MBUU by the numbers

[Pnwrider]

^^^ I only own tangible assets.

[dlb]

It is below $14. Was above $23 in April and May, sold more boats than last year,.....

Why the sell off? It is more than the market decline, that is for sure. Any insight?

[BadgerBoater55]

It is below $14. Was above $23 in April and May, sold more boats than last year,.....

Why the sell off? It is more than the market decline, that is for sure. Any insight?

Currently all markets are down... Partially due to the FED not raising rates and causing uncertainty to be priced into ALL investments. I personally feel Malibu made a mistake going public, but that is my own opinion. With so much of what makes a Malibu a great product, and the reliance on handcrafting many of their parts, there is no real way to automate the process and lower operating costs (huge component of investment value) unless they reduce the model variants they have. As far as insight into their stock, I always feel it is better to look "top-down" rather than "bottom-up" when thinking about stocks. See if there is an overlying failure within the economy, industry, market segment, firm in that order. It is going to be a rocky road for all securities until the FED decides which direction they want the economy to go.

[dlb]

I understand the Fed and market dynamics. The stock is down 40%, the DJIA and S&P 500 are down (S&P500 is down a little over 5% for the year) but nowhere close to that much. A couple of rate increases, if they ever come, are not going to stop people, the top 5 percenters, from financing a $70K boat.

Oil is at $45 and gas around here is about $2.00. Their input costs should be stable to lower and for customers $2.00 gas means more gallons can flow through those LS3's ....

All of these say the price should be higher than what it is. That is why I asked for some other input.

Years ago I bought Ski area stocks in the late spring and sold in early winter. That worked pretty well, I am thinking about that here.

Edited October 4, 2015 by dlb

[Badger]

In principle, I agree with dlb. I was also thinking about a short term trade, as I don't see what was pushing the stock down as far as it is from its high. But I also wasn't following it to know what pushed it up either!

[Pnwrider]

I understand the Fed and market dynamics. The stock is down 40%, the DJIA and S&P 500 are down (S&P500 is down a little over 5% for the year) but nowhere close to that much. A couple of rate increases, if they ever come, are not going to stop people, the top 5 percenters, from financing a $70K boat.

Oil is at $45 and gas around here is about $2.00. Their input costs should be stable to lower and for customers $2.00 gas means more gallons can flow through those LS3's ....

All of these say the price should be higher than what it is. That is why I asked for some other input.

Years ago I bought Ski area stocks in the late spring and sold in early winter. That worked pretty well, I am thinking about that here.

First, you can't compare a relatively small boutique boat company to an index with 500 of the largest companies in the US and expect them to perform the same or even have a high correlation.

Second, one of the main reasons (speculation) that malibu went public was because the investment group that owned a large part of the company wanted to raise capital. You could see the price of a stock drop if some of the larger shareholders decided to sell their holdings for a number of different reasons. It could be the waiting period is over (I would have to actually do a little more research to determine if this was plausible).

Third, your ski slope example could've gone wrong if you had a warmer winter with very little precipitation. Or if it was perceived that would be the case since you sold your shares just before the season.

Would I buy mbuu? No. But it's largely due to the type of companies I prefer to own in my portfolio. Sorry DocPhil I do own assets that aren't tangible!

[dlb]

First, you can't compare a relatively small boutique boat company to an index with 500 of the largest companies in the US and expect them to perform the same or even have a high correlation.

Second, one of the main reasons (speculation) that malibu went public was because the investment group that owned a large part of the company wanted to raise capital. You could see the price of a stock drop if some of the larger shareholders decided to sell their holdings for a number of different reasons. It could be the waiting period is over (I would have to actually do a little more research to determine if this was plausible).

Third, your ski slope example could've gone wrong if you had a warmer winter with very little precipitation. Or if it was perceived that would be the case since you sold your shares just before the season.

