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MasterCraft Reports Fiscal 2017 Fourth-Quarter and Full-Year ResultsContinued Demand for Performance Sport Boats …

VONORE, Tenn., Sept. 07, 2017 (GLOBE NEWSWIRE) —

MasterCraft (NASDAQ:MCFT) today announced financial results for its fiscal 2017 fourth quarter and full year ended June 30, 2017.

Highlights:

  • Net sales for the fourth quarter increased to $58.3 million, up 9.3 percent from $53.4 million in the prior-year period. Net sales for the fiscal year rose to $228.6 million, up 3.2 percent from $221.6 million in the prior year.
  • Gross margin in the fourth quarter increased 190 basis points to 28.2 percent, up from 26.3 percent in the prior-year period, and increased 20 basis points for the fiscal year to 27.8 percent from 27.6 percent in fiscal 2016.
  • Net income for the fourth quarter totaled $6.3 million, up from $4.8 million in the prior-year period. Net income totaled $19.6 million for the fiscal year, almost double from $10.2 million in the prior year.
  • Diluted earnings per share increased to $0.34 for the fourth quarter, from $0.26 in the prior-year period. Diluted earnings per share were $1.05 for the fiscal year compared to $0.56 in the prior year.
  • Adjusted EBITDA, a non-GAAP measure, increased for the fourth quarter to $11.5 million from $9.9 million in the prior-year period and rose for the fiscal year to $43.5 million from $41.2 million in the prior year.
  • Fully diluted pro forma Adjusted net income per share, a non-GAAP measure, increased to $0.35 for the fourth quarter, versus $0.30 in the prior-year period and grew for the fiscal year to $1.30 per share compared to $1.24 in the prior year.
  • Fourth-quarter working capital management continued to be outstanding as evidenced by a cash conversion cycle of 6.5 days.
  • The company paid down total debt by $17.7 million during the fiscal year — reducing the balance from $52.2 million at the start of the fiscal year to $34.5 million at the end.

Terry McNew, MasterCraft’s President and Chief Executive Officer, commented, “We delivered another strong quarter from both a top- and bottom-line perspective. Continued growth in retail demand and our focus on operational efficiency drove results. For the quarter and fiscal year, we delivered gains in net sales, reduced our dealer pipeline inventory, as well as continued to deliver on our industry-leading working capital management—which enabled us to reduce our total debt by $17.7 million during the fiscal year.�

Fourth-Quarter Results
Net sales for the fourth quarter ended June 30, 2017, rose $4.9 million, or 9.3 percent, to $58.3 million from $53.4 million for the prior-year period. The increase reflected a rise in unit sales volume of 37 units, or 5.6 percent, and favorable pricing and product mix.

Gross profit for the fourth quarter, increased $2.5 million, or 17.3 percent, to $16.5 million, versus $14.0 million in the prior-year period. Gross margin increased to 28.2 percent from 26.3 percent for the prior-year period. The respective gains resulted from price increases, sales of higher content option packages and lower retail rebates when compared to the prior-year period.

Said McNew, “Retail activity, up double digits, strengthened in fiscal 2017, resulting in improved dealer inventory turns. This sets the stage for healthy dealer inventory levels and activity in fiscal 2018. We look forward to working with our strong dealer network to maximize their opportunities moving forward.�

Selling and marketing expense increased $0.1 million, or 4.2 percent, to $2.2 million for the fourth quarter ended June 30, 2017, compared to the year-earlier quarter primarily due to the timing of promotion activities. General and administrative expense totaled $3.7 million versus $4.2 million for the prior-year period. This decrease resulted mainly from a decrease in litigation costs.

Fiscal fourth-quarter net income totaled $6.3 million, versus $4.8 million in the year-earlier quarter. Adjusted net income was $6.5 million, or $0.35 per share, on a pro forma, fully diluted weighted average share count of 18.7 million shares. This compares with Adjusted net income of $5.7 million, or $0.30 per share, in the prior-year period.

