cost of sales for the three months ended September 30, 2016 increased $3.7 million, or 8.6%, to $46.2 million as compared to the three months ended September 30, 2015. The increase in cost of sales was primarily driven by higher material content and labor hours driven by the mix shift to Malibu from Axis.
Gross profit for the three months ended September 30, 2016 increased $1.1 million, or 7.6%, to $15.8 million compared to the three months ended September 30, 2015. The increase in gross profit resulted primarily from higher volumes and year over year price increases. Gross margin for the three months ended September 30, 2016 decreased 20 basis points from 25.7% to 25.5% over the same period in the prior fiscal year. The decrease in gross margin was driven primarily by higher labor costs.
Selling and marketing expense for the three month period ended September 30, 2016 increased $0.2 million, or 7.1%, to $2.4 million compared to the three months ended September 30, 2015, due primarily to increased payroll, commissions, and related costs attributable to additional headcount and timing of marketing events. General and administrative expenses for the three months ended September 30, 2016 increased $1.4 million, or 31.1%, to $6.1 million as compared to the three months ended September 30, 2015, largely due to an increase in legal related expenses related to ongoing litigation matters.
Operating income for the first quarter of fiscal 2017 decreased to $6.8 million from $7.3 million in the first quarter of fiscal 2016. Net income for the first quarter of fiscal 2017 increased 6.2% to $4.2 million while net income margin decreased to 6.8% from 7.0% in the first quarter of fiscal 2016. Adjusted EBITDA in the first quarter of fiscal 2017 increased 4.4% to $9.9 million from $9.4 million, while Adjusted EBITDA margin decreased to 15.9% from 16.5% in the first quarter of fiscal 2016.
Webcast and Conference Call Information
The Company will host a webcast and conference call to discuss first quarter fiscal 2017 results on Tuesday, November 1, 2016, at 8:30 a.m Eastern Time. Investors and analysts can participate on the conference call by dialing (855) 433-0928 or (484) 756-4263 and using Conference ID #4405438.
Alternatively, interested parties can listen to a live webcast of the conference call by logging on to the Investor Relations section on the Company's website at http://investors.malibuboats.com. A replay of the webcast will also be archived on the Company's website for twelve months.
About Malibu Boats, Inc.
Malibu Boats is a leading designer, manufacturer and marketer of performance sport boats, with the #1 market share position in the United States since 2010. The Company has two brands of performance sport boats, Malibu and Axis Wake Research (Axis). Since inception in 1982, the Company has been a consistent innovator in the powerboat industry, designing products that appeal to an expanding range of recreational boaters and water sports enthusiasts whose passion for boating and water sports is a key aspect of their lifestyle.
Forward Looking Statements
This press release includes forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). Forward-looking statements can be identified by such words and phrases as "believes," "anticipates," "expects," "intends," "estimates," "may," "will," "should," "continue" and similar expressions, comparable terminology or the negative thereof, and includes the statement in this press release regarding the expected demand and acceptance for our new model year 2017 offerings.
Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, including, but not limited to: general industry, economic and business conditions, demand for our products, changes in consumer preferences, competition within our industry, our reliance on our network of independent dealers, our ability to manage our manufacturing levels and our large fixed cost base, the successful introduction of our new products, and other factors affecting us detailed from time to time in our filings with the Securities and Exchange Commission. Many of these risks and uncertainties are outside our control, and there may be other risks and uncertainties which we do not currently anticipate because they relate to events and depend on circumstances that may or may not occur in the future. Although we believe that the expectations reflected in any forward-looking statements are based on reasonable assumptions at the time made, we can give no assurance that our expectations will be achieved. Undue reliance should not be placed on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation (and we expressly disclaim any obligation) to update or supplement any forward-looking statements that may become untrue because of subsequent events, whether because of new information, future events, changes in assumptions or otherwise. Comparison of results for current and prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.
