Malibu Boats, Inc. · NASDAQ:MBUU
Malibu Boats — Raymond James 35th Annual Institutional Investors Conference (March 2014)
39 slides from Malibu Boats's conference presentation, Mar 4, 2014
Slide 1: Investor Presentation
Investor Presentation Raymond James 35th Annual Institutional Investors Conference March 4 2014
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation includes forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). Forward-looking statements can be identified by such words and phrases as “believes,” “anticipates,” “expects,” “intends,” “estimates,”
Slide 3: Company Overview
COMPANY OVERVIEW Amber Wing MALIBU PRO TEAM Best Women’s Rider - 2013
Slide 4: 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 5: Growth Company with Proven Track Record
GROWTH COMPANY WITH PROVEN TRACK RECORD NET SALES ($MM)(1) $177 $167 $141 $100 $33 $43 FY2011 FY2012 FY2013 LTM 1Q 2014 1Q 2013 1Q 2014 Y/Y Growth 41% 19% 31% ADJUSTED EBITDA ($MM)(1) $34 $32 $20 $8 $5 $8 FY2011 FY2012 FY2013 LTM 1Q 2014 1Q 2013 1Q 2014 Margin 8% 14% 19% 19% 17% 19% 1. FYE June 30;
Slide 6: Over 30 Years of Performance and Innovation
OVER 30 YEARS OF PERFORMANCE AND INNOVATION Launch largest Robert Alkema Introduction of boat to date, the launches the Company Power Wedge, Malibu in Merced, CA with the giving boaters ability Wakesetter 24 Malibu brand name to customize size MXZ and shape of boats wake Introduction of Introduction
Slide 7: Talented and Experienced Management
TALENTED AND EXPERIENCED MANAGEMENT • Joined Malibu in 2009 and has eight 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, re
Slide 8: Broad, Differentiated Product Offering
BROAD, DIFFERENTIATED PRODUCT OFFERING Premium Performance / Recreational Boats Length 20 – 25 ft. 7 Models Retail Price $55K – $120K Entry Performance / Recreational Boats Length 20 –24 ft. Ski Boats Length 20 – 21 ft. 4 Models 3 Models Retail Price $35K – $70K Retail Price $40K – $85K Tournament Q
Slide 9: Malibu Life
MALIBU LIFE WAKE RESEARCH y 9 SMaliou
Slide 10: Investment Highlights: Innovation of the Year 2013
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) 19.0% 32.9% Others 12.9% 15.5% 19.7% • Leading U.S. performance sport boat market share from 2010 – YTD 2013(1) • Positions us to capture new boat buyers as the economy strengthens Source: Statistical Surveys, Inc. 11 1.
Slide 12: Leaving Competitors in Our Wake (Cont.)
LEAVING COMPETITORS IN OUR WAKE (CONT.) CAPTURING SIGNIFICANT SHARE FROM COMPETITORS 40.0% +970 bp 35.0% 32.9% (410) bp 30.0% (230) bp +30 bp 25.0% 23.2% 23.8% (360) bp 21.3% 19.7% 19.0% 20.0% 15.5% 16.5% 15.2% 15.0% 12.9% 10.0% 5.0% 0.0% Others 2008 Nine Months Ended 9/30/2013 • Capturing market sh
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 13% in 2012 but remained 53% below average annual new unit sales volume between 2001 and 2007 and 58% 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) $0.16 $0.38 $2.63 $1.26B Core Addressable U.S. Market $0.88 Performance Sport Boat Jet Bo
Slide 15: Performance Sport Boats Taking Share
PERFORMANCE SPORT BOATS TAKING SHARE • Performance sport boats are capturing meaningful market share within powerboat segment and the sterndrive category in particular PSB % OF TOTAL PSB AND STERNDRIVE UNIT SALES 30% 25% 20% 15% 10% 5% 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 S
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 Efficiency • Primary manufacturing facility in Loudon, TN • Dedicated research and development team and boat tower manufacturing – Merced, CA • The only vertically integrated tower manufacturer in the indu
Slide 18: Industry Leader in Innovation
INDUSTRY LEADER IN INNOVATION Electronic Controls Wake Enhancement Design (Touch Command, MaliView (Surf Gate, Wedge, Plug n Play Ballast) (G3 Tower, Hull, Interior) Presets) STRATEGIES BENEFITS Creates brand differentiation within segment • New model introductions complemented by innovative new f
Slide 19: Industry Game Changer – Surf Gate
INDUSTRY GAME CHANGER – SURF GATE • Increasing popularity across age and experience spectrum due to low body impact Wake Surfing 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: Compelling Margins and Cash Flow
COMPELLING MARGINS AND CASH FLOW • Industry leading Adjusted EBITDA margins relative to our boating and recreational product peers ADJUSTED EBITDA MARGINS(1) 25.0% • Rationalized cost base during the 19.4% 20.0% economic downturn 17.1% 16.4% – Consolidated manufacturing 15.0% – Improved efficiency o