EBITDA was $11.3 million, compared to $9.8 million in the prior-year period primarily due to increased net sales and higher gross profit. Adjusted EBITDA margin rose 120 basis points to 19.8 percent, from 18.6 percent in the prior-year period. Adjusted EBITDA was $11.5 million, a 16.3 percent increase from $9.9 million in the prior-year period. See “Non-GAAP Measures� below for a reconciliation of Adjusted EBITDA, Adjusted EBITDA margin and Adjusted net income to the most directly comparable financial measures presented in accordance with GAAP.

Fiscal 2017 Results
Net sales for the fiscal year increased $7.0 million, or 3.2 percent, to $228.6 million from $221.6 million in the prior year. The increase was due to an increase in unit volume of 48 units, or 1.8 percent and an increase in our net sales per unit of 1.4 percent. This increase was due to price increases, as well as increased sales of higher content option packages.

Gross profit for the fiscal year increased $2.4 million, or 3.9 percent to $63.5 million, versus $61.1 million in the prior year. Gross margin rose to 27.8 percent from 27.6 percent in the prior year.

Selling and marketing expense for the fiscal year declined $0.3 million, or 3.1 percent, to $9.4 million. This decrease resulted mainly from reduced spending on marketing events. General and administrative expense totaled $20.5 million for the fiscal year versus $29.2 million for the prior year. This decrease resulted mainly from a $13.0 million decrease in stock-based compensation costs, partially offset by an increase of $4.3 million in legal and advisory fees related to litigation, including a $2.5 million patent settlement charge.

Net income totaled $19.6 million for the fiscal year up from $10.2 million in the prior year, reflecting reduced stock-based compensation costs. Adjusted net income increased to $24.3 million, or $1.30 per share for the fiscal year on a pro forma, fully diluted weighted average share count of 18.7 million shares. This compares favorably with Adjusted net income of $23.4 million, or $1.24 per share, in the prior year.

EBITDA for the fiscal year increased to $36.7 million from $23.2 million in the prior year primarily due to increased net sales and higher gross profit. Adjusted EBITDA margin for the fiscal year increased 40 basis points to 19.0 percent, from 18.6 percent in the prior year. Adjusted EBITDA was $43.5 million for the fiscal year a 5.5 percent increase from $41.2 million in the prior-year period. See “Non-GAAP Measures� below for a reconciliation of Adjusted EBITDA, Adjusted EBITDA margin and Adjusted net income to the most directly comparable financial measures presented in accordance with GAAP.

Market Milestones
During the fiscal fourth quarter, MasterCraft introduced the new XT22, a larger XT crossover boat designed with families in mind. The second largest do-everything XT boat, the 22-footer’s larger bow and sizeable wake provides more comfort and fun on the water. The new XT22 also showcases MasterCraft’s newest industry-first innovations that create a more intuitive and customizable experience through new digital driving and entertainment systems.  

After studying customers’ usage habits and collaborating with leading technology partners, MasterCraft simplified and enhanced the on-board experience with technology that tunes the boat’s operations to three owner-favorite usage modes: drive, tow and chill. This first-ever “modal� operating software for towboats is enabled by MasterCraft’s new proprietary premium dual-screen dash that streamlines boat operation and improves helm styling and ergonomics.

With the most screen real estate on any towboat, the 10.1� new touch screen and 12� non-touch display simplify boat control, enable better organization, and display information changes on both screens based on customized settings for each mode. The system’s software maximizes the additional screens by also offering pre-loaded tutorial videos and maps of all global waterways. The software also integrates with users’ cellular phones, rear-facing cameras and navigation as well as enabling real-time integration with GoPro Cameras.

In the fourth quarter MasterCraft announced an exclusive partnership with world-class, premium audio equipment manufacturer Klipsch Audio to bring premium, concert-level sound on its new sport boats. Klipsch Audio has created its first-ever marine speakers and amplification solutions that are exclusively offered on MasterCraft boats. Heralded in the music industry for its pioneering achievements and the power of its audio systems, the new Klipsch Audio systems now create a heavy-hitting, customizable concert-style entertainment experience.

