Form 8-K Malibu Boats, Inc. For: May 02
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 2, 2018
MALIBU BOATS, INC.
(Exact Name of Registrant as specified in its charter)
Commission file number: 001-36290
Delaware | 5075 Kimberly Way Loudon, Tennessee 37774 | 46-4024640 | ||
(State or other jurisdiction of incorporation or organization) | (Address of principal executive offices, including zip code) | (I.R.S. Employer Identification No.) | ||
(865) 458-5478 | ||||
(Registrant’s telephone number, including area code) | ||||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company þ
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. þ
Item 2.02. Results of Operations and Financial Condition.
On May 2, 2018, Malibu Boats, Inc. (the “Company”) issued a press release announcing its financial results for its fiscal 2018 third quarter ended March 31, 2018. A copy of the Company’s press release is being furnished hereto as Exhibit 99.1 and incorporated into this Item by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
The following exhibit is being furnished as part of this report:
Exhibit No. | Description | |
Press Release dated May 2, 2018 | ||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Malibu Boats, Inc. | ||
Date: May 2, 2018 | /s/ Jack Springer | |
Jack Springer | ||
Chief Executive Officer | ||
Exhibit 99.1
MALIBU BOATS, INC. ANNOUNCES THIRD QUARTER FISCAL 2018 RESULTS
Loudon, TN - May 2, 2018 - Malibu Boats, Inc. (Nasdaq: MBUU) today announced its financial results for the third quarter of fiscal 2018 ended March 31, 2018.
Highlights for the Third Quarter of Fiscal 2018
• | Net sales increased 82.0% to $140.4 million compared to the third quarter of fiscal 2017. |
• | Unit volume increased 69.4% to 1,786 boats compared to the third quarter of fiscal 2017. |
• | Net sales per unit increased 7.4% to $78,628 and net sales per unit for Malibu U.S. increased 6.2% to $77,260 compared to the third quarter of fiscal 2017. |
• | Gross profit increased 70.2% to $36.4 million compared to the third quarter of fiscal 2017. |
• | Net income increased 89.9% to $16.8 million, or $0.76 per share compared to the third quarter of fiscal 2017. |
• | Adjusted EBITDA increased 70.1% to $28.5 million compared to the third quarter of fiscal 2017. |
• | Adjusted fully distributed net income increased 105.1% to $19.4 million compared to the third quarter of fiscal 2017. |
• | Adjusted fully distributed net income per share increased 81.6% to $0.89 on a fully distributed weighted average share count of 21.8 million shares of Class A Common Stock as compared to the third quarter of fiscal 2017. |
"The results of the third quarter were strong. This performance continues to be driven by robust retail demand in the United States along with Malibu’s operating efficiencies. Channel inventories are at or near optimum levels, which is inspiring dealer confidence despite unfavorable weather during the early spring selling season. In addition, our model year 2018 products are performing very well, including our new Cobalt models. On the international front, Canada continues its slow recovery, while Australia, our second largest market, remains a contributor. Lastly, market share gains are accelerating for both Malibu and Cobalt, where we already hold a commanding lead,” commented Jack Springer, Chief Executive Officer of Malibu Boats. “From an operational perspective, the Cobalt integration is going smoothly, and the Cobalt team is immersing itself into our culture. Further, our operational excellence initiatives continue to drive improvement at Malibu and it is having a quicker and better impact with the Cobalt integration than originally anticipated.
Mr. Springer concluded, "We are executing very well, and as we march towards the end of the fiscal year, macro indicators suggest that the market for our products will stay strong. We remain very well-positioned to generate solid sales growth, improved profitability, and to deliver value to our shareholders.”
