Earnings call transcript: Malibu Boats Q4 2025 misses EPS forecast, stock tumbles

Malibu Boats Inc. (MBUU) reported its fourth-quarter earnings for 2025, revealing a mixed performance. The company fell short of earnings per share (EPS) expectations, posting an EPS of $0.42 against a forecast of $0.4936, a miss of approximately 14.91%. However, revenue exceeded expectations, reaching $207 million compared to the forecasted $195.52 million, a surprise of 5.89%. In response, Malibu Boats’ stock saw a pre-market decline of 21.56%, with shares trading at $31, down from the previous close of $39.52. According to InvestingPro analysis, the company currently appears undervalued, with a "FAIR" overall financial health rating of 2.09 out of 5.

Key Takeaways

• Malibu Boats missed EPS expectations by 14.91% but exceeded revenue forecasts by 5.89%.
• The company’s stock dropped 21.56% in pre-market trading following the earnings announcement.
• Q4 net sales increased by 30.4% year-over-year, while full-year net sales declined by 2.6%.
• The company introduced 11 new boat models for Model Year ’26.
• Malibu Boats anticipates fiscal 2026 net sales to be flat to down mid-single digits.

Company Performance

Malibu Boats demonstrated robust revenue growth in Q4 2025, with net sales up by 30.4% year-over-year. Despite this, the company faced challenges over the full year, with net sales decreasing by 2.6% and unit volume dropping by 9%. The marine industry experienced a challenging retail environment, contributing to these mixed results. However, Malibu Boats maintained its position as a market leader in boating technology and outpaced market performance.

Financial Highlights

• Revenue: $207 million in Q4 2025 (↑30.4% YoY)
• Full-year net sales: $807.6 million (↓2.6% YoY)
• Q4 Gross Margin: 15.8% (vs. 7.9% prior year)
• Q4 Adjusted EBITDA: $19.7 million
• Q4 Net Income: $4.8 million
• Full-year Net Income: $15.2 million (vs. prior year loss of $56.4 million)

Earnings vs. Forecast

Malibu Boats’ actual EPS of $0.42 fell short of the forecasted $0.4936, resulting in a negative surprise of 14.91%. This miss contrasts with the company’s positive revenue surprise, where actual revenue of $207 million surpassed the forecast by 5.89%. The EPS miss highlights potential cost pressures or operational challenges not fully offset by revenue gains.

Market Reaction

Following the earnings release, Malibu Boats’ stock plummeted by 21.56% in pre-market trading, reflecting investor disappointment in the EPS miss. The stock’s current price of $31 is significantly lower than its 52-week high of $47.82, indicating a bearish sentiment. This decline contrasts with broader market trends, where the marine sector has faced headwinds but not to this extent. InvestingPro analysis shows analyst price targets ranging from $30 to $50, with 8 analysts recently revising their earnings expectations downward. Discover more insights and 11 additional ProTips with an InvestingPro subscription.

Outlook & Guidance

Looking ahead, Malibu Boats projects fiscal 2026 net sales to be flat to down mid-single digits, with Q1 net sales expected to rise by high single digits. The company aims for consolidated adjusted EBITDA margins of 8-9% for the fiscal year. Despite anticipated market declines, Malibu Boats remains optimistic about its competitive positioning and product offerings. InvestingPro forecasts indicate potential profitability improvement, with analysts expecting positive earnings this year. Access the comprehensive Pro Research Report, available for 1,400+ US stocks, to dive deeper into Malibu Boats’ financial outlook and competitive position.

Executive Commentary

CEO Steve Minetto expressed optimism about the company’s long-term prospects, stating, "We are excited about the long-term opportunity ahead for MBI and for our industry." CFO Bruce Beckman added, "We expect 2026 to be another year of top line outperformance against the markets in which we compete."

Risks and Challenges

• Elevated dealer inventory levels could impact future sales.
• Tariff impacts on cost of sales are anticipated to be 1.5-3%.
• The broader marine market is expected to decline in fiscal 2026, posing challenges for growth.
• No assumptions of interest rate cuts in guidance could affect financing costs.
• The company must navigate a challenging retail environment.