Said McNew, “We’re dedicated to providing the best experiences on the water for our customers, and our partnership with Klipsch enables MasterCraft to create an exclusive, first-ever audio experience on the water. We spend a lot of time focused on customizing boats to our owners’ needs – from the look and style of the boat to the wake behind it. Digitally controlled, custom, concert-level sound is an exciting new on-board entertainment option that people of all ages will enjoy.�

Outlook
Concluded McNew, “MasterCraft has delivered solid performance and we’re optimistic about prospects for our fiscal 2018. Equally important, we continue to deliver best-in-class working capital management, which provides opportunities to enhance shareholder return in a variety of ways.

“Looking ahead, we remain committed to our five-pronged growth strategy: developing new and innovative products; further penetrating the entry-level and mid-line segment of the performance sport boat category; capturing share from adjacent boating categories; strengthening our dealer network; and driving margin expansion through continuous operational excellence.�

For the fiscal year ending June 30, 2018, MasterCraft expects net sales growth in the mid- to high-single digits and Adjusted EBITDA margin in the low 19 percent range setting the stage for another year of continued growth. Net sales growth will result in continued growth in net income, EBITDA and Adjusted net income.

Conference Call and Webcast Information
MasterCraft will host a live conference call and webcast to discuss fiscal fourth-quarter results today, September 7, 2017, at 5:00 p.m. ET. To access the call, dial (800) 219-6861 (domestic) or (574) 990-1024 (international) and provide the operator with the conference ID 68516887. Please dial in at least 10 minutes prior to the call. To access the live webcast, go to the investor section of the company’s website, www.mastercraft.com, on the day of the conference call and click on the webcast icon.  

For an audio replay of the conference call, dial (855) 859-2056 (domestic) or (404) 537-3406 (international) and enter audience passcode 68516887. The audio replay will be available beginning at 8 p.m. ET on Thursday, September 7, 2017, through 11:59 p.m. ET on Thursday, September 21, 2017.

About MCBC Holdings, Inc.
Headquartered in Vonore, Tenn., MCBC Holdings, Inc. (NASDAQ:MCFT) is the parent of MasterCraft Boat Company, a world-renowned innovator, designer, manufacturer, and marketer of premium performance sport boats. Founded in 1968, MasterCraft has cultivated its iconic brand image through a rich history of industry-leading innovation, and more than four decades after the original MasterCraft made its debut the company’s goal remains the same – to continue building the world’s best ski, wakeboard, wakesurf and luxury performance powerboats. For more information, visit www.mastercraft.com. 

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 often 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 include statements in this press release concerning an exciting pipeline of launches; our ability to continue our operating momentum, capture additional market share and deliver continued growth; expectations regarding driving margin expansion, sales increases and organic growth; our fiscal 2018 outlook and key growth initiatives; and our anticipated financial performance for fiscal 2018.

Forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, including general economic 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, and the successful introduction of our new products. These and other important factors discussed under the caption “Risk Factors� in our Annual Report on Form 10-K for the fiscal year ended June 30, 2016, filed with the Securities and Exchange Commission (the “SEC�) on September 9, 2016, and our other filings with the SEC could cause actual results to differ materially from those indicated by the forward-looking statements. The discussion of these risks is specifically incorporated by reference into this press release.

Any such forward-looking statements represent management’s estimates as of the date of this press release. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release. We undertake no obligation (and we expressly disclaim any obligation) to update or supplement any forward-looking statements that may become untrue or cause our views to change, 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 of Non-GAAP Financial Measures
To supplement MasterCraft’s condensed consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP), the company uses certain non-GAAP financial measures in this release. Reconciliations of the non-GAAP financial measures used in this release to the most comparable U.S. GAAP measures for the respective periods can be found in tables immediately following the condensed consolidated statements of operations. Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for MasterCraft’s financial results prepared in accordance with GAAP.