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Exhibit 99.1
Results of Operations for the Third Quarter of Fiscal 2018
Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(In thousands, except unit and per unit data) | ||||||||||||||||
Net sales | $ | 140,429 | $ | 77,149 | $ | 358,343 | $ | 206,831 | ||||||||
Cost of sales | 104,066 | 55,787 | 271,541 | 151,833 | ||||||||||||
Gross profit | 36,363 | 21,362 | 86,802 | 54,998 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling and marketing | 3,263 | 1,789 | 9,974 | 6,362 | ||||||||||||
General and administrative | 7,862 | 5,997 | 22,371 | 15,514 | ||||||||||||
Amortization | 1,291 | 550 | 3,903 | 1,649 | ||||||||||||
Operating income | 23,947 | 13,026 | 50,554 | 31,473 | ||||||||||||
Other (expense) income, net: | ||||||||||||||||
Other income | 17 | 41 | 27,753 | 116 | ||||||||||||
Interest expense | (923 | ) | (416 | ) | (4,136 | ) | (883 | ) | ||||||||
Other (expense) income, net | (906 | ) | (375 | ) | 23,617 | (767 | ) | |||||||||
Income before provision for income taxes | 23,041 | 12,651 | 74,171 | 30,706 | ||||||||||||
Provision for income taxes | 6,245 | 3,805 | 56,545 | 9,897 | ||||||||||||
Net income | 16,796 | 8,846 | 17,626 | 20,809 | ||||||||||||
Net income attributable to non-controlling interest | 1,124 | 833 | 2,452 | 2,115 | ||||||||||||
Net income attributable to Malibu Boats, Inc. | $ | 15,672 | $ | 8,013 | $ | 15,174 | $ | 18,694 | ||||||||
Unit volumes | 1,786 | 1,054 | 4,584 | 2,811 | ||||||||||||
Net sales per unit | $ | 78,628 | $ | 73,196 | $ | 78,173 | $ | 73,579 | ||||||||
Comparison of the Third Quarter Ended March 31, 2018 to the Third Quarter Ended March 31, 2017
Net sales for the three months ended March 31, 2018 increased $63.3 million, or 82.0%, to $140.4 million as compared to the three months ended March 31, 2017. Unit volume for the three months ended March 31, 2018, increased 732 units, or 69.4%, to 1,786 units as compared to the three months ended March 31, 2017. The increase in net sales and unit volumes was driven primarily by our acquisition of Cobalt Boats, LLC ("Cobalt") in July 2017. Net sales and unit volumes attributable to Cobalt were $49.9 million and 615 units, respectively, for the three months ended March 31, 2018. Net sales attributable to our Malibu U.S. segment increased $14.0 million, or 19.6%, to $85.7 million for the three months ended March 31, 2018, compared to the three months ended March 31, 2017. Unit volumes attributable to our Malibu U.S. segment increased 124 units for the three months ended March 31, 2018, compared to the three months ended March 31, 2017. The increase in net sales and unit volume for Malibu U.S. was driven primarily by continued strong demand for our new and larger models such as the Malibu Wakesetter 23 LSV and Axis A24. Net sales from our Malibu Australia segment decreased $0.7 million, or 12.1%, to $4.8 million for the three months ended March 31, 2018, compared to the three months ended March 31, 2017. Our overall net sales per unit increased 7.4% to $78,628 per unit for the three months ended March 31, 2018, compared to the three months ended March 31, 2017. Net sales per unit for our Malibu U.S. segment increased 6.2% to $77,260 per unit for the three months ended March 31, 2018, compared to the three months ended March 31, 2017, driven by mix of larger premium Malibu models which have a higher average selling price per unit as well as strong demand for optional features and year over year price increases. Net sales per unit for our Cobalt segment was $81,174 per unit for the three months ended March 31, 2018.
Cost of sales for the three months ended March 31, 2018 increased $48.3 million, or 86.5%, to $104.1 million as compared to the three months ended March 31, 2017. The increase in cost of sales was driven primarily by our acquisition of Cobalt in July 2017 and an increase in unit volumes at our Malibu U.S. business.
2
Exhibit 99.1
Gross profit for the three months ended March 31, 2018 increased $15.0 million, or 70.2%, to $36.4 million compared to the three months ended March 31, 2017. The increase in gross profit was due mainly to higher unit volumes attributable to our acquisition of Cobalt. Gross margin for the three months ended March 31, 2018 decreased 180 basis points from 27.7% to 25.9% over the same period in the prior fiscal year due to the acquisition of Cobalt and an increase in unit volumes at our Malibu U.S. business.
