MBUU by the numbers

[oldjeep]

I think that's right. According to the offer, Black Canyon owns approx $90M worth of shares (@ $21 per), and according to the docs they've committed to tender all they own @ $21 per share. So if nobody else tenders, Black Canyon mostly cashes out (and leaves everyone else with the bill) or you can get out now too and dilute how much cash they get out with in this round.

I've got 10 shares as a curiosity, I doubt I'd dilute it much Be interesting to see what calling back about 3.3 million shares does to the stock price

[IXFE]

It's been several quarters since I updated this thread with MBUU official financials. Better late than never, I guess.

We now have 11 quarters of financial information... only one quarter short of three full years.

As I've done before, here is some commentary I picked up from the Earnings Call:

Malibu sold 980 boats in Q3'15. To be fair, 80 of those boats were from the newly acquired Australia plant (volume never previously counted in MBUU's financials). But even if you adjust for that (900 boats), it represents a pretty BIG increase from prior quarters (766 in Q3'13 & 788 in Q3'14). Since I didn't post last quarter, it's worth noting that in Q2'15 Malibu sold 847 boats. That's a a big increase as well (601 in Q2'13 & 662 in Q2'14). So clearly, Malibu is growing.

Now let's look at Average Selling Price (aka "ASP" or dealer invoice as we consumers know it). You'd think it would be up, right? Well, it peaked in Q1'15 at almost $71K. But then it settled back down to $66K for the past two quarters, essentially flat to 2014. The main reason seems to be that MBUU is selling a higher mix of Axis in 2015 (32%) than in 2014 (27%). They said they expected the Axis mix to spike this year due to all the new models (T22 and T23). Going forward they expect the Axis mix to settle back to aprox. 30%. It is interesting to look at just Q3'15... Axis mix went back to 27% (lowest Axis mix in over a year), yet the ASP was still down at $66k. With such a high mix of Malibu (73%), I'd have thought you'd see a big increase in ASP. Clearly some other variable is in play here (could be the Australia boats). With all that said... Malibu stated that ASP was up 5.4% for the year. Unfortunately, the data does not prove that out. Even if I include the surge in Q1'15, the ASP for first three quarters 2015 is really only a 2.4% increase over 2014.

The average cost per boat (to Malibu) peaked in Q1'15 at $53K, but it has settled back down to $48K in Q3'15, which is roughly flat to last year. Not bad considering the new dash board and new wedge. Malibu didn't discuss this, but I suspect if you adjust for oil prices (aprox. half of what they were a year ago), their product costs would be way up. Click this link to see what I mean.

At the bottom line (net income), this was Malibu's strongest quarter since Q4'13. But that's deceiving. Look at the "other" line on the P&L. You'll see a negative $1,534. That's negative cost the way I have it listed... aka "other income." That other income is primarily litigation proceeds from Correct Craft.

Speaking of Axis... Malibu says that with 5 models (A20, A22, A24, T22, T23), it's finally a full fledged brand. They stated that as a stand-alone, it would be #4 in market share. The execs stated that now that they have filled out the Axis line, their focus would shift back to Malibu. As evidence of that, they are planning three new Malibu models for 2016 (with two going into production this summer) and only one new Axis model. I've learned from past calls that a "new model" doesn't necessarily mean a brand new model. It often means a redesign of an existing boat. They said they'd have more details in the next earnings call.

The 23 LSV is still the #1 model, followed by the 22 VLX, then the A22. It's been this way for some time. However, Malibu execs seemed a bit surprised by this. They didn't say it, but I think they expected the newer 22 VLX to outsell the 23 LSV. They said that the 23 LSV is exceeding expectations in it's second year on the market with tremendous year-over-year growth.

As for market share... Malibu says they are currently at 33%, which is 11% ahead of the next competitor.

There was some discussion in a recent thread about vertical integration. Well, whether it is right or wrong for Malibu, the execs made it clear that it's their strategy. In fact they listed it at one of three ways they were driving for improved margins:

1. Malibu/Axis mix to settle out at 70/30.
2. Vertical integration strategy... Allows them to "cut out the middle man and improve gross margin."
3. Continue to introduce new features as option (as opposed to standard equipment)... allows them to capture a little bit higher margin.

It will be interesting to to see what they do with the G4 tower. They didn't mention the take rate... apparently they only mention the take rate of an option with it's 100% (e.g. SG and PW2). But the G4 tower is made my PTM where the G3 tower is made in house. Moving towards an outsourced tower is really the opposite of vertical integration. I'd be really interested to hear what their long-term tower plans were.

They did talk about bringing trailer manufacturing in house. All I got from that was they had $1M of start up costs and were doing this for two reasons:

1. Innovate and bring new features to the trailer.
2. Provide a better value for Malibu dealers and customers (sounds like make it cheaper for us).

