Malibu Boats, Inc. · NASDAQ:MBUU
Malibu Boats — Raymond James 36th Annual Institutional Investors Conference 2015
43 slides from Malibu Boats's conference presentation, March 2015
Slide 1: 36th Annual Raymond James Institutional Investors Conference
MALIBU BOATS INC. 36th Annual Raymond James Institutional Investors Conference March 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 At IPO Current •#1 Market Share in Performance Sport Boats R •Still #1 Market Share at approximately 33% •Boat market has recovered another 10% with Malibu •Poised to Take Advantage of the Boating Market Recovery R participating at market share rate •Performance Sport Boats up
Slide 6: Growth Company with Proven Track Record
GROWTH COMPANY WITH PROVEN TRACK RECORD NET SALES ($MM)(1) $191 $207 $167 $141 $100 $103 $87 FY 2011 FY 2012 FY 2013 FY 2014 LTM F2Q15 YTD F2Q14 YTD F2Q15 Y/Y Growth 41% 18% 14% 18% ADJUSTED EBITDA ($MM)(1)(2) $37 $39 $32 $20 $17 $18 $8 FY 2011 FY 2012 FY 2013 FY 2014 LTM F2Q15 YTD F2Q14 YTD F2Q15 M
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: Broad, Differentiated Product Offering
BROAD, DIFFERENTIATED PRODUCT OFFERING Premium Performance / Recreational Boats Retail Price $55K – $125K Length 20 – 25 ft. 7 Models Length 20 –24 ft. Ski Boats Length 20 – 21 ft. 5 Models 3 Models Entry Performance / Recreational Boats Retail Price $35K – $70K Retail Price $45K – $85K Tournament Q
Slide 9: Product Lineup
PRODUCT LINEUP #9 9 + APPROACHING 40% MARKET SHARE IN NORTH AMERICA + 2015: MOST INDUSTRY INNOVATIONS IN ONE YEAR, EVER +
Slide 10: 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 11: Investment Highlights
INVESTMENT HIGHLIGHTS Watersports Industry Association’s “Innovation of the Year” in 2013
Slide 12: Leaving Competitors in Our Wake
LEAVING COMPETITORS IN OUR WAKE #1 U.S. PERFORMANCE SPORT BOAT MARKET SHARE(1) MASSIVE SHARE GAIN FROM COMPETITORS 18.1% 40.0% +970 bp OTHERS 32.8% 35.0% 32.8% (380) bp 30.0% (250) bp 25.0% 23.1% 23.8% +60 bp 20.0% (400) bp 21.3% 20.0% 18.8% 11.8% 15.2% 15.8% 16.6% 15.0% 12.6% 10.0% 5.0% 0.0% 16.7%
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 (1) Source:
Slide 14: Performance Sport Boats Taking Share
• Performance sport boats are capturing meaningful PERFORMANCE SPORT BOATS TAKING SHARE market 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 P
Slide 15: Customer Conversions from Other Segments
CUSTOMER CONVERSIONS FROM OTHER SEGMENTS January 7, 2015 Dear Mr. Springer: I am an eighth grade student at Medea Creek Middle School in southern California. Your newest line of wake boarding boats are breath taking and, therefore, I would like to congratulate you and your team of employees. Recentl
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 Focus on Manufacturing Vertical Integration Current: • Primary manufacturing facility in Loudon, TN • Drives significant design, quality and margin • Continuous flow manufacturing process advantages encompassing fabrication, asse
Slide 18: Marketing Initiatives / Events
MARKETING INITIATIVES / EVENTS • Five event, grass root series designed to grow the • The most prolific, by invite only, pro event our sport sport of wakeboarding has ever seen • “FREE Ride Friday” gets families on the water and • Sites selected by Malibu in priority growth areas promotes the Malibu
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: Surf Gate Intellectual Property
SURF GATE INTELLECTUAL PROPERTY Patent Portfolio Nautique Litigation • 3 issued US patents • Recognizes the value of our innovation and validates our IP • 6 continuation or pending portfolio patents – Including additional broad functionality / application • $2.25mm one-time cash payment • Priority d
Slide 21: 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 22: 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 #22 + APPROACHING 40% MARKET SHARE IN NORTH AMERICA + 2015: MOST INDUSTRY INNOVATIONS IN ONE YEAR, EVER +