Selling and marketing expenses for the three month period ended March 31, 2018, increased $1.5 million or 82.4%, compared to the three months ended March 31, 2017 primarily due to the acquisition of Cobalt. As a percentage of sales, selling and marketing expenses were flat over the same period in the prior fiscal year. General and administrative expenses for the three months ended March 31, 2018, increased $1.9 million, or 31.1%, to $7.9 million as compared to the three months ended March 31, 2017, largely due to higher general and administrative expenses attributable to Cobalt, which we acquired in July 2017, and higher development costs associated with our engines vertical integration initiative, and partially offset by lower legal expenses related to previously settled litigation in fiscal 2017. As a percentage of sales, general and administrative expenses decreased 220 basis points to 5.6% for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. Amortization expense for the three month period ended March 31, 2018, increased $0.7 million or 134.7% when compared to the three months ended March 31, 2017, due to additional amortization from intangible assets acquired as a result of the Cobalt acquisition.
Operating income for the third quarter of fiscal 2018 increased to $23.9 million from $13.0 million in the third quarter of fiscal 2017. Net income for the third quarter of fiscal 2018 increased 89.9% to $16.8 million from $8.8 million and net income margin increased to 12.0% from 11.5% in the third quarter of fiscal 2017. Adjusted EBITDA in the third quarter of fiscal 2018 increased 70.1% to $28.5 million from $16.8 million, while Adjusted EBITDA margin decreased to 20.3% from 21.8% in the third quarter of fiscal 2017.
Webcast and Conference Call Information
The Company will host a webcast and conference call to discuss third quarter fiscal 2018 results on Wednesday, May 2, 2018, 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 #5085245. 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.
Based in Loudon, Tennessee, Malibu Boats is a leading designer, manufacturer and marketer of a diverse range of recreational powerboats, including performance sport boats, sterndrive and outboard boats. Malibu Boats has the #1 market share position in the United States in the performance sport boat category through its Malibu and Axis Wake Research brands. After Malibu Boats’ recent acquisition of Cobalt Boats, LLC, Malibu Boats has the #1 market share position in the United States in the 24’ - 29’ segment of the sterndrive category. Since inception in 1982, Malibu Boats 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 our expected growth and demand for our products, the expected performance of Cobalt and the expected continuing performance of the U.S. market.
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: the impact of the
3
Exhibit 99.1
Tax Cuts and Jobs Act of 2017 (the "Tax Act"); the successful integration of Cobalt into our business; 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; the success of our engines integration strategy 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, Adjusted Fully Distributed Net Income and Adjusted Fully Distributed Net Income per Share. 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. 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 net income 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, non-cash compensation expense, expenses related to our engine development initiative and adjustments to our tax receivable agreement liability. 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 allow investors to evaluate our operating performance and compare our results of operations from period to period on a consistent basis by excluding items that management does not believe are indicative of core operating performance. Management uses Adjusted EBITDA to assist in highlighting trends in our operating results without regard to our financing methods, capital structures, 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.
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.
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 LLC units into shares of Class A Common Stock, which results in the elimination of non-controlling interest in Malibu Boats Holdings, LLC (the "LLC"), and (iv) reflecting an adjustment for income tax expense on fully distributed net income before income taxes 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 non-controlling 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
4
Exhibit 99.1
net income on a consistent basis from period to period because it removes non-cash or non-recurring items, and eliminates the variability of non-controlling interest as a result of member owner 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".
Investor Contacts
Malibu Boats, Inc.