Q&A

During the earnings call, analysts inquired about dealer inventory levels, which are slightly elevated by 1-2 weeks. The company is exploring multiple tariff mitigation strategies. Analysts also questioned the company’s market share strategy amid challenging conditions, with executives emphasizing their focus on maintaining leadership in boating technology.

Full transcript - Malibu Boats Inc (MBUU) Q4 2025:

Conference Operator: Good morning, and welcome to Malibu Boats Conference Call to discuss Fourth Quarter and Full Fiscal Year twenty twenty five Results. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time. Please be advised that reproduction of this call in whole or in part is not permitted without written authorization of Malibu Boats. And as a reminder, today’s call is being recorded.

On the call today from management are Mr. Steve Minetto, Chief Executive Officer and Mr. Bruce Beckman, Chief Financial Officer. I’ll now turn the conference call over to Mr. Beckman to get started.

Please go ahead, sir.

Bruce Beckman, Chief Financial Officer, Malibu Boats: Thank you and good morning everyone. Joining me on today’s call is our CEO, Steve Mineto. On the call, Steve will provide commentary on the business and an update on the new model year and I will then discuss our fourth quarter and full year 2025 financials. We will then open the call for questions. A press release covering the company’s fiscal fourth quarter and full year twenty twenty five results was issued today and a copy of that press release can be found in the Investor Relations section of the company’s website.

I also want to remind everyone that management’s remarks on this call may contain certain forward looking statements, predictions, expectations, estimates or other information that might be considered forward looking and that actual results could differ materially from those projected on today’s call. You should not place undue reliance on these forward looking statements, which speak only as of today and the company undertakes no obligation to update them for any new information or future events. Factors that might affect future results are discussed in our filings with the SEC and we encourage you to review these filings for a more detailed description of these risk factors. Please also note that we will be referring to certain non GAAP financial measures on today’s call such as adjusted EBITDA, adjusted EBITDA margin and adjusted net income per share. Reconciliations of these GAAP financial measures to non GAAP financial measures are included in our earnings release.

Finally, during today’s prepared remarks, comparisons are due to 2025 unless otherwise noted. I will now turn the call over to Steve.

Steve Minetto, Chief Executive Officer, Malibu Boats: Thanks, Bruce. Good morning, everyone. Fiscal year twenty twenty five was a challenging period for the marine industry shaped by a difficult retail environment and heightened tariff uncertainty. Despite these headwinds, I am proud of our team’s ability to navigate the landscape and deliver strong results for our customers and partners. We outpaced the market while remaining disciplined in protecting the health of our dealers, which remains a North Star for our organization.

As a reminder, we led the charge supporting our dealers’ efforts to bring their inventory into alignment back in fiscal twenty twenty four. This set us up nicely for our outperformance of the market in fiscal year twenty twenty five and we are well positioned to repeat that success in fiscal twenty twenty six. The organization is ready to execute despite a softer retail backdrop. At the same time, we continue investing in our people and kept our foot on the gas with innovation. We will be introducing 11 new model year 26 boats while maintaining our industry leading commitment to quality and safety.

I’m excited to share details on some of these new models with you in just a moment. In addition, we generated another strong year of free cash flow producing 29,000,000 This consistent generation of free cash flow demonstrates both our discipline and the resilience of our business model regardless of the market conditions. As anticipated, we also reduced CapEx spending as we have the capacity in place to support the next upturn in retail demand when the market normalizes. And lastly, we executed on our capital allocation strategy returning $36,000,000 to shareholders through share repurchases. Turning to our dealers, as we noted in fiscal Q3, we expected dealers to continue trimming inventory.

Elevated interest rates, ongoing macroeconomic uncertainty and the timing of trade policy changes weighed on the consumer sentiment, which showed up in the softer industry retail data. Initial market data suggests that fiscal Q4 was the weakest quarter of the year with the broader market down mid teens percentage points. We remain committed to aligning wholesale with retail. Last year when dealers faced higher inventory levels, we were one of the first in the industry to adjust production and increase promotional support. These proactive steps helped reduce non current dealer inventory of our products, which allowed us to lower promotional spending in the back half of fiscal twenty twenty five.

To be clear, we are still providing promotions to our network. The key distinction is that our promotions are now more normalized to a market consumer incentive rather than aggressive inventory reduction. At our most dealer meeting at our recent dealer meetings, we came away energized by the sentiment. Dealers appreciated our customer first approach, ensuring products align with individual needs for a premier boating experience. We shared our new product lineup and the excitement building around it, while also outlining plans to strengthen our role as a trusted dealer partner.