Use and Definition of Non-GAAP Financial Measures
This release includes the following financial measures defined as non-GAAP financial measures by the SEC: Adjusted EBITDA, Adjusted EBITDA Margin, and Adjusted Fully Distributed Net Income. These measures have limitations as analytical tools and should not be considered as an alternative to, or more meaningful than, net income as determined in accordance with GAAP or as an indicator of our liquidity. Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing a company's financial performance, such as a company's cost of capital and tax structure, as well as the historical costs of depreciable assets. Our presentation of these non-GAAP financial measures should also not be construed as an inference that our results will be unaffected by unusual or non-recurring items. Our computations of these non-GAAP financial measures may not be comparable to other similarly titled measures of other companies.
We define Adjusted EBITDA as earnings before interest expense, income taxes, depreciation, amortization and non-cash, non-recurring or non-operating expenses, including certain professional fees, acquisition and integration related expenses and non-cash compensation expense. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by net sales. Adjusted EBITDA and Adjusted EBITDA Margin are not measures of net income as determined by GAAP. Management believes Adjusted EBITDA and Adjusted EBITDA Margin are useful because they allow management to evaluate our operating performance and compare the results of our operations from period to period and against our peers without regard to our financing methods, capital structure and non-recurring or non-operating expenses. We exclude the items listed above from net income in arriving at Adjusted EBITDA because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures, the methods by which assets were acquired and other factors.
We define Adjusted Fully Distributed Net Income as net income attributable to Malibu Boats, Inc. (i) excluding income tax expense, (ii) excluding the effect of non-recurring or non-cash items, (iii) assuming the exchange of all Units ("LLC Units") of Malibu Boats Holdings, LLC (the "LLC") into shares of Class A common stock, which results in the elimination of noncontrolling interest in the LLC, and (iv) reflecting an adjustment for income tax expense on fully distributed net income before income taxes (assuming no income attributable to non-controlling interests) at our estimated effective income tax rate. Adjusted Fully Distributed Net Income is a non-GAAP financial measure because it represents net income attributable to Malibu Boats, Inc, before non-recurring or non-cash items and the effects of noncontrolling interests in the LLC. We use Adjusted Fully Distributed Net Income to facilitate a comparison of our operating performance on a consistent basis from period to period that, when viewed in combination with our results prepared in accordance with GAAP, provides a more complete understanding of factors and trends affecting our business than GAAP measures alone. We believe Adjusted Fully Distributed Net Income assists our board of directors, management and investors in comparing our net income on a consistent basis from period to period because it removes non-cash or non-recurring items, and eliminates the variability of noncontrolling interest as a result of member exchanges of LLC Units into shares of Class A Common Stock. In addition, because Adjusted Fully Distributed Net Income is susceptible to varying calculations, the Adjusted Fully Distributed Net Income measures, as presented in this release, may differ from and may, therefore, not be comparable to similarly titled measures used by other companies.
A reconciliation of our net income as determined in accordance with GAAP to Adjusted EBITDA and Adjusted EBITDA Margin, and of our net income attributable to Malibu Boats, Inc. to Adjusted Fully Distributed Net Income is provided under "Reconciliation of Non-GAAP Financial Measures".