Wayne Wilson
Chief Financial Officer
(865) 458-5478
Zac Lemons
Investor Relations
(865) 458-5478
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Exhibit 99.1
MALIBU BOATS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited)
(In thousands, except share and per share data)
Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net sales | $ | 140,429 | $ | 77,149 | $ | 358,343 | $ | 206,831 | |||||||
Cost of sales | 104,066 | 55,787 | 271,541 | 151,833 | |||||||||||
Gross profit | 36,363 | 21,362 | 86,802 | 54,998 | |||||||||||
Operating expenses: | |||||||||||||||
Selling and marketing | 3,263 | 1,789 | 9,974 | 6,362 | |||||||||||
General and administrative | 7,862 | 5,997 | 22,371 | 15,514 | |||||||||||
Amortization | 1,291 | 550 | 3,903 | 1,649 | |||||||||||
Operating income | 23,947 | 13,026 | 50,554 | 31,473 | |||||||||||
Other (expense) income, net: | |||||||||||||||
Other income | 17 | 41 | 27,753 | 116 | |||||||||||
Interest expense | (923 | ) | (416 | ) | (4,136 | ) | (883 | ) | |||||||
Other (expense) income, net | (906 | ) | (375 | ) | 23,617 | (767 | ) | ||||||||
Income before provision for income taxes | 23,041 | 12,651 | 74,171 | 30,706 | |||||||||||
Provision for income taxes | 6,245 | 3,805 | 56,545 | 9,897 | |||||||||||
Net income | $ | 16,796 | $ | 8,846 | 17,626 | 20,809 | |||||||||
Net income attributable to non-controlling interest | 1,124 | 833 | 2,452 | 2,115 | |||||||||||
Net income attributable to Malibu Boats, Inc. | $ | 15,672 | $ | 8,013 | $ | 15,174 | $ | 18,694 | |||||||
Comprehensive income: | |||||||||||||||
Net income | $ | 16,796 | $ | 8,846 | $ | 17,626 | $ | 20,809 | |||||||
Other comprehensive (loss) income, net of tax: | |||||||||||||||
Change in cumulative translation adjustment | (268 | ) | 867 | (34 | ) | 378 | |||||||||
Other comprehensive (loss) income, net of tax | (268 | ) | 867 | (34 | ) | 378 | |||||||||
Comprehensive income, net of tax | 16,528 | 9,713 | 17,592 | 21,187 | |||||||||||
Less: comprehensive income attributable to non-controlling interest, net of tax | 1,104 | 923 | 2,464 | 2,153 | |||||||||||
Comprehensive income attributable to Malibu Boats, Inc., net of tax | $ | 15,424 | $ | 8,790 | $ | 15,128 | $ | 19,034 | |||||||
Weighted average shares outstanding used in computing net income per share: | |||||||||||||||
Basic | 20,544,488 | 17,877,152 | 20,050,958 | 17,799,221 | |||||||||||
Diluted | 20,657,010 | 17,962,286 | 20,135,064 | 17,887,266 | |||||||||||
Net income available to Class A Common Stock per share: | |||||||||||||||
Basic | $ | 0.76 | $ | 0.45 | $ | 0.76 | $ | 1.05 | |||||||
Diluted | $ | 0.76 | $ | 0.45 | $ | 0.76 | $ | 1.05 | |||||||
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Exhibit 99.1
MALIBU BOATS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands, except share data)
March 31, 2018 | June 30, 2017 | ||||||
Assets | |||||||
Current assets | |||||||
Cash | $ | 53,156 | $ | 32,822 | |||
Trade receivables, net | 22,553 | 9,846 | |||||
Inventories, net | 43,761 | 23,835 | |||||
Prepaid expenses and other current assets | 4,448 | 2,470 | |||||
Income tax receivable | 136 | 1,111 | |||||
Total current assets | 124,054 | 70,084 | |||||
Property, plant and equipment, net | 40,741 | 24,123 | |||||
Goodwill | 32,478 | 12,692 | |||||
Other intangible assets, net | 95,598 | 9,597 | |||||
Deferred tax asset | 61,275 | 107,088 | |||||
Other assets | 420 | 79 | |||||
Total assets | $ | 354,566 | $ | 223,663 | |||
Liabilities | |||||||
Current liabilities | |||||||
Accounts payable | $ | 26,142 | $ | 12,722 | |||
Accrued expenses | 33,001 | 21,616 | |||||
Income taxes and tax distribution payable | 2,748 | 515 | |||||
Payable pursuant to tax receivable agreement, current portion | 4,323 | 4,332 | |||||
Total current liabilities | 66,214 | 39,185 | |||||
Deferred tax liabilities | 442 | 552 | |||||
Payable pursuant to tax receivable agreement | 51,750 | 77,959 | |||||
Long-term debt | 108,393 | 53,403 | |||||
Other long-term liabilities | 668 | 328 | |||||
Total liabilities | 227,467 | 171,427 | |||||
Stockholders' Equity | |||||||
Class A Common Stock, par value $0.01 per share, 100,000,000 shares authorized; 20,524,654 shares issued and outstanding as of March 31, 2018; 17,937,687 issued and outstanding as of June 30, 2017 | 204 | 179 | |||||
Class B Common Stock, par value $0.01 per share, 25,000,000 shares authorized; 17 shares issued and outstanding as of March 31, 2018; 19 shares issued and outstanding as of June 30, 2017 | — | — | |||||
