Malibu Boats, Inc. Class A 2026 Q4 Earnings Call

Please go ahead, sir. Thank you, operator, and good morning, everyone.

Welcome to Malibu Boats' fourth quarter fiscal year 2026 earnings conference call. I am David Black, Chief Financial Officer, and joining me today is Steve Menneto, our President and Chief Executive Officer. A press release covering the company's fourth quarter and fiscal year 2026 results was issued today, and a copy of that press release can be found in the investor relations section of the company's website. I also want to remind everyone that our remarks on this call may contain certain forward-looking statements, including predictions, expectations, estimates, and other information that might be considered forward-looking, and that actual results could differ materially from those projected on today's call. You should not place undue reliance on these forward-looking statements which speak only as of today, and the company undertakes no obligation to update these for any new information or future events.

Factors that might affect future results are discussed in our filings with the SEC, and we encourage you to review our SEC filings for a more detailed description of these risk factors. Please also note that we will be referring to certain non-GAAP financial measures on today's call, such as adjusted EBITDA, adjusted EBITDA margin, adjusted net income, and free cash flow. Reconciliations of these GAAP financial measures to non-GAAP financial measures are included in our earnings release. I will now turn the call over to Steve.

Thank you, David. Good morning, everyone. Our fourth quarter marked a strong finish to fiscal 2026 and demonstrated the power of our strategic execution. Net sales increased 42.7% to $295.5 million, and adjusted EBITDA increased 72.7% to $33.9 million, with margins expanding 200 basis points versus the prior year. Importantly, that strength showed up in our legacy business before layering in Saxdor's full quarter contribution. This is a direct result of the MBI Advantage operating framework, which is the operational excellence, central sourcing, and channel discipline we've been building into this company over the past year. Zooming out to the full fiscal year, net sales came in at $914.6 million, roughly $29 million above the top end of the range we raised in May, driven by better than expected performance across the portfolio and the addition of Saxdor.

We also delivered adjusted EBITDA of $73.9 million in the upper half of our guided range. In addition to a strengthened financial performance in nearly all aspects, fiscal 2026 was also a year filled with milestones, and it is worth walking through some of the highlights along the way. In September, we hosted our first Investor Day since 2018, where we introduced the Build, Innovate, Grow framework that is anchoring our strategy. We laid out the four focus areas where we intend to compete in marine. We framed the mid-cycle opportunity in front of us, roughly $1.5 billion of revenue at a 20% adjusted EBITDA margin and over $200 million of free cash flow. In that same month, we announced a six-year global partnership with the International Waterski & Wakeboard Federation, naming Malibu the exclusive official towboat partner beginning this past January.

In November, David stepped into the CFO role, leading the finance team with focus and discipline, and most importantly, setting forth expectations that we know we can deliver. At the Miami International Boat Show in February, we were recognized with the NMMA Customer Satisfaction Index Awards across five of our brands. on March 2nd, we closed the acquisition of Saxdor Yachts, the most significant milestone in our company's history that reinforces our premium positioning and expands our portfolio to the adventure day boat segment and provides international growth opportunities for our legacy brands. Just last month, we celebrated 50 years of Pursuit Boats, one of the founding brands of our saltwater fishing segment. Congratulations to that whole team on five decades and an amazing legacy of building award-winning sport fishing boats. Here is to the next 50. It is worth pausing on the backdrop this represents.

This time last year, the marine industry was still working through one of the most difficult stretches in its history, and our own results reflected that, with legacy volumes under pressure across the portfolio. This quarter tells a different story. We saw unit volume growth in both our Cobalt and saltwater fishing segments, consolidated gross margin expansion of 190 basis points, and a meaningful, stronger bottom line. This is the kind of finish to a demanding year that reinforces our conviction in the Build, Innovate, Grow framework. On build, we are deepening vertical integration and scaling centralized sourcing and category management, which contributed to our strong margin performance this year. On innovate, we are holding a pace of new product introduction no one else in the industry matches.

On grow, we are not only growing with what we already have and taking share in our legacy businesses, but also adding to our portfolio in ways that drive value creation through M&A. Which brings me to the second part, Saxdor. The integration is progressing well in these first four months, and our early experience continues to reinforce the thesis we laid out when we announced the transaction. It has opened a new category, a new geography, and access to a younger, affluent buyer profile that we believe is highly attractive in the current environment and can compound for decades as conditions improve. The adventure day boat category that Saxdor competes in is one of the fastest-growing in the industry, and families are drawn to it because it functions like a living room on the water, built for spending the day together rather than any single activity.

Our first domestically built Saxdor boat remains on schedule to be completed at our Fort Pierce, Florida, facility later this fall in the first half of this fiscal year. This is an important step in unlocking that facility's capacity and extending Saxdor's reach into North America. We are also laying the operational foundation underneath the brand, bringing Saxdor into our sourcing organization, giving that business the benefit of our procurement scale. In just the first few months of ownership, Saxdor has cleared the high bar for acquisitions we described at Investor Day, a premium brand where we could add real value through our scale, our centralized sourcing, and a dealer network that is the envy of the industry. On the product side, Saxdor will introduce two new models at the Cannes Yachting Festival in September, continuing to build out that brand's lineup.

In April, the Saxdor 460 GTC was named winner in the Motor Yacht 14 to 16 meter category at the Yacht Style Awards 2026 in Singapore. Recognition that reflects Saxdor's continued commitment to innovation and design excellence. We also invested meaningfully in innovation this year across all of our brands, and it starts with the voice of the customer feeding directly into our engineering teams. Our model year 2026 lineup added 11 new models across the portfolio, bringing new features as well as value to our product line and continuing the innovation pipeline that has been the hallmark of this platform. Looking ahead to model year 2027, we are already executing against that plan. Malibu launched the all-new 20 VTX in July. Axis introduced the T220 and T235 in July. Cobalt launched the new R26 and R26 SURF in August.

Pursuit launched the S288 and the OS 445 refresh in late July. We also rolled out a new console design across the Pathfinder 2600 and 2400 hybrid models. For Pursuit, our award-winning dual console lineup transitioned to the Denali series for model year 2027, reconnecting with a name that played an important role in the brand's history while establishing a distinctive identity as Pursuit's premier family adventure platform. In May, the Pursuit S 388 Sport Center Console was recognized as a top product of 2026 by Boating Industry. In total, we plan to bring 13 new models to market across our legacy brands in fiscal 2027, and we have more to share on the remaining new products as we get closer to boat show season.

Zooming back out, while we're seeing early signs of stabilization across the industry, we are contending with macro disruptions that continue to pressure the payment buyer, which is a key link to drive an inflection in this cycle. That said, we have not seen a correlation between rising fuel prices and our retail boat sales at the upper end of the market, and usage has stayed strong. Our MBI customers are still on the water, still buying parts, still spending time at the dock, and that tells us the experience of boating with family remains the priority for our core buyer, even at a higher cost per gallon. For the payment-sensitive buyer who has been slower to return, we continued rolling out MBI Acceptance, giving our dealers financing and extended service tools to help close sales.

Applications have grown steadily since launch, including through the periods when we were not running promotional rate programs, which we think speaks volumes about the broader sensitivity of today's consumer. In marine components, the team continued to build external customer engagement and won additional business during the year. Another proof point that the build pillar creates value well beyond just our own boats. With respect to the channel, dealer inventories decreased over the course of the year, reflecting our disciplined approach on managing wholesale shipments all year. That is the right way to protect our dealers and our brands through a soft cycle, and it is why we enter fiscal 2027 with a healthier channel than we started with. On summer retail, the industry improved modestly as we moved through our fourth quarter.