Malibu Boats, Inc. · NASDAQ:MBUU
Malibu Boats — 17th Annual ICR XChange Conference (January 2015)
40 slides from Malibu Boats's conference presentation, January 2015
Slide 1: Malibu Boats Inc. Investor Presentation January 2015
MALIBU BOATS INC. Investor Presentation January 2015 1
Slide 2: Safe Harbor Statement
SAFE HARBOR STATEMENT Statements in this presentation that are not purely historical, including statements regarding Malibu Boats, Inc.’s (“Malibu Boats”) intentions, hopes, beliefs, expectations, representations, projections, estimates, plans or predictions of the future are forward-looking stateme
Slide 3: Use and Definition of Non-GAAP Financial Measures
USE AND DEFINITION OF NON-GAAP FINANCIAL MEASURES This presentation includes the following financial measures defined as non-GAAP financial measures by the SEC: Adjusted EBITDA and Adjusted Fully Distributed Net Income. These measures have limitations as analytical tools and should not be considered
Slide 4: Company Overview
COMPANY OVERVIEW Amber Wing MALIBU PRO TEAM Best Women’s Rider - 2013
Slide 5: Investment Highlights
INVESTMENT HIGHLIGHTS • #1 Market Share in Performance Sport Boats • Poised to Take Advantage of the Boating Market Recovery • Performance Sport Boats Taking Share • Industry-Leading Product Development and Innovation • Strong Dealer Network • Two Highly Recognized Brands • Compelling Margins and Ca
Slide 6: Growth Company with Proven Track Record
GROWTH COMPANY WITH PROVEN TRACK RECORD NET SALES ($MM)(1) $191 $195 $167 $141 $100 $43 $48 FY 2011 FY 2012 FY 2013 FY 2014 LTM F1Q15 YTD F1Q14 YTD F1Q15 Y/Y Growth 41% 19% 18% 10% ADJUSTED EBITDA ($MM)(1)(2) $37 $37 $32 $20 $8 $8 $8 FY 2011 FY 2012 FY 2013 FY 2014 LTM F1Q15 YTD F1Q14 YTD F1Q15 Marg
Slide 7: Over 30 Years of Performance and Innovation
OVER 30 YEARS OF PERFORMANCE AND INNOVATION Launch largest Robert Alkema launches Introduction of Power boat to date, the the Company in Merced, Wedge, giving boaters Malibu CA with the Malibu brand ability to customize Malibu completes its Wakesetter 24 name size and shape of highly successful init
Slide 8: Talented and Experienced Management
TALENTED AND EXPERIENCED MANAGEMENT • Joined Malibu in 2009 and has nine years marine industry experience Jack Springer • Prior experience as C-level executive with several companies CEO and Director • Formerly a partner with Qorval, LLC and served as integration officer for Nautic Global Group, res
Slide 9: Broad, Differentiated Product Offering
BROAD, DIFFERENTIATED PRODUCT OFFERING Premium Performance / Recreational Boats Length 20 – 25 ft. Retail Price $55K – $125K 7 Models Retail Price $55K – $125K Length 20 –24 ft. Ski Boats Length 20 – 21 ft. 5 Models 3 Models Entry Performance / Recreational Boats Retail Price $35K – $70K Retail Pric
Slide 10: Investment Highlights
INVESTMENT HIGHLIGHTS Watersports Industry Association’s “Innovation of the Year” in 2013
Slide 11: Leaving Competitors in Our Wake
LEAVING COMPETITORS IN OUR WAKE #1 U.S. PERFORMANCE SPORT BOAT MARKET SHARE(1) 18.1% OTHERS 32.8% 11.8% 16.7% 20.6% • Leading U.S. performance sport boat market share from 2010 – 2014 • Positions us to capture new boat buyers as the economy strengthens Source: Statistical Surveys, Inc. (“SSI”). 1. F
Slide 12: Leave Competitors in Our Wake (Cont.)