Preferred Stock, par value $0.01 per share; 25,000,000 shares authorized; no shares issued and outstanding as of March 31, 2018 and June 30, 2017 | — | — | |||||
Additional paid in capital 1 | 107,692 | 48,328 | |||||
Accumulated other comprehensive loss | (1,397 | ) | (1,363 | ) | |||
Accumulated earnings | 15,350 | 151 | |||||
Total stockholders' equity attributable to Malibu Boats, Inc. | 121,849 | 47,295 | |||||
Non-controlling interest 1 | 5,250 | 4,941 | |||||
Total stockholders’ equity | 127,099 | 52,236 | |||||
Total liabilities and stockholders' equity | $ | 354,566 | $ | 223,663 | |||
7
Exhibit 99.1
1 During the second quarter of fiscal 2018, the Company identified and corrected an error for the fiscal year ended June 30, 2017, related to an understatement of the non-controlling interest held by LLC Unit holders in the LLC of $1,869, an overstatement to accumulated other comprehensive loss of $639, and an overstatement of additional paid in capital of $2,508, within stockholders' equity on the unaudited condensed consolidated balance sheet and within the statement of stockholders' equity. There was no change in total stockholders’ equity for the fiscal year ended June 30, 2017. The Company evaluated the materiality of the error from quantitative and qualitative perspectives, and concluded that the error was immaterial to the Company’s prior period interim and annual consolidated financial statements under FASB ASC Topic 250, Accounting Changes and Error Corrections. Since the revision was not material to any prior period interim or annual consolidated financial statements, no amendments to previously filed interim or annual periodic reports are required. Consequently, the Company revised the historical consolidated financial information presented herein and will reflect the same revisions in its forthcoming fiscal 2018 Form 10-K.
8
Exhibit 99.1
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 March 31, | Nine Months Ended March 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income | $ | 16,796 | $ | 8,846 | $ | 17,626 | $ | 20,809 | |||||||
Provision for income taxes 1 | 6,245 | 3,805 | 56,545 | 9,897 | |||||||||||
Interest expense | 923 | 416 | 4,136 | 883 | |||||||||||
Depreciation | 1,685 | 1,050 | 5,102 | 3,044 | |||||||||||
Amortization | 1,291 | 550 | 3,903 | 1,649 | |||||||||||
Professional fees 2 | — | 1,159 | 26 | 3,145 | |||||||||||
Marine Power litigation judgment 3 | — | — | — | (1,330 | ) | ||||||||||
Acquisition and integration related expenses 4 | 144 | — | 2,281 | — | |||||||||||
Stock-based compensation expense 5 | 560 | 325 | 1,410 | 1,070 | |||||||||||
Engine development 6 | 899 | 630 | 3,486 | 1,090 | |||||||||||
Adjustments to tax receivable agreement liability 7 | — | — | (27,702 | ) | — | ||||||||||
Adjusted EBITDA | $ | 28,543 | $ | 16,781 | $ | 66,813 | $ | 40,257 | |||||||
Adjusted EBITDA margin | 20.3 | % | 21.8 | % | 18.6 | % | 19.5 | % | |||||||
(1) | Provision for income taxes for the three and nine months ended March 31, 2018 reflects the impact of the Tax Act adopted in December 2017, which among other items, lowered the U.S. corporate income tax rate from 35% to 21%, effective January 1, 2018. For the nine months ended March 31, 2018, we recorded a non-cash provisional adjustment to income tax expense of $47.2 million for the remeasurement of deferred taxes on the enactment date and the deferred tax impact related to the reduction in the tax receivables agreement liability. |
(2) | For the nine months ended March 31, 2018 and three and nine months ended March 31, 2017, represents legal and advisory fees related to our litigation with MasterCraft Boat Company, LLC ("MasterCraft") which was settled in May 2017. |
(3) | Represents the reduction in a one-time charge related to a judgment rendered against us in connection with a lawsuit by Marine Power where the court amended the judgment to $1.9 million. |
(4) | Represents legal and advisory fees as well as integration related costs incurred in connection with our acquisition of Cobalt. Integration related expenses for the nine months ended March 31, 2018 include post-acquisition adjustments to cost of goods sold of $1.5 million for the fair value step up of inventory acquired, most of which was sold during the first quarter of fiscal 2018. |
(5) | 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. |
(6) | Represents costs incurred in connection with our vertical integration of engines including product development costs and supplier transition performance incentives. |
