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Category: Stock Market and Malibu Boats Inc.
Date: 2 September 2019 Stock Price: $27.82 We take a look at the latest earnings report for the 4th quarter of their 2019 fiscal year of Malibu Boats Inc.
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About Malibu Boats Inc.
Malibu Boats is a leading designer, manufacturer and marketer of performance sport boats, with the #1 market share position in the United States since 2010. The Company has three brands of high performance boats, Malibu, Axis Wake Research (Axis), and Cobalt. Since inception in 1982, the Company 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.
Financial overview of Malibu Boats Inc. latest earnings report
Numbers for the quarter highlighted by the group's management
The numbers we are interested in (for the quarter):
- Net sales increased 40.5% to $194.8 million compared to the fourth quarter of fiscal year 2018.
- Unit volume increased 16.6% to 1,992 boats compared to the fourth quarter of fiscal year 2018.
- Net sales per unit increased 20.5% to $97,802 per unit compared to the fourth quarter of fiscal year 2018.
- Gross profit increased 42.3% to $47.7 million compared to the fourth quarter of fiscal year 2018.
- Net income increased 53.5% to $20.5 million, or $0.93 per share compared to the fourth quarter of fiscal year 2018.
- Adjusted EBITDA increased 38.4% to $35.8 million compared to the fourth quarter of fiscal year 2018.
- Adjusted fully distributed net income increased 42.3% to $23.5 million compared to the fourth quarter of fiscal year 2018.
- Adjusted fully distributed net income per share increased 42.1% to $1.08 on a fully distributed weighted average share count of 21.9 million shares of Class A Common Stock as compared to the fourth quarter of fiscal year 2018.
The numbers we are interested in (for the quarter):
- Net sales $194.822 million (up from $138.659 million for the same quarter of the previous year)
- Cost of sales: $147.090 million (up from $105.119 million for the same quarter of the previous year)
- Net income attributable to Malibu Boats, Inc.: $19.412 million (up from $12.439 million for the same quarter of the previous year)
- Unit volumes 1,992 (up from 1,708 for the same quarter of the previous year)
- Net sales per unit: $97.802 million ($81.182 million for the same quarter of the previous year)
- Diluted number of shares in issue: 21,021,242 (up from 20,701,343 for the same quarter of the previous year)
- Diluted income per share: $0.92 (up from $0.60 for the same quarter of the previous year)
- Cash and cash equivalents: $27.392 million
- Cash and cash equivalents per share: $1.30
- Cash and cash equivalents makes up 4.6% of the group's current market capital
- Cash and cash equivalents makes up 6.1% of the group's total assets
- Total stockholders’ equity: $210.353 million
- Stockholders equity per share: $10.07
- Trade receivables, net: $27.961 million
- Trade and receivables makes up 6.19% of the group's total assets
- Inventories, net: $67.768 million
- Inventories makes up 15% of the group's total assets
Malibu Boats Inc. management commentary on the results and earnings guidance
"Fiscal year 2019 was another exceptional year for Malibu. We delivered record-breaking operational and financial performance supported by the strength of our brands, our commitment to operational excellence, and a best-in-class team laser-focused on superior execution. For the year, we delivered a 38% increase in net sales, with adjusted net income rising 46% to $82 million, or $3.76 per share," commented Jack Springer, Chief Executive Officer of Malibu Boats, Inc.
"Pursuit and Cobalt, together with our Malibu and Axis brands, have created a well-rounded, premium portfolio that brings to market a line-up of innovative boats that are resonating with customers. In fact, we recently announced the release of three new products - the Axis A20, which exemplifies performance and value in an entry level small package; the Malibu 20 VTX, the ultimate triathlete that excels for skiing, wakeboarding and wakesurfing; and the Malibu Wakesetter 23 MXZ, which is the perfect mix of luxury and watersports performance."
