MBUU by the numbers

[IXFE]

That is eye opening info. Thanks for sharing... I guess my question is how is going public going to help Malibu keep building better boats? My gut answer is its all about the bottom line profits for the ceo, executive staff and board members. If he can get stock options that would drive up his net worth, it's how all the big ceo's become millionaires. I would hope they did this to help generate cash flow to improve R&D, employ better workers and use higher end materials, and end result would be to produce a better product every year.

How is this working out so far? Do people hear feel like Malibu is producing a better product, with better value than before they went public?

All good questions. In truth, it's probably too soon to tell how the IPO will affect the product. It's only been 9 months. Whatever issues Malibu has with QC existed before the IPO. I'm hopeful it gets better.

I have heard several on this board equate the IPO as something bad for the consumer. While it certainly can be, I view it this way...

An IPO just means you have a new set of owners. Even before the IPO there were owners. And even before the buy out, there were owners. All owners want to earn a return for their investment in time and capital. Bad owners (whether public or private) may take short cuts at the expense of their customer base. Good owners recognize that sustained earnings growth is only achieved when you both maximize profits while pleasing consumers at the same time... a tricky balance for sure, but certainly achievable.

We had good owners before. Time will tell what type of owners we have now. But if the new VLX I demo'd today is any indication, these guys are on the right track. The boat really does address a lot of issues. I'll go out on a limb and say the new helm is the best in the biz. No joking. It's Apple-esque. Zero glitches, gorgeous, and super intuitive.

Edited August 15, 2014 by IXFE

[TallRedRider]

My dealer wasn't lying. I think he was just surprised to hear the avg. Invoice being that low. We both surmised that his mix of Malibu -to- Axis is probably richer than the average.

Sometimes it's easy to look at an average number and mentally compare it to a single number (likely an outlier) in your head. I only shared his comment to demonstrate that the Wakesetter invoices (and corrsponding build costs) can be much higher than the averages you see on the P&L, especially the boats that keep showing up on this forum (flake, 450's, 18's, decadence, color towers, etc. etc.). My dealer delivers a lot of fancy boats like that.

The point is... these boats ain't cheap to build and the corporate raiders are not necessarily printing money at that factory. It's a tight biz with stiff competition, just like a lot of others.

I can see that. If you bling your boat to the max, you were probably more likely to share it here. The guy that bought the base engine, no frills trailer, no extras, isn't posting pics here.

IXFE, I meant to say thanks for posting this too. It takes time, even for a trained eye to analyze that information and summarize it in a concise fashion. Now when I explain to my wife why they cost so much, I can sound a bit more educated.

[wakebrdr94]

Did you not read IXFE's post?

Oh I read it, numbers do lie. Sorry, I see how things are done in my company to expense everything they can on my p&l, and I see how it affects my particular stores bottom line, and my bonuses, while some how HQ makes their bonuses off of our numbers. Weird. I'm not saying illegal, but loopholes are every company's best friend.

Labor I assume would be their biggest factor per boat, but who knows. I'd like to see the detailed report

[liljohn]

IXFE is a numbers nerd!

Interesting read. I still think Malibu will never be what it was when Bob was at the helm. Bob looked after the dealers , the third party company's and most of all the customer. Anyone who has owned a Malibu long enough understands what I am saying. Anyone who hasn't, search for the 08 make it right program. It will give you an idea the kind of company that it used to be.

[IXFE]

Oh I read it, numbers do lie. Sorry, I see how things are done in my company to expense everything they can on my p&l, and I see how it affects my particular stores bottom line, and my bonuses, while some how HQ makes their bonuses off of our numbers. Weird. I'm not saying illegal, but loopholes are every company's best friend.

Labor I assume would be their biggest factor per boat, but who knows. I'd like to see the detailed report

So tell me... what incentive would Malibu have to understate their earnings? And how do you imagine they are doing that?