LEAVE COMPETITORS IN OUR WAKE (CONT.) CAPTURING SIGNIFICANT SHARE FROM COMPETITORS 40.0% +970 bp 35.0% 32.8% (380) bp 30.0% (250) bp 23.8% +60 bp 25.0% 23.1% (400) bp 21.3% 20.0% 20.0% 18.8% 16.6% 15.2% 15.8% 15.0% 12.6% 10.0% 5.0% 0.0% Others OTHER 2008 2013 • Capturing market share from our closes
Slide 13: In the Early Stages of the Market Recovery
IN THE EARLY STAGES OF THE MARKET RECOVERY • U.S. performance sport boat sales grew 11% in 2013 but remained 48% below average annual new unit sales volume between 2001 and 2007 and 53% below the new units sold at the market peak in 2006 NEW UNIT U.S. PERFORMANCE SPORT BOAT RETAIL SALES 14,000 13,10
Slide 14: Large, Addressable Market Opportunity
LARGE, ADDRESSABLE MARKET OPPORTUNITY • +$4 billion addressable U.S. market • Core addressable market includes larger, adjacent powerboat categories (e.g. sterndrive) +$4 BILLION U.S. MARKET OPPORTUNITY(1) ($B) $0.11 $0.47 $2.96 $1.48B Core Addressable U.S. Market $0.90 Performance Sport Boat Jet Bo
Slide 15: Performance Sport Boats Taking Share
• Performance sport boats are capturing meaningful PERFORMANCE SPORT BOATS TAKING SHAREmarket share within powerboat segment and the sterndrive category in particular • Performance sport boats are capturing meaningful market share within powerboat segment and the sterndrive category in particular PS
Slide 16: Versatility, Innovation Driving Share Gains
VERSATILITY, INNOVATION DRIVING SHARE GAINS Performance Sport Boats Have All of the Features and Functionality of Sterndrive Boats and More Malibu 24MXZ OUTPERFORMANCE DRIVEN BY: Picklefork bow Expansive • New engineering and designs (V-drive propulsion, design seating longer lengths and wider beams
Slide 17: Integrated Design, Engineering & Manufacturing
INTEGRATED DESIGN, ENGINEERING & MANUFACTURING ● Merced, CA Loudon, TN Operations Update Focus on Manufacturing Efficiency • Primary manufacturing facility in Loudon, TN Engine Supplier: • Dedicated research and development team and boat tower manufacturing – Merced, CA • Developed new relationship
Slide 18: Industry Leader in Innovation
INDUSTRY LEADER IN INNOVATION Wake Enhancement Electronic Controls Design (Surf Gate, Wedge, Plug n Play Ballast) (Touch Command, MaliView Presets) (G4 Tower, Hull, Interior) BENEFITS STRATEGIES New model introductions complemented Creates brand differentiation within segment by innovative new f
Slide 19: Industry Game Changer – Surf Gate
INDUSTRY GAME CHANGER – SURF GATE Wake Surfing • Increasing popularity across age and experience spectrum due to low body impact and ease of learning Opportunity • Traditional boat preparation for surfing is time-consuming, inconsistent and cumbersome • We were the first to market with a dedicated s
Slide 20: Model Year 2015… Innovation in Action
MODEL YEAR 2015… INNOVATION IN ACTION COMPLETELY REMODELED FROM THE HULL UP Malibu 22 VLX Axis A22 NEW BOATS Malibu Response LXR Axis T23 #20 + APPROACHING 40% MARKET SHARE IN NORTH AMERICA + 2015: MOST INDUSTRY INNOVATIONS IN ONE YEAR, EVER +
Slide 21: Model Year 2015… Innovation in Action
MODEL YEAR 2015… INNOVATION IN ACTION CATEGORY DEFINING FEATURES State-of-the-Art Next Generation Touchscreen Command Center G4 Tower Re-engineered, Performance- Enhancing Power Wedge II Next Generation Upgraded AXIS Vinyl AW15 Tower #21 + APPROACHING 40% MARKET SHARE IN NORTH AMERICA + 2015: MOST I
Slide 22: Global, High Quality Distribution Network
GLOBAL, HIGH QUALITY DISTRIBUTION NETWORK #1 market position in 65% of our U.S. markets over five total units, in FY14 international dealer locations in Europe, 143 52 Asia, South America and Africa. Also, dealer locations in the U.S. and Canada acquired Australian licensee in October 2014 that has
Slide 23: Converting the Best Dealers – Texas Ski Ranch
CONVERTING THE BEST DEALERS – TEXAS SKI RANCH • Limited historical presence (12% market share) in South Texas region (excluding Austin, TX) • Texas Ski Ranch (“TSR”), near San Antonio, is the pre-eminent cable park in the nation, drawing ~400,000 people per year • Significant market opportunity TSR/
Slide 24: Growth Strategies
GROWTH STRATEGIES Launched in 2009
Slide 25: Multiple Growth Opportunities
MULTIPLE GROWTH OPPORTUNITIES • Industry sales 53% below peak volume(1) Strong Industry Fundamentals • Rapidly expanding • Well-positioned to capitalize • New boat models New & Innovative Products • New features • Drive consumer interest and margin growth • Take share from other boating segments (e.