Supplemental Operating Data

The following table sets forth certain supplemental operating data for the periods indicated:

Non-GAAP Measures
We define EBITDA as earnings before interest expense, income taxes, depreciation and amortization. We define Adjusted EBITDA as EBITDA further adjusted to eliminate certain non-cash charges and other items that we do not consider to be indicative of our ongoing operations, including change in common stock warrant fair value, fees and expenses related to the company’s initial public offering and follow-on offering and our stock-based compensation. We define Adjusted net income as net (loss) income adjusted to eliminate certain non-cash charges and other items that we do not consider to be indicative of our ongoing operations, including change in common stock warrant fair value, fees and expenses related to the company’s initial public offering and follow-on offering, our stock-based compensation and an adjustment for income tax expense at a normalized annual effective tax rate. We define Adjusted EBITDA margin as Adjusted EBITDA expressed as a percentage of sales. Adjusted EBITDA, Adjusted net income and Adjusted EBITDA margin are not measures of net income or operating income as determined under accounting principles generally accepted in the United States, which we refer to as “GAAP.� Adjusted EBITDA and Adjusted net income are not measures of performance in accordance with GAAP and should not be considered as an alternative to net income or operating cash flows determined in accordance with GAAP. Additionally, Adjusted EBITDA is not intended to be a measure of cash flow for management’s discretionary use. We believe that the inclusion of EBITDA, Adjusted EBITDA, Adjusted EBITDA margin and Adjusted net income is appropriate to provide additional information to investors because securities analysts, noteholders and other investors use these non-GAAP financial measures to assess our operating performance across periods on a consistent basis and to evaluate the relative risk of an investment in our securities. We use Adjusted 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 alone measures. We believe Adjusted 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 items and items not indicative of our ongoing operations. Adjusted EBITDA and Adjusted net income have limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

  • Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and Adjusted EBITDA does not reflect any cash requirements for such replacements;
  • Adjusted EBITDA does not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments;
  • Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
  • Adjusted EBITDA does not reflect our tax expense or any cash requirements to pay income taxes;
  • Adjusted EBITDA does not reflect interest expense, or the cash requirements necessary to service interest payments on our indebtedness; and
  • Adjusted net income and Adjusted EBITDA do not reflect the impact of earnings or charges resulting from matters we do not consider to be indicative of our ongoing operations, but may nonetheless have a material impact on our results of operations.

In addition, because not all companies use identical calculations, our presentation of Adjusted EBITDA and Adjusted net income may not be comparable to similarly titled measures of other companies, including companies in our industry.

The following table sets forth a reconciliation of Adjusted EBITDA to net income as determined in accordance with GAAP for the periods indicated:

(a) Represents non-cash expense related to changes in the fair market value of our common stock warrant.

(b) Represents fees and expenses related to our secondary offering, follow-on offering and initial public offering and payment of a special cash dividend in June 2016.

(c) Represents legal and advisory fees for our litigation with Malibu Boats, LLC, which includes settling the Malibu patent case.

(d) Represents receipt of a one-time payment to settle certain litigation matters.

(e) We define Adjusted EBITDA margin as Adjusted EBITDA expressed as a percentage of net sales.

The following table sets forth a reconciliation of Adjusted net income to net income as determined in accordance with GAAP for the periods indicated:

(a) Represents non-cash expense related to changes in the fair market value of our common stock warrant.

(b) Represents fees and expenses related to our secondary offering, follow-on offering and initial public offering and payment of a special cash dividend in June 2016.

(c) Represents legal and advisory fees for our litigation with Malibu Boats, LLC, which includes settling the Malibu patent case.

(d) Represents receipt of a one-time payment to settle certain litigation matters.

(e) Reflects income tax expense at an estimated normalized annual effective income tax rate of 36.0 percent for the periods presented.

(f) The weighted average shares used for computation of pro forma basic and diluted earnings per common share gives effect to the 26,417 shares of restricted stock awards, the 40,612 performance stock units granted under the 2015 Incentive Award Plan during the fiscal year ended June 30, 2017 and 52,660 shares for the dilutive effect of stock options. The average of the prior quarters is used for computation of the fiscal year ended period.

The following table shows the reconciliation of diluted earnings per share to diluted pro forma Adjusted net income per share for the periods presented:

(a) Represents non-cash expense related to increases in the fair market value of our common stock warrant.

(b) Represents fees and expenses related to our secondary offering, follow-on offering and initial public offering and payment of a special cash dividend in June 2016.

(c) Represents legal and advisory fees for our litigation with Malibu Boats, LLC, which includes settling the Malibu patent case.

(d) Represents receipt of a one-time payment to settle certain litigation matters.