This includes new tools to drive retail activity in the local markets and support long term dealer success in fostering stronger relationships with our customers. We look forward to sharing more about these unique initiatives at our upcoming Investor Day next month. We have also made significant progress upgrading our dealer network. 2025 marked a turning point as we reset our Malibu and Axis network. With both liquidations behind us and new dealers in place, we are rebuilding our share in these affected markets and are proud of the quality and speed at which our new dealers have come online.

While there is still work to do, onboarding has been smooth and our new dealers are enthusiastic about providing industry leading service and support to our customers in these important markets. Customer centric innovation is central to our mission at MBI. As a market share leader, we are committed to delivering the most advanced boating technology and highest quality products in the industry. Our Model Year ’26 lineup sets a new standard in creativity, craftsmanship and performance including 11 new models. Among the highlights are Covia two forty five center console and the three zero five center console, which were unveiled at our National Dealer Meeting three weeks ago.

These models are part of our strategy to upgrade the Covia lineup and we are excited to see that initial orders have exceeded expectations. Next, we have the Malibu 22 LSV, the newest evolution of our best selling LSV series. Easy to tow, store and maneuver, the 22 is the most complete compact wake boat ever built. We recently announced the Axis T250, the biggest, boldest and most powerful Axis in our history with room for 18 to ride, relax and repeat. The T250 is an excellent option for value focused buyers looking for outstanding quality at an affordable price point.

And finally, the Pursuit S388, an evolution of one of our most popular models with more storage, premium upgrades and performance in a smart layout. We plan on unveiling six more new models across our portfolio in the coming months and we’ll continue rolling out the all new Monsoon engine with enhanced power, torque and efficiency. In addition to customer centric innovation, our enterprise commitment to our communities remains paramount. Our mission is to deliver the ultimate on the water experience and in doing so we remain committed to safe boating and waterway health. We continue to educate customers on responsible boating and push the bounds of innovation with environmental impact in mind.

Also, our long standing history and involvement in MMMA and WSIA exemplifies our leadership role in the industry and together with our industry advocates, we can take ownership in setting the standard for responsible and safe voting. Looking ahead, we are going to stay grounded in the realities of today’s market, which is still feeling the effects of the broader macroeconomic uncertainties. With respect to the trade environment, tariffs will continue to create uncertainty in the general market. However, we anticipate a modest direct impact on our fiscal twenty twenty six structure estimated between 1.5% to 3% cost of sales, assuming current tariff rates. We will remain proactive in mitigating impacts through our strategic supply chain management initiatives and leverage our robust vertically integrated U.

S. Manufacturing capabilities, all of which will balance the need for associated price increases. From a retail standpoint, we do expect to see gradual improvement in fiscal year twenty twenty six. We have not yet seen a clear inflection point that signals a return to growth for the overall industry. That is why we’re going to remain disciplined, keeping our expectations aligned with what the market is telling us real time and not get ahead of ourselves.

Our dealer first approach will continue to guide us and our operational discipline will ensure we are in the right position when the market turns. We have the capacity in place, an exceptional team in the driver seats and a customer centric product line that positions us to hit the throttle when the time comes. We are excited about the long term opportunity ahead for MBI and for our industry. And as I mentioned, we look forward to sharing more at our Investor Day in September, where you will see how we are building on our strong foundation, innovating for the future and positioning ourselves to accelerate growth. We hope you can join us.

With that, I will turn it back

Bruce Beckman, Chief Financial Officer, Malibu Boats: to Bruce to discuss our financial results in more detail. Thanks, Steve. In the fourth quarter, results were generally in line with our expectations. Net sales increased 30.4% to $2.00 $7,000,000 and unit volume increased 16.8% to twelve twenty one boats. The increase in net sales was driven primarily by increased unit volumes in the Malibu segment, a favorable model mix across all segments and decreased promotional costs from elevated year ago levels.