[Kellyb]

Dave are you telling me that us accountants would allocate OH charges or 'management' out to the divisions??? We would never burden or 'over' allocate when our overhead rates are wrong because we never make mistakes.....

IXFE...

Public companies never revenue smooth once they hit expectations do they.... I have never adjusted ADA or an obsolesce reserve at quarter end or 20 other GAAP compliant entries to hit our numbers. 20 audits (damn I'm old) and not one qualified opinion let alone not a single audit adjustment.

How sad this was my break tonight from the umpteenth hours of due diligence. I am getting tired of data rooms...

Kelly

[85 Barefoot]

IXFE is a numbers nerd!

Interesting read. I still think Malibu will never be what it was when Bob was at the helm. Bob looked after the dealers , the third party company's and most of all the customer. Anyone who has owned a Malibu long enough understands what I am saying. Anyone who hasn't, search for the 08 make it right program. It will give you an idea the kind of company that it used to be.

I've owned many with Bob at the helm (who, by the way, was just as much about profit as anyone else, which is FINE) and several after. This chicken little attitude that there is some difference after Black Canyon and after going public are kidding themselves. Black Canyon bought in 2006. The make it right program was UNDER black canyon. Malibu went public THIS YEAR. For crying out loud its not like this year the boats are built of wood now.

[liljohn]

@ 85- Your right black canyon did buy controlling interest. Bob was still on the board until 08. If you think Malibu hasn't changed since he stepped down you need to take a peek at what was and what is now covered by warranty. Black canyon tightened down on there policies and there is no longer a grey area. Ask any dealer if its a different company and they will all say the same thing.

I'm not sure how this is a "chicken little" attitude. The company has changed. For the better or worse depends on how you want to look at it. Malibu is still a good product and on par with the big 3. (or is it 4 now?) I never implied the company changed for the worse.

[shawndoggy]

Have things changed since the original offering? From the S-1A, all that public stockholders get is a right to participate as minority interest holders. The private equity guys continue to wear the pants (retain voting control )

[oldjeep]

Have things changed since the original offering? From the S-1A, all that public stockholders get is a right to participate as minority interest holders. The private equity guys continue to wear the pants (retain voting control )

The important part (I think) of that picture is that last statement on the LLC Units - Exchangeable on 1-for-1 basis for shares of Class A Common stock. To know if the control still exists you would have to look at the filings to see if they are starting to convert those shares and subsequently selling them. (Kind of doubt it this early, but I didn't look)

I neither stayed at a holiday inn express, nor am an investment genius, but that is how I read it

Edited August 15, 2014 by oldjeep

[oldjeep]

Maybe they have converted them Can someone smarter than me explain what all the July 15th filings are?

http://www.nasdaq.com/symbol/mbuu/sec-filings

[RTS]

Maybe they have converted them Can someone smarter than me explain what all the July 15th filings are?

http://www.nasdaq.com/symbol/mbuu/sec-filings

Probably some sort of lock down period is expiring and those people are getting out while the getting is good.

Probably converting some derivative securities (options) to common stock. I didn't look at the filings in depth.

If it is true and those folks are converting to common stock, it would not be unreasonable to conclude that there will be a lot of selling going on in the next little while as those officers do some cashing out. As the stock does not do heavy volume on a daily basis, I would expect the price to start declining. I would not be buying this stock right now....maybe shorting it if you are so inclined.

Edited August 15, 2014 by RTS

[85 Barefoot]

@ 85- Your right black canyon did buy controlling interest. Bob was still on the board until 08. If you think Malibu hasn't changed since he stepped down you need to take a peek at what was and what is now covered by warranty. Black canyon tightened down on there policies and there is no longer a grey area. Ask any dealer if its a different company and they will all say the same thing.

I'm not sure how this is a "chicken little" attitude. The company has changed. For the better or worse depends on how you want to look at it. Malibu is still a good product and on par with the big 3. (or is it 4 now?) I never implied the company changed for the worse.