Personally, I like Boatmate trailers ALOT and I'm not thrilled with this move.

Anyway, that's all for now...

Edited June 2, 2015 by IXFE

[IXFE]

A couple of charts I made to show some of the more interesting trends:

[DAI]

That's a nice summary; can tell you're a finance guy. I'm going to have to dig up their financials as I'm curious to what their working capital looks like.

[IXFE]

That's a nice summary; can tell you're a finance guy. I'm going to have to dig up their financials as I'm curious to what their working capital looks like.

Thanks, DAI. I've focused all this almost entirely on the P&L because that's where the most interesting boat facts can be uncovered. Also, I'm too lazy to dig any deeper.

[wakebrdr94]

I'd like to know how much inventory is sitting on dealers floors vs what consumers have bought

[isellacuras]

Always nice to see your commentary and explanation of the quarterlies, IXFE.

[Fman]

Do you guys see many new boats on the water ways? I have not seen one yet this year, where are all the new boats going? Garage queens? I don't get it...I'm pretty good at dodging traffic on lakes, we typically dont see many boats in general but by now I would have thought I would have seen a few new rides around....any brand, just not Malibu.

[bamabonners]

I have seen a ton of new Axis in my area.

[DocPhil]

Is it possible to add a "average cost to consumer" to that chart. Would just be interesting to see.

Thanks for schooling me on finances. I understood about 10% of it.

[wakebrdr94]

Do you guys see many new boats on the water ways? I have not seen one yet this year, where are all the new boats going? Garage queens? I don't get it...I'm pretty good at dodging traffic on lakes, we typically dont see many boats in general but by now I would have thought I would have seen a few new rides around....any brand, just not Malibu.

And that's my question. These numbers are what Malibu has sold to the dealers, not what has been bought by consumers. While they may have sold 900 boats, total new registration numbers would be interesting to have.

With 2016s coming soon, it will be interesting what MBUU has up their sleeve to keep the numbers going.

[DAI]

Is it possible to add a "average cost to consumer" to that chart. Would just be interesting to see.

I'm not sure what level IXFE is at his company, but if he is like my finance guys he gets enough of these types of requests from work

[rennis]

The 23 LSV is still the #1 model, followed by the 22 VLX, then the A22. It's been this way for some time. However, Malibu execs seemed a bit surprised by this. They didn't say it, but I think they expected the newer 22 VLX to outsell the 23 LSV. They said that the 23 LSV is exceeding expectations in it's second year on the market with tremendous year-over-year growth.

It's all about that bass, not treble

[rennis]

Do you guys see many new boats on the water ways? I have not seen one yet this year, where are all the new boats going? Garage queens? I don't get it...I'm pretty good at dodging traffic on lakes, we typically dont see many boats in general but by now I would have thought I would have seen a few new rides around....any brand, just not Malibu.

I wasn't seeing too many out there either and then BAM, saw about a half dozen new Axis/Malibus on the lake this weekend.

[teamerickson]

Thanks for all the work and write up IXFE.

Can I trust your interpretation or do I need to dig in?

Edited June 3, 2015 by teamerickson

[Fman]

And that's my question. These numbers are what Malibu has sold to the dealers, not what has been bought by consumers. While they may have sold 900 boats, total new registration numbers would be interesting to have.

With 2016s coming soon, it will be interesting what MBUU has up their sleeve to keep the numbers going.

I am amazed they can keep this train going, at what point does the market just get saturated, there are only so many stupid customers like me that keep upgrading there boats every 2-3 years! I am very interested in seeing there new boat line up for 2016, sounds like some new stuff coming down the pipeline. This drought in California cant be helping sales here at all.... the local news is constantly letting everyone know how bad it is.

Edited June 3, 2015 by Fman

[DarkSide]

They are selling REALLY WELL here. I think the economy has caught up to where people are willing to buy a luxury item again. It also helps that credit is readily available at decent rates.

I am not trying to start THAT discussion again.

[bunji169]

Once Again, nice summary and commentary IXFE. Lazy people like me appreciate your hard work.

Surfin USA [emoji570][emoji475]

[wakebrdr94]

I am amazed they can keep this train going, at what point does the market just get saturated, there are only so many stupid customers like me that keep upgrading there boats every 2-3 years! I am very interested in seeing there new boat line up for 2016, sounds like some new stuff coming down the pipeline. This drought in California cant be helping sales here at all.... the local news is constantly letting everyone know how bad it is.

I know they are selling well in my area, but down here, you'd be amazed how many people have places in havasu and the river, and leave their boats there. water aroung here is low, but still useable. I hear how crazy I am when I tell people I trailer my boat back and forth to the river. But again, I use it here at home.