The Malibu and Axis brands represented approximately 46.6% of unit sales, cobalt represented 26.9% and saltwater fishing representing the remaining 26.5%. Consolidated net sales per unit increased 11.6% to $169,565 per unit, primarily driven by inflation driven year over year price increases, decreased promotional costs and favorable model mix. Gross profit increased 162.1% to $32,700,000 and gross margin was 15.8%. This compares to a gross margin of 7.9% in the prior year period. The increased gross margin was driven by decreased promotional costs across all segments and favorable model mix.

Selling and marketing expenses increased 10.7% to $5,400,000 The increase was driven primarily by an increase in compensation and higher marketing activity. As a percentage of sales, selling and marketing expenses decreased 50 basis points to 2.6%. General and administrative expenses decreased 12.7% to $18,800,000 The decrease was driven primarily by a decrease in legal and professional fees and a one time IT item in the comparable period. As a percentage of sales G and A expenses were 9.1%. Q4 adjusted EBITDA increased to $19,700,000 and Q4 adjusted EBITDA margin increased twelve ten basis points to 9.5%.

Q4 GAAP net income increased to $4,800,000 In an effort to evolve and simplify our financial metrics, we have replaced the adjusted fully distributed net income per share metric with adjusted net income per share. In the fourth quarter, adjusted net income per share increased by 205% to $0.42 per share. This is calculated using the normalized tax rate of 24.5% and a weighted average share count of approximately 19,300,000.0 shares. For a reconciliation of adjusted EBITDA and adjusted earnings per share to GAAP metrics, please see the tables in our earnings release. Turning our attention to cash flow.

We generated $14,300,000 of free cash flow during Q4, inclusive of $7,000,000 of capital expenditures. We repurchased $5,600,000 of stock in the quarter. Now to keep recap our results for all of fiscal twenty twenty five. Net sales decreased 2.6% to $807,600,000 and unit volume decreased 9% to 4,898 boats. Consolidated net sales per unit increased 7.1% to $164,876 per unit driven by a favorable model mix and inflation driven year over year price increases.

Gross profit decreased 2% to $144,100,000 GAAP net income for the year was $15,200,000 compared to a loss of $56,400,000 in the prior year and adjusted EBITDA decreased 9.1% to $74,800,000 Adjusted EBITDA margin decreased by 60 basis points to 9.3%. As you may have noticed this morning, we have provided additional segment level detail in our press release and filings. For context, we have also moved several corporate expenses from the Malibu Access segment to the corporate expenses and other line item to better reflect our operating structure. A historical recast was also provided in the 10 ks and will be filed later today. Adjusted EBITDA margin for the Malibu segment increased to 19.4% for fiscal year twenty twenty five from 15.3% in fiscal twenty twenty four.

For the same periods adjusted EBITDA margin for the saltwater fishing segment decreased to 9.5% from 10.8% and adjusted EBITDA margin for the Cobalt segment decreased to 8.3% from 10.2%. For the year, non GAAP adjusted earnings per share decreased 21.4% to $1.58 per share. This is calculated using a normalized tax rate of 24.5% and a weighted average share count of approximately 19,700,000.0 shares. For the year, cash flow was $28,900,000 inclusive of $27,900,000 of CapEx and proactive raw material purchases in advance of increased tariff rates. We executed our capital allocation priorities by returning $35,900,000 to shareholders through share repurchases and we finished the year with $19,000,000 of net cash on the balance sheet and over $300,000,000 of untapped liquidity on our credit facility.

Our balance sheet strength and ample liquidity gives us the confidence in our ability to support growth and innovation through every phase of the market cycle. As we enter the New Year as Steve mentioned earlier, earlier, we will take a pragmatic approach to our fiscal year 2026 guide. Market softness resulted in modestly higher than anticipated dealer inventory levels at year end and macro uncertainty remains a key headwind in tempering retail demand. While we envision an improvement from the market declines we experienced in Q4, we

Financial Spokesperson, Malibu Boats: have yet to see the likely catalysts for material inflection in the market. As such, our guide today is anchored in the expectation that our markets will decline in the range of mid to high single digits for the year. This will be characterized by continuation of high single digit to low double digit decline through the first half of the year with some improvement projected towards the back half.

Bruce Beckman, Chief Financial Officer, Malibu Boats: If the market proves to be more favorable, we are well positioned to serve stronger demand and exceed our pace of outperformance. Based on our current market outlook and operating plans, our expectations for the fiscal year 2026 are as follows. We anticipate year over year net sales to be flat to down mid single digit percentage points. For Q1, we expect net sales to be up high single digits. We expect consolidated adjusted EBITDA margins ranging from 8% to 9% for the fiscal year.