Malibu was a different company from 1999 to 2006 too...what's your point? It was ALWAYS constantly changing. I have not heard a thing from my dealer that things are not now covered under warranty that used to. I have heard him say that they are requiring pictures and documentation. Not unfair. In fact, other than the geographical warranty issues that some DEALERS are engaging in, I'm not aware of a situation where Malibu has denied a warranty claim that would have been honored in 2006. In fact, the warranty is even stronger than it was then.

[IXFE]

Dave are you telling me that us accountants would allocate OH charges or 'management' out to the divisions??? We would never burden or 'over' allocate when our overhead rates are wrong because we never make mistakes.....

IXFE...

Public companies never revenue smooth once they hit expectations do they.... I have never adjusted ADA or an obsolesce reserve at quarter end or 20 other GAAP compliant entries to hit our numbers. 20 audits (damn I'm old) and not one qualified opinion let alone not a single audit adjustment.

How sad this was my break tonight from the umpteenth hours of due diligence. I am getting tired of data rooms...

Kelly

I'm making an argument at the 30k foot level. You're down in the weeds.

If you have a theory on what accounting tricks Malibu is playing, please air it out.

I certainly didn't mean to imply it's all black and white. But this ain't no garage business either where we pencil our profits down to zero in order to avoid the tax man. That's what is being implied.

As to allocations among internal divisions, I've done more than I care to recall. But where does that come into play on a corp level PnL once all those divisions are consolidated back together? Malibu has all of 400 employees? How many divisions are we even talking about here?

At $45m in revenue per quarter, Malibu is a small business, guys. And they are publicly traded at that with SEC oversight. Please stop implying shenanigans. Unless we have proof of it, why wouldn't we take these certified financials at face value?

Some of you guys just can't resist the conspiracy theories. Do you really think Malibu is dreaming of ways to fool you all? Jeez people. Take off the tin foil hats already.

Edited August 15, 2014 by IXFE

[IXFE]

And of course the owners and execs (also owners) are going to cash out stock. That's what owners do. Stock is just a different vehicle by which they do it. In fact that's what Bob was doing all those years with the profits of the business, and it's what he did in a BIG way when he sold out in '06. Big deal. This isnt now and never was a charity.

Count me as another who's never had a warranty item declined by the new Malibu.

I'm also a guy who has implemented stricter warranty terms in the businesses I support at work after learning of abuse and/or to match comp's warranty terms.

[Fman]

The last two years I have seen Malibu release some nice boats. The lsv and now the new vlx, both imo are sweet. It would be nice to not have the 6-9% price increase every year, but maybe this is what is required to keep the lights on, employees wages, benefits, etc. paid up and keep R&D going strong. I also have never had warranty work declined by Malibu. I think the product overall is actually getting better and moving in the right direction, but it definitely comes at a significant cost increase.

[RTS]

And of course the owners and execs (also owners) are going to cash out stock. That's what owners do. Stock is just a different vehicle by which they do it. In fact that's what Bob was doing all those years with the profits of the business, and it's what he did in a BIG way when he sold out in '06. Big deal. This isnt now and never was a charity.

Count me as another who's never had a warranty item declined by the new Malibu.

I'm also a guy who has implemented stricter warranty terms in the businesses I support at work after learning of abuse and/or to match comp's warranty terms.

I'm not saying they shouldn't. What I am saying is with all these options being converted to common (if that is the case), and a 50 day average volume of about 150K shares (today they traded about 60K shares) ...when these shares begin to be sold, the stock will fall.

Also, anybody think Malibu as a company is worth in excess of $200 Million? That's their market cap right now.

Book value looks to be about $40 million when I looked at their most recent Balance sheet. Newly public company at 5X book is not my cup of tea. Especially if IPO options are leaving lockdown.The bottom could fall out....like real fast.

But I am pessimistic by nature....so your thoughts on buying the stock might differ <---and that was addressed to someone earlier that asked if it was a good stock to buy right now...I forget who it was.