MALIBU BOATS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations and Comprehensive Income
(Loss) (Unaudited)
(In thousands, except share and per share data)
Three Months Ended
September 30,
------------------------
2016 2015
----------- -----------
Net sales $ 62,021 $ 57,240
Cost of sales 46,198 42,530
----------- -----------
Gross profit 15,823 14,710
Operating expenses:
Selling and marketing 2,423 2,262
General and administrative 6,064 4,626
Amortization 550 547
----------- -----------
Operating income 6,786 7,275
Other income (expense):
Other 17 7
Interest expense (430) (1,316)
----------- -----------
Other expense (413) (1,309)
----------- -----------
Income before provision for income taxes 6,373 5,966
Provision for income taxes 2,147 1,986
----------- -----------
Net income $ 4,226 $ 3,980
Net income attributable to non-controlling
interest 446 422
----------- -----------
Net income attributable to Malibu Boats, Inc. $ 3,780 $ 3,558
=========== ===========
Comprehensive income (loss):
Net income $ 4,226 $ 3,980
Other comprehensive loss, net of tax:
Change in cumulative translation adjustment 357 (1,257)
----------- -----------
Other comprehensive loss, net of tax 357 (1,257)
----------- -----------
Comprehensive income, net of tax 4,583 2,723
Less: comprehensive income attributable to non-
controlling interest, net of tax $ 484 $ 289
----------- -----------
Comprehensive income attributable to Malibu
Boats, Inc., net of tax $ 4,099 $ 2,434
=========== ===========
Weighted average shares outstanding used in
computing net income per share:
Basic 17,734,390 17,942,085
Diluted 17,761,768 17,948,835
Net income available to Class A Common Stock per
share:
Basic $ 0.21 $ 0.20
Diluted $ 0.21 $ 0.20
MALIBU BOATS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands, except share data)
September June 30,
30, 2016 2016
----------- -----------
Assets
Current assets
Cash $ 16,293 $ 25,921
Trade receivables, net 15,593 14,690
Inventories, net 24,293 20,431
Prepaid expenses and other current assets 2,269 2,707
Income tax receivable 392 965
----------- -----------
Total current assets 58,840 64,714
Property and equipment, net 17,776 17,813
Goodwill 12,646 12,470
Other intangible assets, net 11,231 11,703
Deferred tax asset 112,892 113,798
Other assets 30 32
----------- -----------
Total assets $ 213,415 $ 220,530
=========== ===========
Liabilities
Current liabilities
Current maturities of long-term debt $ 1,117 $ 8,000
Accounts payable 18,332 16,158
Accrued expenses 20,096 19,055
Income taxes and tax distribution payable 523 427
Payable pursuant to tax receivable agreement,
current portion 4,189 4,189
----------- -----------
Total current liabilities 44,257 47,829
Deferred tax liabilities 678 685
Payable pursuant to tax receivable agreement 89,561 89,561
Long-term debt 55,030 63,086
Other long-term liabilities 895 1,136
----------- -----------
Total liabilities 190,421 202,297
----------- -----------
Stockholders' Equity
Class A Common Stock, par value $0.01 per share,
100,000,000 shares authorized; 17,699,056 shares
issued and outstanding as of September 30, 2016;
17,690,874 issued and outstanding as of June 30,
2016 176 176
Class B Common Stock, par value $0.01 per share,
25,000,000 shares authorized; 23 shares issued
and outstanding as of September 30, 2016 and June
30, 2016 - -
Preferred Stock, par value $0.01 per share;
25,000,000 shares authorized; no shares issued
and outstanding as of September 30, 2016 and June
30, 2016 - -
Additional paid in capital 44,571 44,151
Accumulated other comprehensive loss (2,114) (2,471)
Accumulated deficit (24,522) (28,302)
----------- -----------
Total stockholders' equity attributable to
Malibu Boats, Inc. 18,111 13,554
Non-controlling interest 4,883 4,679
----------- -----------
Total stockholders' equity 22,994 18,233
----------- -----------
Total liabilities and stockholders' equity $ 213,415 $ 220,530
=========== ===========
MALIBU BOATS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
Reconciliation of Net Income to Non-GAAP Adjusted EBITDA and Adjusted EBITDA
Margin (Unaudited):
The following table sets forth a reconciliation of net income as determined
in accordance with GAAP to Adjusted EBITDA and Adjusted EBITDA Margin for
the periods indicated (dollars in thousands):
Three Months Ended
September 30,
------------------------
2016 2015
----------- -----------
Net income $ 4,226 $ 3,980
Provision for income taxes 2,147 1,986
Interest expense 430 1,316
Depreciation 968 775
Amortization 550 547
Professional fees 1 1,069 170
Acquisition and integration related expenses 2 - 330
Stock based compensation expense 3 465 340
----------- -----------
Adjusted EBITDA $ 9,855 $ 9,444
----------- -----------
Adjusted EBITDA margin 15.9% 16.5%
=========== ===========
(1) Represents legal and advisory fees related to our litigation with
MasterCraft Boat Company, LLC.