For Q1, we expect adjusted EBITDA margins between 5% to 6%. This guidance incorporates the expected increased tariff costs and associated mitigations including pricing. To conclude, in fiscal twenty twenty five, we executed our strategy, outpaced the market and delivered strong free cash flow despite a challenging external environment. We have demonstrated industry leadership and prioritizing the health of our dealer network and are strategically positioned to capitalize on higher demand when the market returns to growth. We expect 2026 to be another year of top line outperformance against the markets in which we compete and our resilient business model will again enable us to generate strong free cash flow to fund our capital allocation priorities.

We are excited about our company’s future and look forward to sharing our plans for growth and value creation at our upcoming Investor Day. And with that, I’d like to open up the call for questions.

Conference Operator: Our first question today comes from Joe Altobello from Raymond James. Please go ahead with your question.

Martin, Analyst, Raymond James: Hi, good morning. This is Martin on for Joe. I wanted to quickly touch on sort of inventory levels, which I believe you said were elevated at year end. Just trying to get an idea of how much is that we expect further destocking this year? And sort of is it across the board or is it mostly in the saltwater and cobalt segments?

Bruce Beckman, Chief Financial Officer, Malibu Boats: Yes. What I would say is it’s across the board. It’s not in any one given segment. I think all the segments were affected by the macroeconomic uncertainty that we experienced. And it’s not a I would say a large amount of excess inventory.

It’s more modest. It’s in the one to two weeks range. But certainly something as we maintain our focus on dealer health and dealer inventories is something that we are going to address in our fiscal twenty twenty six guidance.

Martin, Analyst, Raymond James: Great. Thank you. And I just want to really quickly touch on tariffs and how that might affect pricing. Will that just go directly into MSRP? Or could you be looking at a surcharge?

Bruce Beckman, Chief Financial Officer, Malibu Boats: We haven’t necessarily decided on exactly which mitigation and how exactly we’re going to mitigate it. We’re looking at multiple forms of mitigation from supply chain strategies, changing sourcing patterns and a number of potential mitigations in an attempt to minimize the need for price increases. But we have incorporated that increase in cost into our guidance.

Martin, Analyst, Raymond James: Thank you and good luck.

Bruce Beckman, Chief Financial Officer, Malibu Boats: All right. Thank you.

Conference Operator: Our next question comes from Eric Wold from Texas Capital Securities. Please go ahead with your question.

Eric Wold, Analyst, Texas Capital Securities: Thanks. Good morning,

Financial Spokesperson, Malibu Boats: Good

Eric Wold, Analyst, Texas Capital Securities: One quick kind of just clarification question around the guidance and then kind of a follow-up on that. I guess, one, does your guidance assume any interest rate cuts during the fiscal year? And then should we start to see some interest rate relief this fall as is now kind of more widely anticipated? You mentioned that you kind of your promotional and kind of discounting is kind of you’re kind of leaning back on it a little bit. If we start to see some promotional or some industry relief around the boat show, would you expect to kind of lean more or dealers to lean more into promotions to kind of jump start demand during that important kind of boat show season and to get people into boats to kind of maybe not miss a boat show season before next year?

I mean, kind of how much rate from talking to your dealers, how much rate relief do you think those payment buyers really need at this point to kind of drive affordability into your key segments?

Steve Minetto, Chief Executive Officer, Malibu Boats: Thanks for the question. No, our guidance did not include any rate cuts. That was your first question. Your second question around where are the dealers failing, how are the dealers failing, what’s our promo and so forth. Like we said, we’re kind of in that normalized consumer discount versus an inventory reduction phase, right?

So with our dealers, we’re working to make sure that we can capture every sale, that we can drive market share. We have the new models like we said, we’ve only introduced about five of the 11 new models. We have new models coming out that will help us through the boat show season as well as if there are rate cuts to happen that could provide some wind to our back as we go through the boat show season.