"Our vertical integration initiatives are also progressing on target, as our Malibu Monsoon engines are now completely integrated into 100% of our Malibu and Axis boats and the beginning of FY2020 saw us unveil our own flooring for all Malibu and Axis boats. While certainly not as large of scale as the Malibu Monsoon engine, the profitability profile of our new flooring vertical integration initiative is as strong, or stronger, than our other vertical integration initiatives over the years. In addition, we expect to finalize our expansion of Cobalt by the second quarter of fiscal year 2020, and are progressing nicely with the capacity expansion initiative at Pursuit," Mr. Springer continued.
"Maximizing the customer experience, coupled with our operational prowess has allowed us to consistently deliver strong results despite recent choppiness in the marine market. While we remain incredibly well-positioned in the industry, we are cognizant of the rising uncertainty around the broader macroenvironment. That said, we believe our inventory levels remain at adequate levels and our variable cost structure allows us to be nimble should things materially change," concluded Mr. Springer. "As we look to fiscal year 2020, while we are being prudent, we are investing in the areas that have driven our success across our brands - new products, innovation, vertical integration and performance optimization. We remain incredibly confident in the opportunities ahead of us and look forward to delivering long-term value for our shareholders."
"Pursuit and Cobalt, together with our Malibu and Axis brands, have created a well-rounded, premium portfolio that brings to market a line-up of innovative boats that are resonating with customers. In fact, we recently announced the release of three new products - the Axis A20, which exemplifies performance and value in an entry level small package; the Malibu 20 VTX, the ultimate triathlete that excels for skiing, wakeboarding and wakesurfing; and the Malibu Wakesetter 23 MXZ, which is the perfect mix of luxury and watersports performance."
"Our vertical integration initiatives are also progressing on target, as our Malibu Monsoon engines are now completely integrated into 100% of our Malibu and Axis boats and the beginning of FY2020 saw us unveil our own flooring for all Malibu and Axis boats. While certainly not as large of scale as the Malibu Monsoon engine, the profitability profile of our new flooring vertical integration initiative is as strong, or stronger, than our other vertical integration initiatives over the years. In addition, we expect to finalize our expansion of Cobalt by the second quarter of fiscal year 2020, and are progressing nicely with the capacity expansion initiative at Pursuit," Mr. Springer continued.
"Maximizing the customer experience, coupled with our operational prowess has allowed us to consistently deliver strong results despite recent choppiness in the marine market. While we remain incredibly well-positioned in the industry, we are cognizant of the rising uncertainty around the broader macroenvironment. That said, we believe our inventory levels remain at adequate levels and our variable cost structure allows us to be nimble should things materially change," concluded Mr. Springer. "As we look to fiscal year 2020, while we are being prudent, we are investing in the areas that have driven our success across our brands - new products, innovation, vertical integration and performance optimization. We remain incredibly confident in the opportunities ahead of us and look forward to delivering long-term value for our shareholders."
Malibu Boats Inc. (NASDAQ: MBUU) stock price history
The image below, obtained from Google, shows the stock price history of Malibu Boats Inc. and its been a pretty volatile time for the stock's investors, with it having traded around $20 a stock 5 years ago it reached highs of well above the $50 a share (and since then its been a slow gradual decline in the group's stock and its trading at $27.82 close to its 52 week low of $24.79 and a far cry away from its 52 week high of $59.57. So the question is whether the weakness in the stock price has created a buying opportunity for fundamental long term investors looking to buy good value proposition stocks?
Malibu Boats Inc. (NASDAQ: MBUU) latest stock valuation
Based on the group's latest earnings report we have a target price (full value price) on Malibu Boats Inc of $47.50. Thus we believe the recent stock price weakness as created an opportunity for fundamental long term investors who are looking for a value buy. The only concern for us is the market they operate in. If any economic weakness were to manifest itself in the US economy, the first thing consumers will cut back on is luxury goods such as boats, but in saying this our valuation model took into account a 15% reduction in earnings for the next fiscal year. So this valuation is at the lower level of our valuation estimate.