(2) Represents legal and advisory fees as well as integration related costs
incurred in connection with certain acquisition activities.
(3) Represents equity-based incentives awarded to key employees under the
Malibu Boats, Inc. Long-Term Incentive Plan and profit interests issued
under the previously existing limited liability company agreement of the
LLC.
Reconciliation of Non-GAAP Adjusted Fully Distributed Net Income
(Unaudited):
The following table sets forth a reconciliation of net income attributable
to Malibu Boats, Inc. to Adjusted Fully Distributed Net Income for the
periods presented (dollars in thousands, except share and per share data):
Three Months Ended
September 30,
-------------------------
2016 2015
----------- ------------
Net income attributable to Malibu Boats, Inc. $ 3,780 $ 3,558
Provision for income taxes 2,147 1,986
Professional fees 1 1,069 170
Acquisition and integration related expenses 2 - 330
Fair market value adjustment for interest rate
swap 3 (245) 557
Stock based compensation expense 4 465 340
Net income attributable to non-controlling
interest 5 446 422
----------- ------------
Fully distributed net income before income taxes 7,662 7,363
Income tax expense on fully distributed income
before income taxes 6 2,720 2,614
----------- ------------
Adjusted fully distributed net income 4,942 4,749
=========== ============
Adjusted Fully Distributed Net Income per share of
Class A Common Stock 7:
Basic $ 0.26 $ 0.25
Diluted $ 0.26 $ 0.25
Weighted average shares of Class A Common Stock
outstanding used in computing Adjusted Fully
Distributed Net Income 8:
Basic 19,221,503 19,348,424
Diluted 19,221,503 19,348,424
(1) Represents legal and advisory fees related to our litigation with
MasterCraft Boat Company, LLC.
(2) Represents legal and advisory fees as well as integration related costs
incurred in connection with certain acquisition activities.
(3) Represents the change in the fair value of our interest rate swap
entered into on July 1, 2015.
(4) Represents equity-based incentives awarded to key employees under the
Malibu Boats, Inc. Long-Term Incentive Plan and profit interests issued
under the previously existing limited liability company agreement of the
LLC.
(5) Reflects the elimination of the non-controlling interest in the LLC as
if all LLC members had fully exchanged their LLC Units for shares of
Class A Common Stock.
(6) Reflects income tax expense at an estimated normalized annual effective
income tax rate of 35.5% of income before income taxes for the three
months ended September 30, 2016 and 2015, assuming the conversion of all
LLC Units into shares of Class A Common Stock. The estimated normalized
annual effective income tax rate is based on the federal statutory rate
plus a blended state rate adjusted for deductions under Section 199 of
the Internal Revenue Code of 1986, as amended, state taxes attributable
to the LLC, and foreign income taxes attributable to our Australian
based subsidiary.
(7) Adjusted fully distributed net income divided by the shares of Class A
Common Stock outstanding in (8) below.
(8) Represents the weighted average shares outstanding during the applicable
period calculated as (i) the weighted average shares outstanding during
the applicable period of Class A Common Stock, (ii) the weighted average
shares outstanding of LLC Units held by non-controlling interests
assuming they were exchanged into Class A Common Stock on a one-for-one
basis and (iii) the weighted average fully vested restricted stock units
outstanding during the applicable period that were convertible into
Class A Common Stock and granted to directors for their services.
Investor Contacts Malibu Boats, Inc.Wayne WilsonChief Financial Officer(865) 458-5478Zac LemonsInvestor Relations(865) [email protected]
Source: Malibu Boats