(e) Reflects income tax expense at an estimated normalized annual effective income tax rate of 36.0% for the periods presented.

(f) Reflects impact of increased share counts giving effect to the exchange of all restricted stock awards, the vesting of all performance stock units and for the dilutive effect of stock options included in outstanding shares.


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Malibu Boats, Inc. Announces Fourth Quarter and Fiscal Year 2017 Results

LOUDON, TN –(Marketwired – September 07, 2017) – Malibu Boats, Inc. (NASDAQ: MBUU) today announced its financial results for the fourth quarter and fiscal year ended June 30, 2017.

Highlights for the Fourth Quarter of Fiscal Year 2017

  • Net sales increased 12.6% to $75.1 million compared to the fourth quarter of fiscal year 2016.
  • Unit volume increased 8.9% to 1,004 boats compared to the fourth quarter of fiscal year 2016.
  • Net sales per unit increased 3.4% to $74,807 compared to the fourth quarter of fiscal year 2016, and net sales per unit in the U.S. increased 3.2% over the same period in fiscal year 2016.
  • Gross profit increased 12.4% to $20.0 million compared to the fourth quarter of fiscal year 2016.
  • Net income increased 151.0% to $10.3 million, or $0.54 per share compared to the fourth quarter of fiscal year 2016.
  • Adjusted EBITDA increased 14.4% to $15.5 million compared to the fourth quarter of fiscal year 2016.
  • Adjusted fully distributed net income increased 13.0% to $8.2 million compared to the fourth quarter of fiscal year 2016.
  • Adjusted fully distributed net income per share increased 13.2% to $0.43 per share on a fully distributed weighted average share count of 19.3 million shares of Class A Common Stock as compared to the fourth quarter of fiscal year 2016.

Highlights for Fiscal Year 2017

  • Net sales increased 11.5% to $281.9 million compared to fiscal year 2016.
  • Unit volume increased 6.9% to 3,815 boats compared to fiscal year 2016.
  • Net sales per unit increased 4.3% to $73,902 compared to fiscal year 2016, and net sales per unit in the U.S. increased 11.6% over the same period in fiscal year 2016.
  • Gross profit increased 12.3% to $75.0 million compared to fiscal year 2016.
  • Net income increased 53.1% to $31.1 million, or $1.59 per share, compared to fiscal year 2016.
  • Adjusted EBITDA increased 15.5% to $55.7 million compared to fiscal year 2016.
  • Adjusted fully distributed net income increased 17.2% to $30.0 million compared to fiscal year 2016.
  • Adjusted fully distributed net income per share increased 18.2% to $1.56 per share on a fully distributed weighted average share count of 19.3 million shares of Class A Common Stock as compared to fiscal year 2016.

Jack Springer, Chief Executive Officer, stated, “Fourth quarter and full fiscal year 2017 results were records for unit volumes, sales, net income, adjusted EBITDA, and adjusted fully distributed net income per share. Both our Malibu and Axis brands performed very well as validated by our large market share expansion. Our product, our dealers and our leadership of Malibu continue to set us apart from all our competitors.

“Lower retail inventory levels fueled demand in fiscal year 2017 and these healthy levels continue to fuel demand in the first quarter of fiscal year 2018. The U.S. continues to more than offset weakness internationally as a result of oil and gas in Canada and currency issues in the rest of the world. On a positive note, we continue to believe the decrease in retail sales over the previous two or three years has abated and we are now showing recovery at the retail level which we believe will lead to recovery at the wholesale level.”

Mr. Springer continued, “Our new product has been anticipated and now is being received very well. The 23 LSV, the performance sports boat segment’s best seller in history and every single year for the last eight years is new and will be a strong addition for Malibu. We were able to keep pricing at $79,995 on the 21 VLX introduced last year. The 21 VLX was a very high demand boat last year and retaining the pricing at the first-year introduction price point will be impactful for fiscal year 2018. Another new Malibu will be introduced for the first time in November. For Axis this year, the T22 and the A24 are both new boats we believe will perform very well. In addition, the patented, innovative Power Wedge 2 is now available on every Axis model.