Bruce Beckman, Chief Financial Officer, Malibu Boats: Yes. I think that’s well said, Steve. I mean, there will probably be some lag between when a Fed rate cut happens and when that transitions into consumer financing rates. We’ll get the benefit right away from floor plan financing standpoint that will be helpful to our dealers and to us, but it will likely take a little bit of while to trickle through. We do think that’s an important will be an important factor of getting this industry back to growth is getting those consumer rates to come down.

We have seen the payment buyers pull back and we’ve not them come back to the market as of yet. So looking forward to that future point when those buyers are back in the market and that will likely help the industry get back to growth.

Eric Wold, Analyst, Texas Capital Securities: Got it. Thank you, guys.

Conference Operator: And our next question comes from Craig Kennison from Baird. Please go ahead with your question.

Craig Kennison, Analyst, Baird: Yes. Good morning, Steve and Bruce. Thanks for taking my question. Wanted to understand the retail outlook that is embedded in your fiscal twenty twenty six guidance.

Steve Minetto, Chief Executive Officer, Malibu Boats: I think the easiest way, Craig, is to think about it is at this point, we’re kind of seeing more of the same. There’s nothing that says there’s going to be this wild ride up yet that we’re at the beginning of the next up cycle. So we’ve kind of looked at it and positioned it as more of the same. So it’s still the focus on how do we gain share in a mid single to upper single digit down market. So we’re going to be focused on the new products, how do we work with our dealers to be better retailers and what we can do to support that.

So that’s kind of where we continue to see the market until we see some point that says, hey, this thing is going to turn for the better.

Craig Kennison, Analyst, Baird: If

Bruce Beckman, Chief Financial Officer, Malibu Boats: you were to summarize it, Craig, we’re kind of expecting next year to play out very similarly to the way this year played out. And if there is an inflection change in the market, we’ll be ready to capitalize on that change. But as of right now, it’s probably more prudent to assume it’s going to be similar to last year.

Craig Kennison, Analyst, Baird: That’s helpful. And fiscal twenty twenty five included retail being down, but then also some destocking activity. Would you say you would also expect again, you made the comment on retail, but then you would also reduce inventory in the channel?

Bruce Beckman, Chief Financial Officer, Malibu Boats: Exactly, yes. And it would likely be a little bit more destocking than we had this year because again we’ve got a little bit heavier coming into the year than we would have anticipated three months ago just because of how soft retail was in Q4.

Craig Kennison, Analyst, Baird: Got it. That’s helpful. And then just thinking about your dealer network, you’ve made some changes and upgrades. Does that have any impact on your stocking plans? Or is it fairly immaterial given the size of your whole network?

Bruce Beckman, Chief Financial Officer, Malibu Boats: I would say it’s fairly immaterial, Greg.

Craig Kennison, Analyst, Baird: Okay. Thank you.

Bruce Beckman, Chief Financial Officer, Malibu Boats: All right. Thank you.

Conference Operator: Our next question comes from Noah Zatkin from KeyBanc Capital Markets. Please go ahead with your question.

Financial Spokesperson, Malibu Boats: Hi, thanks for taking my questions. I guess first just hoping you could kind of comment on the health of the dealer base both for you guys and for the broader industry. And then in terms of inventory levels, like what’s your sense of from an industry perspective, how inventory levels are? Thanks.

Steve Minetto, Chief Executive Officer, Malibu Boats: Yes, from the health of our dealer network and I think we said this on an ongoing basis, we check-in with our floor plan supplier every month. We have our fingers on the pulse of what’s going on. They’re pretty healthy. No big issues. However, as Bruce stated, with the softer Q4, maybe one or two weeks heavier than inventory than we wanted.

And as we kind of look at 2026, we want to be prudent and making sure we continue to stay disciplined to watching our dealer health. So I think our NBI dealers are in good shape. Like any other manufacturer, we’ll have a pocket here or there that we’re always cleaning up regionally or so forth. So always got our eye on that. Industry wise, I think the overall industry got better in inventory.

I know some of our competitors are still working through. We were the first ones to kind of go. So there’s still some folks working through their inventory challenges. But we’re going to remain disciplined and continue to have that finger on the pulse to really support our dealers.

Bruce Beckman, Chief Financial Officer, Malibu Boats: The other thing I would add to that is just the level of noncurrents in the system for us is in a healthy spot and better than what we understand the industry to be. So we feel good about that. And again, that’s I think a result of the focus that we’ve put on dealer health.