Edited August 16, 2014 by RTS

[IXFE]

I'm not saying they shouldn't. What I am saying is with all these options being converted to common (if that is the case), and a 50 day average volume of about 150K shares (today they traded about 60K shares) ...when these shares begin to be sold, the stock will fall.

Also, anybody think Malibu as a company is worth in excess of $200 Million? That's their market cap right now.

Book value looks to be about $40 million when I looked at their most recent Balance sheet. Newly public company at 5X book is not my cup of tea. Especially if IPO options are leaving lockdown.The bottom could fall out....like real fast.

But I am pessimistic by nature....so your thoughts on buying the stock might differ <---and that was addressed to someone earlier that asked if it was a good stock to buy right now...I forget who it was.

We agree, RTS. I follow you 100% on the volume commentary. I'm not a buyer either, but then again I'm not a fan of recreation stocks that depend on seasonal business and long term, cheap financing.

As for the $200M market cap, that's only 1.1x revenue, so for me it's not that big a stretch. Actually, as revenue multiples go, that's pretty low. Admittedly, I don't know what the comps look like. But, setting the profitable PnL aside, the market share and trade name alone are worth a bunch.

[MalibuTime]

I might buy some Malibu stock, just to have it.

[oldjeep]

I might buy some Malibu stock, just to have it.

I bought 10 shares a couple days after the IPO for the same reason. Might have to request an actual cert so I can just put it on the wall with the waterski art.

[RTS]

Can you even get an actual certificate these days??? I know growing up we would often get 1 share of Disney stock for a birthday or something, as the certificates were almost works of art....certainly worthy of a frame. But I don't think I've seen an actual stock certifiate in many years.

[oldjeep]

Can you even get an actual certificate these days??? I know growing up we would often get 1 share of Disney stock for a birthday or something, as the certificates were almost works of art....certainly worthy of a frame. But I don't think I've seen an actual stock certifiate in many years.

It has been a long time since I tried to get ahold of one, but they are required by law to provide one if you ask.

[RTS]

It has been a long time since I tried to get ahold of one, but they are required by law to provide one if you ask.

I did not know that....

[MalibuTime]

I'm not saying they shouldn't. What I am saying is with all these options being converted to common (if that is the case), and a 50 day average volume of about 150K shares (today they traded about 60K shares) ...when these shares begin to be sold, the stock will fall.

Also, anybody think Malibu as a company is worth in excess of $200 Million? That's their market cap right now.

Book value looks to be about $40 million when I looked at their most recent Balance sheet. Newly public company at 5X book is not my cup of tea. Especially if IPO options are leaving lockdown.The bottom could fall out....like real fast.

But I am pessimistic by nature....so your thoughts on buying the stock might differ <---and that was addressed to someone earlier that asked if it was a good stock to buy right now...I forget who it was.

Hmm, it has been a while since I took accounting but goiing out on a limb here I think book value is just that. It doesn't mean anything in a stock trading market. Once your stock starts trading publicly, the value is determined by that, not book. IIRC (and, man it has been a long time) book value is much more relevant to privately held companies. Of course,

[RTS]

Book (or some portion thereof) is what the shareholders get when a company goes insolvent or the activist investors get ahold of the company. So I often look to book as a baseline for the downside....but again, I am a pessimist. I try to take care of the downside and let the upside take care of itself. Others may have different investment strategies and therefore no need to look beyond the stock price.

I also find it interesting that according to what I see, 75% of the stock in the newly 'public' Malibu is held by 10 Institutional investors. Institutional Investors are like the dinosaurs in Jurrasic Park..."they do move in heards"...and I really think it will not take much for one of them to decide to divest, and then all bets are off. Somethin like two quarters in a row like they had Q2'14.

I just don't see much upside to the company as an investment.....and a whole lotta risk.

Edited August 16, 2014 by RTS