“Fiscal year 2017 was a record year, the best in Malibu’s history on our above referenced financial and operational metrics as well as driving considerable market share gains. We have worked hard and positioned ourselves well to be able to drive increased performance in our business and are planning for another strong year in fiscal 2018.”

Comparison of the Fourth Quarter Ended June 30, 2017 to the Fourth Quarter Ended June 30, 2016

Net sales for the three months ended June 30, 2017 increased $8.4 million, or 12.6%, to $75.1 million, compared to the three months ended June 30, 2016. Included in net sales for the three months ended June 30, 2017 and 2016 were net sales of $5.8 million and $5.2 million, respectively, attributable to our Australian business. Unit volume for the three months ended June 30, 2017 increased 82 units, or 8.9%, to 1,004 units compared to the three months ended June 30, 2016. The increase in units was primarily driven by demand for our new models such as the Malibu Wakesetter 21 VLX and 22 and 24 MXZs. Net sales per unit increased 3.4% to $74,807 per unit for the three months ended June 30, 2017 compared to the three months ended June 30, 2016, primarily driven by year over year price increases, a mix shift from Axis to Malibu and lower discount activity, offset by higher rebate expense associated with our new rebate program for model year 2017. Net sales per unit in the U.S., excluding sales to our Australian operations, increased 3.2% to $75,048 for the three months ended June 30, 2017 as compared to the three months ended June 30, 2016.

Cost of sales for the three months ended June 30, 2017 increased $6.2 million, or 12.7%, to $55.1 million compared to the three months ended June 30, 2016. The increase in cost of sales was driven primarily by increased volumes and higher material content and labor hours driven by the mix shift from Axis to Malibu. Included in cost of sales were $0.1 million in costs related to our engines vertical integration initiative.

Gross profit for the three months ended June 30, 2017 increased $2.2 million, or 12.4%, to $20.0 million compared to the three months ended June 30, 2016. The increase in gross profit resulted primarily from increased volumes. Gross margin for the three months ended June 30, 2017 and 2016 was 26.7%.

Selling and marketing expense for the three months ended June 30, 2017 increased 52.8% to $2.3 million compared to the three months ended June 30, 2016, primarily due to the timing of sponsorship events and photo shoots. As a percentage of sales, selling and marketing expenses increased 80 basis points from 2.2% for the three months ended June 30, 2016 to 3.0% for the three months ended June 30, 2017.

General and administrative expense increased $1.3 million, or 16.2%, to $9.3 million for the three months ended June 30, 2017 compared to three months ended June 30, 2016. The increase in general and administrative expenses was driven in part by an increase in acquisition related expenses tied to our acquisition of Cobalt Boats, LLC (“Cobalt”) on July 6, 2017, product development activities in connection with our engines vertical integration initiative, and higher incentive compensation offset by a decrease in legal expenses due to the prior year charge of $3.3 million related to a jury verdict rendered against us in litigation with Marine Power Holding, LLC (“Marine Power”) and prior year legal expenses attributable to the MasterCraft Boat Company, LLC (“Mastercraft”) litigation which was settled on May 2, 2017.

Operating income for the three month period ended June 30, 2017 increased to $8.0 million from operating income of $7.8 million for the three month period ended June 30, 2016. Net income in the fourth quarter of fiscal year 2017 increased 151.0% to $10.3 million and net income margin increased to 13.7% from 6.1% in the fourth quarter of fiscal year 2016. The increase in net income was primarily due to a decrease of $8.1 million in our tax receivable agreement liability related to tax legislation enacted during the fourth quarter of fiscal year 2017 which lowered the tax rate used to estimate the future tax benefit expected to be realized by us on increased tax basis from previous sales and exchanges of units (“LLC Units”) in Malibu Boats Holdings, LLC (the “LLC”) by the pre-IPO owners. Adjusted EBITDA in the fourth quarter of fiscal year 2017 increased 14.4% to $15.5 million and Adjusted EBITDA margin increased to 20.6% from 20.3% in the fourth quarter of fiscal year 2016.