Financial Spokesperson, Malibu Boats: Got it. Very helpful. And maybe just one more again on kind of how you’re thinking about pricing. I think you made the comment, and correct me if I’m wrong, but the tariffs would represent about one points point to three points of additional COGS. So in terms of the guide, how are you thinking about, how are what kind of offsets are embedded, if any, versus those kind of additional costs?

And then just any mitigation efforts or opportunities that you could kind of expand on would be great? Thanks.

Bruce Beckman, Chief Financial Officer, Malibu Boats: So maybe the first thing I’ll say is that some of the mitigation activity took place in last fiscal year where we did some advanced purchases. We had roughly $10,000,000 of additional working capital on the balance sheet at the end of the year that we wouldn’t have had had it not been for those advanced purchases. So that was I would say mitigation number one. And then we have a number of supply chain efficiency initiatives underway. We always do and those we expect to help us.

And then we likely will have some price increases that will be necessitated by these additional costs and those have been factored into the guidance that we have provided.

Financial Spokesperson, Malibu Boats: Very helpful. Thank you.

Conference Operator: And our next question comes from Jamie Katz from Morningstar. Please go ahead with your question.

Jamie Katz, Analyst, Morningstar: Hey, good morning guys. I did notice there was some long term debt on the balance sheet this morning. I’m not sure if that is the change in how you guys are thinking about capitalizing the balance sheet or if there was something else I missed. But can you talk to that first?

Bruce Beckman, Chief Financial Officer, Malibu Boats: No. There’s no long term change, Jamie. I mean, we have a credit facility. And from time to time, we pull on that credit facility to be able to ensure that we have the working capital to run our business. We ended up in a good spot from net cash position.

I mean, have $19,000,000 of net cash, so strong positive cash. And that’s after returning $36,000,000 to shareholders in the form of share repurchases. So, no change in strategy there.

Jamie Katz, Analyst, Morningstar: Okay. And I understand we’re in this really difficult period, but could you give us or walk us through maybe a sensitivity analysis on how we get back to a double digit EBITDA margin? What sort of sales growth would we need to get there? And has the promotional cadence changed as we have gone through the last two months, I guess? Or does that give us some hope that maybe there is some upside to the initial EBITDA margin we’re looking at for the year ahead?

Thanks.

Bruce Beckman, Chief Financial Officer, Malibu Boats: Well, maybe the first thing I’ll say, Jamie, is that if we can get the market to stabilize, then we no longer have to destock to keep the dealers healthy from weeks on hand standpoint. We’ve been in the process of destocking now for the last two fiscal years. It would be great if we could get that in the rearview mirror and that alone would allow us to post revenue unit stabilize our units and allow us to drive revenue and profit growth. So that would be the first thing. We have seen promotions I would say normalize where you see the spike in promotional activity is when there is a high level of dealer inventories non currents and there’s problems to be cleaned up.

And that’s not just for us, it’s for the industry. And as Steve mentioned, the industry is getting healthier. So I think that will help the industry normalize those promotions going forward. And then of course, I mean, we are under shipping as an industry kind of the long term kind of replacement level of units for the industry. So this industry will bounce back.

And when it does, we have the capacity and the team in place to be able to support that next upturn in the market. Steve?

Jamie Katz, Analyst, Morningstar: Go ahead.

Steve Minetto, Chief Executive Officer, Malibu Boats: No, go ahead, Jamie.

Jamie Katz, Analyst, Morningstar: I was curious too like as you go through this, I don’t think there was anything mentioned about like CapEx spend this year and whether you guys are still constraining that or maybe constraining it more given where we are?

Bruce Beckman, Chief Financial Officer, Malibu Boats: Well, mean, I think last year we gave guidance of 30,000,000 to $35,000,000 and we finished below that level in fiscal twenty twenty five. So we have been very disciplined and prudent in those capital investment levels. And again, that’s well below where we were in the prior year because we’ve completed our capacity expansions and we have that capacity in place. So I would say this year we’re expecting similar levels to what we had last year which is again a more normalized post capacity expansion level of CapEx.

Jamie Katz, Analyst, Morningstar: Thanks.

Conference Operator: And ladies and gentlemen, with that being our final question, I would like to conclude today’s conference call. Thank you for participating. You may now disconnect your lines.

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