I'm one of those crazy people with you....

until my wife puts an end to it

Edited June 3, 2015 by wakebrdr94

[IXFE]

I'd like to know how much inventory is sitting on dealers floors vs what consumers have bought

And that's my question. These numbers are what Malibu has sold to the dealers, not what has been bought by consumers. While they may have sold 900 boats, total new registration numbers would be interesting to have.

With 2016s coming soon, it will be interesting what MBUU has up their sleeve to keep the numbers going.

Great question, guys. The analysts refer to this as "channel inventory" or "retail inventory." It means, how many boats are sitting on dealer lots. The analysts obviously care about this because they want to ensure that the volume growth they see is, in fact, real growth! "Stuffing the channel" is what we call it when a manufacturer just builds a bunch of junk and makes their dealers take it.

Anyway, the analysts ask this question every quarter. And every quarter Malibu gives a half-baked, qualitative answer, IMHO. When asked this quarter, Jack Springer (CEO), said essentially that he is "comfortable with channel inventory levels." He added that he feels much better about it than he did a year ago.

That's all you get... nothing quantitative. But it certainly sounds like Malibu dealers are not necessarily carrying more inventory than normal.

[IXFE]

Is it possible to add a "average cost to consumer" to that chart. Would just be interesting to see.

Thanks for schooling me on finances. I understood about 10% of it.

Doc... I wish I could do just that. It would be a nice compliment to that chart, huh? Even better if we had that data by model!! Unfortunately, Malibu doesn't report those numbers because it's really not theirs to quote. It's really a dealer thing.

And I think you're being humble with that 10% number... come on, man. You're a smart guy... I'm guess you understood at least 12% of it.

Jokes aside, give me a ring if you ever want to "nerd out" on this stuff. At least it will make me feel good to pay back some of the knowledge you've freely shared with me.

[Cory]

Great question, guys. The analysts refer to this as "channel inventory" or "retail inventory." It means, how many boats are sitting on dealer lots. The analysts obviously care about this because they want to ensure that the volume growth they see is, in fact, real growth! "Stuffing the channel" is what we call it when a manufacturer just builds a bunch of junk and makes their dealers take it.

Anyway, the analysts ask this question every quarter. And every quarter Malibu gives a half-baked, qualitative answer, IMHO. When asked this quarter, Jack Springer (CEO), said essentially that he is "comfortable with channel inventory levels." He added that he feels much better about it than he did a year ago.

That's all you get... nothing quantitative. But it certainly sounds like Malibu dealers are not necessarily carrying more inventory than normal.

I've been watching Wizard Lake's website to see if they were going to get stuck with that massive inventory build up they had this past winter. It appears they are selling those boats like hotcakes. I really thought they were going to get in trouble with the fall of oil prices and the rise of the US dollar. But, looking at their current inventory (online anyway) relative to how many they had, I think they will be fine. Also, most of their inventory was purchased from Malibu before the US dollar rose against the CDN dollar.

Edited June 3, 2015 by Cory

[IXFE]

Thanks for all the work and write up IXFE.

Can I trust your interpretation or do I need to dig in?

Oh you should definitely dig in... would be good to get a different set of eyes on it.

To be honest, the data is the data... reported to you the way MBUU reports it to "the street." The commentary I included is mostly just a "wash and wax" of what I heard on the Earnings Call. I tried hard not to bake too much of my own interpretation into it.

[ahopkins22LSV]

Do you guys see many new boats on the water ways? I have not seen one yet this year, where are all the new boats going? Garage queens? I don't get it...I'm pretty good at dodging traffic on lakes, we typically dont see many boats in general but by now I would have thought I would have seen a few new rides around....any brand, just not Malibu.

There are 8 new inboards to our lake this year. Plus about a dozen or more new pontoons which were not cheap either. A few new to their owner inboards as well. Even though my friend and I got new boats last year it's like damn, our boats are old ?

[Badger]

After reading a couple of comments about MBUU in the new 23 MKZ thread, I went on a search to learn about the stock. I just found this thread and read through from beginning to end. Thank you IXFE for putting this together and keeping the updates coming over time. I really appreciate your easy to understand analysis.

Over 8 pages, there's not a lot of talk about 'buyers' and 'sellers' of the stock. I know people like to keep this close to the vest, because nobody wants to announce they bought a "boatload" of the stock and then when it "sinks", everyone knows about it (see what I did back there?).

Anyhow, with the recent downtown in price and the continued strong line-up potentially getting stronger, is anyone looking at this as a potential buying opportunity? I agree that it's basically a bet on where you think interest rates are headed, as I think an uptick there would really hurt these sales.