(7) | For the nine months ended March 31, 2018, we recognized other income as a result of a decrease in our estimated tax receivable agreement liability. The reduction in our tax receivable agreement liability resulted from the adoption of the Tax Act, which decreased the estimated tax rate used in computing our future tax obligations and, in turn, decreased the future tax benefit we expect to realize related to increased tax basis from previous sales and exchanges of LLC Units by our pre-IPO owners. |
9
Exhibit 99.1
Reconciliation of Non-GAAP Adjusted Fully Distributed Net Income (Unaudited):
The following table shows the reconciliation of the numerator and denominator for net income available to Class A Common Stock per share to Adjusted Fully Distributed Net Income per Share of Class A Common Stock for the periods presented (in thousands except share and per share data):
Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Reconciliation of numerator for net income available to Class A Common Stock per share to Adjusted Fully Distributed Net Income per Share of Class A Common Stock: | ||||||||||||||||
Net income attributable to Malibu Boats, Inc. | $ | 15,672 | $ | 8,013 | $ | 15,174 | $ | 18,694 | ||||||||
Provision for income taxes 1 | 6,245 | 3,805 | 56,545 | 9,897 | ||||||||||||
Professional fees 2 | — | 1,159 | 26 | 3,145 | ||||||||||||
Acquisition and integration related expenses 3 | 870 | — | 4,393 | — | ||||||||||||
Fair market value adjustment for interest rate swap 4 | (137 | ) | (116 | ) | (340 | ) | (941 | ) | ||||||||
Stock-based compensation expense 5 | 560 | 325 | 1,410 | 1,070 | ||||||||||||
Marine Power litigation judgment 6 | — | — | — | (1,330 | ) | |||||||||||
Engine development 7 | 899 | 630 | 3,486 | 1,090 | ||||||||||||
Adjustments to tax receivable agreement liability 8 | — | — | (27,702 | ) | — | |||||||||||
Net income attributable to non-controlling interest 9 | 1,124 | 833 | 2,452 | 2,115 | ||||||||||||
Fully distributed net income before income taxes | 25,233 | 14,649 | 55,444 | 33,740 | ||||||||||||
Income tax expense on fully distributed income before income taxes 10 | 5,854 | 5,201 | 15,914 | 11,978 | ||||||||||||
Adjusted fully distributed net income | 19,379 | 9,448 | $ | 39,530 | $ | 21,762 | ||||||||||
Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
Reconciliation of denominator for net income available to Class A Common Stock per share to Adjusted Fully Distributed Net Income per Share of Class A Common Stock: | ||||||||||||
Weighted average shares outstanding of Class A Common Stock used for basic net income per share: | 20,550,972 | 17,877,152 | 20,063,282 | 17,799,221 | ||||||||
Adjustments to weighted average shares of Class A Common Stock: | ||||||||||||
Weighted-average LLC units held by non-controlling unit holders 11 | 1,073,830 | 1,331,842 | 1,165,750 | 1,384,653 | ||||||||
Weighted-average unvested restricted stock awards issued to management 12 | 137,146 | 134,744 | 131,182 | 105,564 | ||||||||
Adjusted weighted average shares of Class A Common Stock outstanding used in computing Adjusted Fully Distributed Net Income per Share of Class A Common Stock: | 21,761,948 | 19,343,738 | 21,360,214 | 19,289,438 | ||||||||
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Exhibit 99.1
The following table shows the reconciliation of net income available to Class A Common Stock per share to Adjusted Fully Distributed Net Income per Share of Class A Common Stock for the periods presented:
Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net income available to Class A Common Stock per share | $ | 0.76 | $ | 0.45 | $ | 0.76 | $ | 1.05 | ||||||||
Impact of adjustments: | ||||||||||||||||
Provision for income taxes 1 | 0.30 | 0.21 | 2.82 | 0.56 | ||||||||||||
Professional fees 2 | — | 0.06 | — | 0.18 | ||||||||||||
Acquisition and integration related expenses 3 | 0.04 | — | 0.22 | — | ||||||||||||
Fair market value adjustment for interest rate swap 4 | (0.01 | ) | (0.01 | ) | (0.02 | ) | (0.05 | ) | ||||||||
Stock-based compensation expense 5 | 0.03 | 0.02 | 0.07 | 0.06 | ||||||||||||
Marine Power litigation judgment 6 | — | — | — | (0.07 | ) | |||||||||||
Engine development 7 | 0.04 | 0.04 | 0.17 | 0.06 | ||||||||||||
Adjustment to tax receivable agreement liability 8 | — | — | (1.38 | ) | — | |||||||||||
Net income attributable to non-controlling interest 9 | 0.05 | 0.05 | 0.12 | 0.12 | ||||||||||||
Fully distributed net income per share before income taxes | 1.21 | 0.82 | 2.76 | 1.91 | ||||||||||||
Impact of income tax expense on fully distributed income before income taxes 10 | (0.28 | ) | (0.29 | ) | (0.79 | ) | (0.67 | ) | ||||||||