Comparison of the Fiscal Year Ended June 30, 2017 to the Fiscal Year Ended June 30, 2016

Net sales for fiscal year 2017 increased $29.0 million, or 11.5%, to $281.9 million, compared to fiscal year 2016. Included in net sales for fiscal years 2017 and 2016 were net sales of $23.0 million and $20.8 million, respectively, attributable to our Australian business. Unit volume for fiscal year 2017 increased 246 units, or 6.9%, to 3,815 units compared to fiscal year 2016. The increase in units was primarily driven by demand for our new models such as the Malibu Wakesetter 21 VLX and 22 and 24 MXZs and optional features. Net sales per unit for fiscal year 2017 increased 4.3% to $73,902 compared to fiscal year 2016, primarily driven by year over year price increases, a mix shift from Axis to Malibu, and lower discount activity, offset by higher rebate expense associated with our new rebate program for model year 2017. Net sales per unit in the U.S., excluding sales to our Australian operations, increased 3.6% to $73,878 for fiscal year 2017 as compared to fiscal year 2016.

Cost of sales for fiscal year 2017 increased $20.8 million, or 11.1%, to $206.9 million compared to fiscal year 2016. The increase in cost of sales was primarily driven by increased volumes, higher material content and labor hours driven by the mix shift from Axis to Malibu as well as higher warranty expense. Included in cost of sales were $0.3 million in costs related to our engines vertical integration initiative.

Gross profit for fiscal year 2017 increased $8.2 million, or 12.3%, compared to fiscal year 2016. The increase in gross profit resulted primarily from higher volumes. Gross margin for fiscal year 2017 increased 20 basis points to 26.6% compared to fiscal year 2016 due primarily to lower material cost margin, offset partially by higher labor and warranty expenses.

Selling and marketing expense for fiscal year 2017 increased $1.1 million, or 15.3%, to $8.6 million compared to fiscal year 2016 primarily due to increased payroll, commissions and related costs attributable to additional headcount. As a percentage of sales, sales and marketing expense increased 10 basis points from 3.0% for fiscal year 2016 to 3.1% for fiscal year 2017. General and administrative expense for fiscal year 2017 increased $3.5 million, or 16.6%, to $24.8 million compared to fiscal year 2016. The increase in general and administrative expenses was driven in part by an increase in acquisition related expenses tied to our acquisition of Cobalt on July 6, 2017, product development activities in connection with our engines vertical integration initiative, increased legal expenses for our Mastercraft litigation which was settled in the fourth quarter in fiscal year 2017, and higher incentive compensation, offset by a $1.1 million reduction in the Marine Power litigation judgment following a court verdict in the second quarter of fiscal year 2017 and lower stock compensation expense associated, in part, with share-based equity awards granted in the second quarter of fiscal year 2016.

Operating income for fiscal year 2017 increased to $39.4 million from operating income of $35.9 million for fiscal year 2016. Net income for fiscal year 2017 increased 53.1% to $31.1 million, and net income margin increased to 11.0% from 8.0% for fiscal year 2016. The increase in net income was primarily due to a decrease of $8.1 million in our tax receivable agreement liability related to tax legislation enacted during the fourth quarter of fiscal year 2017 which lowered the tax rate used to estimate the future tax benefit expected to be realized by us on increased tax basis from previous sales and exchanges of LLC Units by the pre-IPO owners. Adjusted EBITDA for fiscal year 2017 increased 15.5% to $55.7 million, and Adjusted EBITDA margin increased to 19.8% from 19.1% for fiscal year 2016.

Webcast and Conference Call Information

The Company will host a webcast and conference call to discuss the fourth quarter of fiscal year 2017 results today, September 7, 2017, at 8:30 a.m. Eastern Daylight Time. Investors and analysts can participate on the conference call by dialing (855) 433-0928 or (484) 756-4263 and using Conference ID #73676710. 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. Also, after Malibu Boats’ recent acquisition of Cobalt Boats, LLC, Malibu Boats also 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 the expected demand and acceptance for our new model year 2018 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: the successful integration of Cobalt into our business, general industry, economic and business conditions, demand for our products, the success of our engines integration strategy, 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, 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. 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 net income before interest expense, income taxes, depreciation, amortization and non-cash, non-recurring or non-operating expenses, including certain professional fees, litigation related expenses, acquisition 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. Management believes Adjusted EBITDA and Adjusted EBITDA Margin allow investors to evaluate the company’s 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.