Would I buy mbuu? No. But it's largely due to the type of companies I prefer to own in my portfolio. Sorry DocPhil I do own assets that aren't tangible!

First the reason this is interesting is that MBUU is a boutique and uncoupled from the S&P 500 herd instinct.

There were 2 big transactions this year both when the price was over $20 that I assume we're driven by timing of lock up restrictions. The transcripts of the earnings calls will enlighten you to that. The rest of the trading is pretty stable low volume stuff

The ski example was Vail Resorts, buying in late May or early June and selling around Thanksgiving. It was a human psychology play. Weather risk doesn't show up until after that. No one is thinking skiing in June and by Thanksgiving they have planned or are planning. The idea came to me at a party when someone said they were going to Vail and was one upped by the guy who said "I own Vail". You could buy in spring for about $8-10 and sell for $14-15 six months later.

At the time Vail was so thinly traded it took hours to transact. About 12-15K shares a day IIRC. MBUU is 10x that volume.

The idea is that the same psychology may work here. Buy in early fall and sell in February as folks start looking boats at the shows and talk in the office and parties about new boats is rekindled...

It is a trade for some fun, not something I am planning needing to retire on.

So if it works, the reward could be for a hundred shares you could pay for the next summer's gas.....

[The Hulk]

Anyone take into account if corporate and new owners have set up profit sharing Most often done when new owners invest or buy large percentage or buy outs etc. It's only 11k to set up trust and 5k/ yr to maintain wit IRS. This allows key persons aka owners and key employees to have something similar to the old pensions. U might ask how big companies can survive on say low 10-20% margins shown on the books once u understand how this is done it makes a lot if sense if your in business. Long story short only pay taxes on what u need to operate and defer all the rest. As an example say your small biz profits 100k and your making a reasonable salary rather than paying high corporate taxes u vest it into your retirement trust as much as u like up to 253k/person or more depending on age without getting g into detail. So you could put your 100k lrofit into your retirement and say your small biz has 0 profit And not pay taxes. Ideally u have to have enough profit to cover operating expenses so thus why stable large companies stay in the 5-15% range. This is why when investors come in and set this stuff up profit often falls because they can fully expense profits into retirements and best part is the money doesn't even have to be deposited until September of following fiscal year.those funds can even be transferred into inventory assets instead of cash if cash is not available to deposit before filings. This is often. Done with smaller companies but can easily be done with larger by hiring part timers which can cancel DB funds for the majority of full timers. Regardless it's what a lot of investors want since they prefer to defer the earnings and taxes. The question becomes if this shows up on expenses or is built into the per boat expense. Got me just throwing out a possibility for why profits could be kept low whether or not they ar or are not. Just food for thought as before I never knew how companies could operate on such low margins until I knew this stuff. It's basically a method to become wealthy for investors if they do something of the nature..

[IXFE]

Anyone take into account if corporate and new owners have set up profit sharing Most often done when new owners invest or buy large percentage or buy outs etc. It's only 11k to set up trust and 5k/ yr to maintain wit IRS. This allows key persons aka owners and key employees to have something similar to the old pensions. U might ask how big companies can survive on say low 10-20% margins shown on the books once u understand how this is done it makes a lot if sense if your in business. Long story short only pay taxes on what u need to operate and defer all the rest. As an example say your small biz profits 100k and your making a reasonable salary rather than paying high corporate taxes u vest it into your retirement trust as much as u like up to 253k/person or more depending on age without getting g into detail. So you could put your 100k lrofit into your retirement and say your small biz has 0 profit And not pay taxes. Ideally u have to have enough profit to cover operating expenses so thus why stable large companies stay in the 5-15% range. This is why when investors come in and set this stuff up profit often falls because they can fully expense profits into retirements and best part is the money doesn't even have to be deposited until September of following fiscal year.those funds can even be transferred into inventory assets instead of cash if cash is not available to deposit before filings. This is often. Done with smaller companies but can easily be done with larger by hiring part timers which can cancel DB funds for the majority of full timers. Regardless it's what a lot of investors want since they prefer to defer the earnings and taxes. The question becomes if this shows up on expenses or is built into the per boat expense. Got me just throwing out a possibility for why profits could be kept low whether or not they ar or are not. Just food for thought as before I never knew how companies could operate on such low margins until I knew this stuff. It's basically a method to become wealthy for investors if they do something of the nature..