Impact of increased share count 13 | (0.04 | ) | (0.04 | ) | $ | (0.13 | ) | $ | (0.11 | ) | ||||||
Adjusted Fully Distributed Net Income per Share of Class A Common Stock | $ | 0.89 | $ | 0.49 | $ | 1.84 | $ | 1.13 | ||||||||
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Exhibit 99.1
(1) | Provision for income taxes for the three and nine months ended March 31, 2018 reflects the impact of the Tax Act adopted in December 2017, which among other items, lowered the U.S. corporate income tax rate from 35% to 21%, effective January 1, 2018. For the nine months ended March 31, 2018, we recorded a non-cash provisional adjustment to income tax expense of $47.2 million for the remeasurement of deferred taxes on the enactment date and the deferred tax impact related to the reduction in the tax receivables agreement liability. |
(2) | For the nine months ended March 31, 2018 and three and nine months ended March 31, 2017, represents legal and advisory fees related to our litigation with MasterCraft Boat Company, LLC ("MasterCraft") which was settled in May 2017. |
(3) | Represents legal and advisory fees as well as integration related costs incurred in connection with our acquisition of Cobalt. Integration related expenses for the nine months ended March 31, 2018 include post-acquisition adjustments to cost of goods sold of $1.5 million for the fair value step up of inventory acquired, most of which was sold during the first quarter of fiscal 2018. In addition, integration related expenses includes $0.7 million in depreciation and amortization associated with our fair value step up of property, plant and equipment and intangibles acquired in connection with the acquisition of Cobalt. |
(4) | Represents the change in the fair value of our interest rate swap entered into on July 1, 2015. |
(5) | Represents equity-based incentives awarded to certain of our 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. |
(6) | Represents the reduction in a one-time charge related to a judgment rendered against us in connection with a lawsuit by Marine Power where the court amended the judgment to $1.9 million. |
(7) | Represents costs incurred in connection with our vertical integration of engines including product development costs and supplier transition performance incentives. |
(8) | For the nine months ended March 31, 2018, we recognized other income as a result of a decrease in our estimated tax receivable agreement liability. The reduction in our tax receivable agreement liability resulted from the adoption of the Tax Act, which decreased the estimated tax rate used in computing our future tax obligations and, in turn, decreased the future tax benefit we expect to realize related to increased tax basis from previous sales and exchanges of LLC Units by our pre-IPO owners. |
(9) | 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. |
(10) | Reflects income tax expense at an estimated normalized annual effective income tax rate of 23.2% and 35.5% of income before income taxes for the three months ended March 31, 2018 and 2017, respectively, 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. The decrease in the normalized annual effective income tax rate to 23.2% for the three months ended March 31, 2018, is primarily the result of the Tax Act which was effective for periods after January 1, 2018, lowering the corporate tax rate to 21%, as well as an updated blended state rate, which considers the impacts of the Cobalt acquisition and a recent law change in Tennessee. The estimated normalized effective income tax rate for the nine months ended March 31, 2018 reflects a blended rate of 28.7% of income before income taxes assuming the conversion of all LLC Units into shares of Class A Common Stock. For the nine months ended March 31, 2017, the estimated normalized effective income tax rate used was 35.5%. |
(11) | Represents 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. |
(12) | Represents the weighted average unvested restricted stock awards included in outstanding shares during the applicable period that were convertible into Class A Common Stock and granted to members of management. |
(13) | Reflects impact of increased share counts assuming the exchange of all weighted average shares outstanding of LLC Units into shares of Class A Common Stock and the conversion of all weighted average unvested restricted stock awards included in outstanding shares granted to members of management. |
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