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 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 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.”

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):

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 (certain totals for table below will not sum exactly due to rounding):

(1)Represents legal and advisory fees related to our litigation with Mastercraft offset by the settlement received from them in connection with the Mastercraft Settlement and License Agreement entered into on May 2, 2017.(2)Represents a charge recorded in fiscal year 2016 related to a judgment rendered against us in connection with a lawsuit by Marine Power, a former engine supplier, on August 18, 2016 and the reduction of that charge to $2.2 million, the amount ultimately settled and paid in the fourth quarter of fiscal year 2017.(3)Represents legal, professional, and advisory fees incurred in connection with our acquisition of Cobalt, which was completed on July 6, 2017. Fiscal year 2016 included legal and advisory fees as well as other acquisition related costs.(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 costs incurred in connection with our vertical integration of engines including product development costs and supplier transition performance incentives.(7)Represents a decrease in the estimated tax receivable agreement liability stemming from tax legislation enacted during the fourth quarter of fiscal 2017 which reduced the tax rate applied in computing the future benefit expected to be realized by us on increased tax basis from previous sales and exchanges of LLC Units by the pre-IPO owners.(8)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.(9)Reflects income tax expense at an estimated normalized annual effective income tax rate of 35.5% of income before income taxes for the fiscal years ended June 30, 2017 and 2016, 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.(10)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.(11)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.(12)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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Metro Boat Show docks in Harrison Township Sept. 14-17

Posted September 7, 2017


HARRISON TOWNSHIP — It’s time to get ready for the 2018 boating season, and what better place to do that than at Lake St. Clair Metropark in Harrison Township?

That’s where the eighth annual Metro Boat Show will be docked Sept. 14-17, bringing in hundreds of dealers and brokers from across the state.

Show manager Nicki Polan said the event is unique in that it’s the only in-water boat show around, and it will feature hundreds of boats ranging in length from 10 feet to more than 50 feet on display and for sale at end-of-season prices.

“It’s a great time to buy a boat,” said Polan. “The marina setting lined with beautiful boats, beer tents, live bands and so much more make this boat show more of a destination than just a boat show.”

The show is expanding this year with more boat slips and even more dry land exhibitors.

Travis Nivelt, general manager at Hideaway Yacht Sales on Jefferson Avenue in Harrison Township, said the Metro Boat Show has always been a tremendous success for his sales team.

“We’ll be there in full arms with plenty of sales and clearance specials,” he said. “We’ll have one of the biggest displays there. You get a lot of people (at the show) looking to get ready for next year.”

The event will also include live music, with local bands performing in the Tiki Bar, as well as a new bar location: the Nauti-bar. A multitude of activities will fill the day, including appearances from the XPOGO Stunt Team, which appeared on “America’s Got Talent”; food trucks with a variety of foods, including burgers, tacos, salads, smoothies, coffee and more; Michigan-made craft brews at the beer tents; a kids zone with T-shirt stamping, face painting, RC boats and bounce houses; and street teams from local radio stations with contests and prizes.

Low interest rates and fuel prices, combined with high water levels and temperatures, fueled another successful season for the boating industry. In 2016, the Michigan boating industry saw its seventh year of growth, with nearly $8.7 million in new boat, motor, trailer and accessory purchases, according to the Michigan Boating Industries Association, which produces the Metro Boat Show.

Show hours are noon to 7:30 p.m. Sept. 14-15, 11 a.m. to 7:30 p.m. Sept. 16, and 11 a.m. to 6 p.m. Sept. 17. Admission costs $10 for adults. Children 12 and younger enter for free with an adult. For more information, current promotions and contest information, visit metroboatshow.net.

About the author

Staff Writer Julie Snyder covers Harrison Township, Mount Clemens, Macomb County, L’Anse Creuse Public Schools, and Mount Clemens Community Schools for the Journal. She has worked for C G Newspapers since 2003, and attended the University of Toledo with degrees in journalism and photography. Julie has received several awards for her work in Arizona and Washington, including AP awards in Arizona for breaking news reporting and feature writing.


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