I hear what you're saying. For it to be true, on the P&L you're saying that employee expenses would be overstated because they are overpaying employees with lavish retirement plans. Whatever the vehicle is (trust, pension, etc.) it would have the same impact to the P&L... higher cost of sales (if they are doing this for the guys on the factory floor) and higher operating expenses (where it applies to management).

Just one question... do you really think the investors would tolerate this? I mean, would you invest in a company that was siphoning off profits to enrich the work force (beyond what is competitive for that industry)? Wall Street is the great equalizer. It keeps companies accountable. Not saying what you're talking about isn't possible. I'm simply saying it would be hard to hide it from the analysts and investors who follow the stock. They expect maximization of profits and would not tolerate paying employees or management beyond competitive rates.

Anyway, rather than speculate, why do YOU go investigate this? You're free to go comb through 12 quarters of financials, notes, and investor calls to substantiate your claim. I know it's much easier to just throw spaghetti at the wall to see if it sticks. But you could contribute a lot more to this thread if you actually investigated your claim and brought back your findings.

I don't have time. In fact, I'm a quarter behind already in updating this thread with the P&L analysis I've done in the past.

[The Hulk]

I was not saying this is true or not it would be hard to understand depending on how they did it I was just throwing food for thought out there on Y margins could be low as I have seen with other companies that do this. I appreciate the hard work of looking through all that data hats off to you for the great analysis I was just offering some possibilities is all.

Some investors I know specifically look for companies with stability and pretty good margins they buy it up do this sort of thing and then prophets fall to around 5 to 15% the following year then they try to maintain just a slight increase to keep investors happy. Also there would only have to be roughly 3 out of 10 employees that received the defined benefit if they hire enough part time Fulk or put them on terms say three to four years if they don't work that long they cannot receive the defined benefit also that can be reduced to something only like $1,000 per employee while the key management or main owners Reagan hundreds of thousands of dollars into their plan it's a crappy way to do it but a lot of small machine shops around here do that my only point would be that depending on how they did it as I said it may be hard to decipher that if it's built into the cost of the boats unless they break down on a per item basis and get into a lot of detail it might be impossible to know for sure again I'm not saying this is what they're doing just offering a possibility for why a company like that would have low margins.. just food for thought is all

[The Hulk]

Thing public you're more than likely correct they would not support much of that or very little for key personnel again just potential possibilities but given the cost of labor and the amount of work that goes into these I agree with you the margins probably aren't all that great

[23LSVOwner]

According to several of my contacts there is no "profit sharing" plan at Malibu.

[Pnwrider]

According to several of my contacts there is no "profit sharing" plan at Malibu.

Do they have a 401k plan with or without a match?

[The Hulk]

The only people that would know for sure would be the very few people at the top but again if publicly traded this would be a little bit more difficult to brush under the rug if they were really trying to hide profit they would be doing it via royalty payments as an expense associated with the boats. Similar to how Apple makes all of its money and pays very little tax if nothing all the profit is associated with the royalties the only way to know if they are doing a little bit of this or if any would be to know the breakdown cost of the boats again I highly doubt that just throwing some info out or possibilities out there for speculation purposes only. At the end of the day it's more than likely just low profitslabor intensive biz and when you factor in any small number of recalls or warranty issues that will really kill profit quickly when your margins are less than double or in this case very low. So there's no wonder why all the boat companies are all in cheap labor areas of the country. I think it's pretty safe to assume it's just not a high margin business and it's a good bet we're not really being raped

[NWBU]

They do have a 401k plan with a match.