Slide 23: 2015 Model Year Product
2015 MODEL YEAR PRODUCT
Slide 24: 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 New Docking Mode Throttle AW15 Tower #24 + APPROACHING 40% MARKET SHARE IN NORTH AMERICA + 2015:
Slide 25: 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 and dealer locations in the U.S. and Canada acquired Australian licensee in October 2014 54% market s
Slide 26: Growth Strategies
GROWTH STRATEGIES Launched in 2009
Slide 27: 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 28: 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 #28 + APPROACHING 40% MARKET SHARE IN NORTH AMERICA + 2015: M
Slide 29: 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 30: 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 31: 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 • Asia growth in excess of our expectati
Slide 32: 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. • New General Manager to lead Australian operation began February 1, 2015 • The Australian license business includes distribution righ
Slide 33: 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 34: Financial Overview
FINANCIAL OVERVIEW BEST-SELLING 23-FOOT PERFORMANCE SPORT BOAT IN THE HISTORY OF THE INDUSTRY
Slide 35: Proven Performance
PROVEN PERFORMANCE NET SALES ($MM)(1) $191 $207 $167 $141 $100 $103 $87 FY 2011 FY 2012 FY 2013 FY 2014 LTM F2Q15 YTD F2Q14 YTD F2Q15 Y/Y Growth 41% 19% 14% 18% UNIT SALES(1) 2,910 3,107 2,482 2,672 1,860 1,323 1,520 FY 2011 FY 2012 FY 2013 FY 2014 LTM F2Q15 YTD F2Q14 YTD F2Q15 Net Sales / Unit ($00
Slide 36: Proven Performance (Cont.)
PROVEN PERFORMANCE(CONT.) GROSS PROFIT ($MM)(1) • Gross margin has improved significantly as a result of: $51 $54 – New disciplined operational management $44 – Operational restructuring and vertical integration of manufacturing $30 – Improved labor efficiency $23 $26 – Higher margin features and op
Slide 37: Adjusted EBITDA – 9.5% Increase
Adjusted EBITDA – 9.5% Increase(1) Adj. EBITDA – Comparable Basis (2)(3) Adjusted EBITDA • Strong growth driven by increased volume and Australia acquisition • After adjusting for Public Company expenses incurred in FY15 and not FY14 Adjusted EBITDA growth is ~16% (1) See Appendix for a reconciliati
Slide 38: Strong Cash Flow Generation
STRONG CASH FLOW GENERATION • Strong free cash flow generation is a result of healthy operating margins and low capital requirements (recurring CapEx ~2% of sales) • Highly efficient working capital cycle FREE CASH FLOW ($MM)(1)(2) $31 $30 $29 $17 $15 $16 $7 FY 2011 FY 2012 FY 2013 FY 2014 LTM F2Q15
Slide 39: Long-Term Performance Targets
LONG-TERM PERFORMANCE TARGETS METRIC TARGET Revenue Growth 10% + Adjusted EBITDA Margin 20% + Long-Term EPS Growth 15% + #39 + APPROACHING 40% MARKET SHARE IN NORTH AMERICA + 2015: MOST INDUSTRY INNOVATIONS IN ONE YEAR, EVER +
Slide 40: Key Takeaways
KEY TAKEAWAYS #1 Market Share Poised to Take Position in Advantage of the Performance Sport Boating Market Boats Recovery Highly Experienced Performance Management Team with Sport Boats Proven Track Record Taking Share Multi-Pronged Growth Industry-Leading Product Opportunities Design and Innovation
Slide 41: Appendix
APPENDIX + 40% MARKET SHARE, NORTH AMERICA + 40% MARKET SHARE, NORTH AMERICA + 40% MARKET SHARE, NORTH AMER
Slide 42: Adjusted EBITDA and Free Cash Flow Reconciliation
ADJUSTED EBIDTA AND FREE CASH FLOW RECONCILIATION Fiscal Year Ended June 30, Fiscal YTD through Dec 31, Twelve Months Ending December ($ in millions) 2011 2012 2013 2014 2014 2015 31st, 2014 Net (loss) Income ($0.5) $11.1 $18.0 ($1.2) $10.4 $8.0 (3.0) (Benefit) Provision for Income Taxes 0.0 0.0 0.0
Slide 43: Reconciliation of Net Income to Non-GAAP Adjusted EBITDA
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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