Slide 21: Global, High Quality Distribution Network
GLOBAL, HIGH QUALITY DISTRIBUTION NETWORK #1 market position in nearly 60% of our U.S. markets in FY13 international dealer locations in Europe, 139 dealer locations in the U.S. and Canada 49 Asia, South America and Africa in addition to licensing arrangement with an Australian manufacturer 40% mark
Slide 22: 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 – TSR has ~41% market share in the So
Slide 23: Growth Strategies
GROWTH STRATEGIES Launched in 2009
Slide 24: Multiple Growth Opportunities
MULTIPLE GROWTH OPPORTUNITIES • Industry sales at 58% of peak volume (1) Strong Industry Fundamentals • Performance Sport Boats taking share • Well-positioned to capitalize • New boat models New & Innovative Products • New features • Drive consumer interest and margin growth • Take share from other
Slide 25: Malibu Is Well-Positioned Amidst Favorable Trends
MALIBU IS WELL-POSITIONED AMIDST FAVORABLE TRENDS Industry Boating industry recovery in the early innings Segment Company Performance sport boats have taken Experienced team with proven, share from other segments winning execution strategy 25
Slide 26: Runway for Boating Recovery in All U.S. Markets
RUNWAY FOR BOATING RECOVERY IN ALL U.S. MARKETS • 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 PERF
Slide 27: 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 Drive demand and enhance Malibu’s segments of the
Slide 28: 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 – 3rd model – A24 – released August 2013 – Surf Gate available for option on all Axis models as of August 20
Slide 29: Accelerate International Expansion
ACCELERATE INTERNATIONAL EXPANSION • Currently the #1 or #2 U.S. brand exported to most 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 – Deve
Slide 30: Financial Overview
FINANCIAL OVERVIEW BEST-SELLING 23-FOOT PERFORMANCE SPORT BOAT OVER THE PAST FIVE YEARS
Slide 31: Proven Performance
PROVEN PERFORMANCE NET SALES ($MM)(1) $177 $167 $141 $100 $33 $43 FY2011 FY2012 FY2013 LTM 1Q 2014 1Q 2013 1Q 2014 Y/Y Growth 41% 19% 31% UNIT SALES(1) 2,672 2,783 2,482 1,860 550 661 FY2011 FY2012 FY2013 LTM 1Q 2014 1Q 2013 1Q 2014 Net Sales / $54 $57 $63 $64 $60 $65 Unit ($000s) 1. FYE June 30; 1Q
Slide 32: Proven Performance (Cont.)
PROVEN PERFORMANCE (CONT.) GROSS PROFIT ($MM)(1) • Gross margin has improved significantly as a result of: – New disciplined operational management – Operational restructuring and vertical $47 $44 integration of manufacturing – Improved labor efficiency $30 – Higher margin features and options $16 $
Slide 33: 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 <2% of sales) • Highly efficient working capital cycle FREE CASH FLOW ($MM)(1)(2) $31 $29 $17 $7 $7 $5 FY2011 FY2012 FY2013 LTM 1Q 2014 1Q 2013 1Q 2014 FCF % of
Slide 34: A Winning Combination of Growth and Profitability
A WINNING COMBINATION OF GROWTH AND PROFITABILITY MALIBU COMBINES LEADING GROWTH …WITH TOP-TIER PROFITABILITY 35% 40% 35% 30% 30% 25% FY11-13 Revenue CAGR 25% LTM Gross Margin 20% 20% 15% 15% 10% 10% 5% 5% 0% 0% 0% 20% 40% 60% 80% 100% 0% 5% 10% 15% 20% FY11-13 Adjusted EBITDA CAGR LTM Adjusted EBIT
Slide 35: Five-Year Performance Targets
FIVE-YEAR PERFORMANCE TARGETS METRIC TARGET Revenue Growth 10% + Adjusted EBITDA Margin 20% + Long-Term EPS Growth 15% + 35
Slide 36: Fortress Balance Sheet
FORTRESS BALANCE SHEET • Debt free balance sheet and strong free cash flow creates tremendous stability and flexibility ($ in millions) As of September 30, 2013 Actual Pro Forma Cash & Equivalents $4.7 $6.5 Revolving Credit Facility - - Term Loan 64.2 - Total Debt $64.2 - Total Equity (32.5) 36.1 To
Slide 37: Key Takeaways
KEY TAKEAWAYS #1 Market Share Poised to Take Position in Advantage of the Performance Boating Market Sport Boats Recovery Highly Experienced Management Team with Performance Proven Track Record Sport Boats Taking Share Multi-Pronged Industry-Leading Growth Product Design and Opportunities Innovation
Slide 38: Appendix
APPENDIX
Slide 39: Adjusted EBITDA and Free Cash Flow Reconciliation
ADJUSTED EBITDA AND FREE CASH FLOW RECONCILIATION Year Ended June 30, Quarter Ended September 30, Twelve Months Ending 2011 2012 2013 2012 2013 September 30, ($ in millions) 2013 Net Income $(0.5) $11.1 $18.0 $0.6 $5.2 $22.5 Interest Expense 1.8 1.4 1.3 0.4 1.2 2.1 Depreciation & Amortization 6.0 6.
Malibu Boats — Raymond James 35th Annual Institutional Investors Conference (March 2014) on 6ix