Your question made me go read their proxy and I see the best perk is that a few key execs get use of a company owned boat as part of their benefits package. Sweet deal!

[Pnwrider]

They do have a 401k plan with a match

Hard to say they don't have a profit sharing plan then...

[shawndoggy]

Hulk, I mean this in the nicest way possible...

This is a good thread that talks about and interprets ACTUAL FACTS which are revealed in MBUU's SEC filings and earnings calls.

Could you please keep your run on stream of consciousness unsubstantiated speculative posts confined to the topics of getting more horsepower out of an LSA and propping your wakeboat to go 65 mph?

[The Hulk]

It just would be very interesting to see and expense breakdown for the boats to know for sure if any profits are being disguised as an expense.. I doubt it but you never know even if it was a few grand for boat or less somebody could be making a ton of money off of that... but I highly doubt they would ever want to release their expense breakdown per boat because that would give competitors a direct nalysis of their material cost which other manufacturers could then go to their suppliers or even the same suppliers and negotiate potentially better rates. So it's probably a safe bet to assume we'll never know for sure what the true breakdown is

[23LSVOwner]

Do they have a 401k plan with or without a match?

Yes.

[23LSVOwner]

It just would be very interesting to see and expense breakdown for the boats to know for sure if any profits are being disguised as an expense.. I doubt it but you never know even if it was a few grand for boat or less somebody could be making a ton of money off of that... but I highly doubt they would ever want to release their expense breakdown per boat because that would give competitors a direct nalysis of their material cost which other manufacturers could then go to their suppliers or even the same suppliers and negotiate potentially better rates. So it's probably a safe bet to assume we'll never know for sure what the true breakdown is

Having worked for several publicly traded companies I can tell you that this would be pretty dang hard to pull off. Being audited by several independent companies constantly, etc.

[IXFE]

The only people that would know for sure would be the very few people at the top but again if publicly traded this would be a little bit more difficult to brush under the rug if they were really trying to hide profit they would be doing it via royalty payments as an expense associated with the boats. Similar to how Apple makes all of its money and pays very little tax if nothing all the profit is associated with the royalties the only way to know if they are doing a little bit of this or if any would be to know the breakdown cost of the boats again I highly doubt that just throwing some info out or possibilities out there for speculation purposes only. At the end of the day it's more than likely just low profitslabor intensive biz and when you factor in any small number of recalls or warranty issues that will really kill profit quickly when your margins are less than double or in this case very low. So there's no wonder why all the boat companies are all in cheap labor areas of the country. I think it's pretty safe to assume it's just not a high margin business and it's a good bet we're not really being raped

As a publicly traded company, regulated by the SEC, Malibu is required to report compensation details for top management. This is all public. It took me less than 30 seconds to find the following:

• Jack D. Springer, CEO - $749K
• Wayne Wilson, CFO - $420K
• Ritchie Anderson, COO - $318K
• Dan L. Gasper, VP of Design - $166K
• Deborah S. Kent, VP of HR - $105K

Those are the highest paid employees, including base, bonus, stock, etc. Sticking strictly to the facts, I have a hard time seeing how these would be inflated. Those are very very modest compensation numbers. That's $1.8M for your entire executive staff, which is < 1% of total revenue.

As is said before (and SD reiterated).... go get the data or end the speculation. This thread is about facts, not speculation or insinuation.

[NWBU]

It's a shame nobody reads 10Ks - lots of good info in them, for any company. Market share, unit volumes, etc.

[RTS]

The Risk Factors section fascinates me. So interesting to see a company forced to "look in he mirror" like that and enumerate what they feel could go wrong.

[Zac]

Great read, thanks IXFE. I tried to PM you but I think your box is full - fyi

[The Hulk]

well i dont think the investors can complain too much about the comps, very minimal for sure. is there a breakdown of how much is stock options, vs salary and other various comp.