Slide 26: Malibu is Well Positioned Amidst Favorable Trends
MALIBU IS WELL POSITIONED AMIDST FAVORABLE TRENDS Industry Boating industry recovery in the early stages Segment Company Performance sport boats have taken Experienced team with proven, winning share from other segments execution strategy #26 + APPROACHING 40% MARKET SHARE IN NORTH AMERICA + 2015: M
Slide 27: Runway for Boating Recovery in All U.S. Markets
RUNWAY FOR BOATING RECOVERY IN ALL U.S. MARKETS • Our market position should allow us to capitalize on a boating recovery in all U.S. regions • The Southwest U.S., the largest U.S. market in FY06, experienced the largest declines during the recession and is in the very early innings of the recovery
Slide 28: Two-Pronged Product Development Strategy
TWO-PRONGED PRODUCT DEVELOPMENT STRATEGY The Release of New Products and Features Multiple Times Throughout the Year is a Key Competitive Advantage Introduce New Boat Models Develop & Integrate New Features Goal Goal Target unaddressed or underserved segments of Drive demand and enhance Malibu’s rep
Slide 29: Accelerate International Expansion
ACCELERATE INTERNATIONAL EXPANSION • Currently the #1 or #2 U.S. brand exported to all major markets • Historically, lower strategic priority – less than 5% of 2013 unit sales from outside North America • Recently expanded direct coverage of important markets • Significant global opportunity – Devel
Slide 30: Australia – A Gateway into Asia
AUSTRALIA – A GATEWAY INTO ASIA • In October 2014, we closed a transaction to acquire all of the equity interests of our licensee in Australia, Malibu Boats Pty Ltd. • The Australian license business includes distribution rights in the Australia and New Zealand markets as well as a manufacturing fac
Slide 31: Expanding Reach into Entry Market - Axis
EXPANDING REACH INTO ENTRY MARKET - AXIS • Launched in FY 2009 as a de novo brand – Entry-level, lower price point product appealing to younger demographic • Recent developments driving growth – Surf Gate available for option on all Axis models as of August 2013 – T22 released December 2013 - first
Slide 32: Financial Overview
FINANCIAL OVERVIEW BEST-SELLING 23-FOOT PERFORMANCE SPORT BOAT OVER THE PAST FIVE YEARS
Slide 33: Proven Performance
PROVEN PERFORMANCE NET SALES ($MM)(1) $191 $195 $167 $141 $100 $43 $48 FY 2011 FY 2012 FY 2013 FY 2014 LTM F1Q15 YTD F1Q14 YTD F1Q15 Y/Y Growth 41% 19% 18% 10% UNIT SALES(1) 2,910 2,922 2,482 2,672 1,860 661 673 FY 2011 FY 2012 FY 2013 FY 2014 LTM F1Q15 YTD F1Q14 YTD F1Q15 Net Sales / Unit ($000s) $
Slide 34: Proven Performance (Cont.)
PROVEN PERFORMANCE(CONT.) GROSS PROFIT ($MM)(1) • Gross margin has improved significantly as a result of: $51 $52 – New disciplined operational management $44 – Operational restructuring and vertical integration of manufacturing $30 – Improved labor efficiency – Higher margin features and options $1
Slide 35: Strong Cash Flow Generation
STRONG CASH FLOW GENERATION • Strong free cash flow generation is a result of healthy operating margins and low capital requirements (CapEx <4% of sales) • Highly efficient working capital cycle FREE CASH FLOW ($MM)(1)(2) $31 $31 $29 $17 $7 $7 $7 FY 2011 FY 2012 FY 2013 FY 2014 LTM F1Q15 YTD F1Q14 Y
Slide 36: Long-Term Performance Targets
LONG-TERM PERFORMANCE TARGETS METRIC TARGET Revenue Growth 10% + Adjusted EBITDA Margin 20% + Long-Term EPS Growth 15% + #36 + APPROACHING 40% MARKET SHARE IN NORTH AMERICA + 2015: MOST INDUSTRY INNOVATIONS IN ONE YEAR, EVER +
Slide 37: Key Takeaways
KEY TAKEAWAYS #1 Market Share Poised to Take Position in Advantage of the Performance Sport Boating Market Boats Recovery Highly Experienced Performance Management Team with Sport Boats Proven Track Record Taking Share Multi-Pronged Growth Industry-Leading Product Opportunities Design and Innovation
Slide 38: Appendix
APPENDIX + 40% MOST + 2015: MARKET SHARE, INNOVATIONS INDUSTRY NORTH AMERICA IN +ONE 40%YEAR, MARKET SHARE, EVER NORTH + 2015: AMERICA MOST + 40% INDUSTRY MARKET SHARE, INNOVATIONS NORTH IN ONE AMER YEAR, EVER
Slide 39: Adjusted EBITDA and Free Cash Flow Reconciliation
ADJUSTED EBIDTA AND FREE CASH FLOW RECONCILIATION Fiscal Year Ended June 30, Fiscal YTD through Sept 30, Twelve Months Ending September ($ in millions) 2011 2012 2013 2014 2014 2015 30, 2014 Net (loss) Income ($0.5) $11.1 $18.0 ($1.2) $5.2 $2.4 ($4.0) Provision for Income Taxes 0.0 0.0 0.0 (2.2) 0.0
Slide 40: Reconciliation of Net Income to Non-GAAP Adjusted EBITDA and Margin
Reconciliation of Net Income to Non-GAAP Adjusted EBITDA and Adjusted EBITDA Margin (Unaudited): The following table sets forth a reconciliation of net income as determined in accordance with GAAP to Adjusted EBITDA and Adjusted EBITDA Margin for the periods indicated (dollars in thousands): Three M
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