Malibu Boats(MBUU) - 2025 Q4 - Annual Report

PART I Item 1. Business Malibu Boats is a leading global designer, manufacturer, and marketer of recreational powerboats across eight premium brands - Malibu Boats is a market leader in performance sport boats (Malibu, Axis), fiberglass outboard fishing boats (Pursuit, Maverick Boat Group), and 24'-29' sterndrive segment (Cobalt)[23] - The company's product portfolio includes eight brands: Malibu, Axis, Pursuit, Maverick, Cobia, Pathfinder, Hewes, and Cobalt, catering to diverse recreational boating activities including water sports and fishing[23][25][26] - Key innovations like Surf Gate and Surf Band have expanded the market for water sports products[25][33] - As of June 30, 2025, the company's distribution channel comprised over 325 global dealer locations, with the top ten dealers representing 42.8% of net sales for fiscal year 2025[28][37] - Vertical integration of key components such as engines (Malibu Monsoon), boat trailers, towers, wiring harnesses, and tooling aims to reduce reliance on third-party suppliers, increase incremental margin, and enhance control over design and quality[56][57][278][279] Our Company This section provides an overview of Malibu Boats, Inc. as a leading designer, manufacturer, and marketer of recreational powerboats Competitive Market This section analyzes the competitive landscape and market position of Malibu Boats within the recreational powerboat industry Recreational Powerboat Market Data (Calendar Year 2024) | Recreational Powerboat Category | Unit Sales | Retail Sales (Dollars in millions) | | :------------------------------ | :--------- | :------------------------------- | | Outboard | 141,590 | $10,090 | | Performance sport boat | 8,867 | $849 | | Sterndrive | 5,858 | $1,659 | | Jet boat | 9,742 | $648 | | Cruisers | 1,356 | $2,302 | | Total addressable market | 167,413 | $15,548 | Our Products and Brands This section details the company's diverse product portfolio across its eight premium brands, including models, lengths, and price ranges Product Offerings by Brand (as of June 30, 2025) | Reportable Segment | Brand | Number of Models | Lengths | Retail Price Range (In thousands) | | :----------------- | :---------------- | :--------------- | :-------- | :-------------------------------- | | Malibu | Malibu | 12 | 20'-26' | $80-$300 | | | Axis | 6 | 20'-25' | $80-$175 | | Saltwater Fishing | Pursuit | 16 | 25'-46' | $130-$1,400 | | | Cobia | 14 | 21'-34' | $60-$500 | | | Pathfinder | 8 | 22'-27' | $60-$250 | | | Maverick and Hewes | 6 | 16'-21' | $45-$125 | | Cobalt | Cobalt | 16 | 22'-35' | $75-$625 | Innovative Features This section highlights Malibu Boats' proprietary technologies and product innovations that enhance the recreational boating experience - Proprietary technologies like Surf Gate and Surf Band allow remote control of surf waves, enhancing the wake surfing experience[33] - Other notable innovations include Malibu Monsoon Engine, Power Wedge III, G5 and G10+ Tower, Electronic Dashboard Controls, Flip Down Swim Step, Tower Mister, Splash and Stow, Cobalt's TruWave Technology, Pursuit's Electric Sliding Entertainment Center, and Maverick Boat Group's 'Hybrid' and 'Open' Bay Boat designs[33] - Malibu Wakesetter 23 LSV won Wakeworld 'Readers Choice' Wakeboard and Wakesurf Boat of the Year five years running (2020-2024)[33] Our Dealer Network This section describes the company's global dealer network, its structure, and the significant contribution of top dealers to net sales - As of June 30, 2025, the company's global dealer network consisted of over 325 locations[28][37][39] Top Ten Dealers' Contribution to Net Sales | Fiscal Year | Consolidated Net Sales (%) | | :---------- | :------------------------- | | 2025 | 42.8% | | 2024 | 40.4% | | 2023 | 41.1% | OneWater Marine, Inc. Sales as % of Consolidated Net Sales | Fiscal Year | Consolidated Net Sales (%) | | :---------- | :------------------------- | | 2025 | 24.7% | | 2024 | 23.7% | | 2023 | 17.2% | - The company repurchased 22 units under repurchase agreements in fiscal year 2025, including 19 units related to Tommy's Boats bankruptcy, with 20 units subsequently resold above cost[45] Marketing and Sales This section outlines the company's strategies and activities related to marketing and sales of its recreational powerboats Product Development and Engineering This section details the company's approach to product innovation, including team structure and strategic initiatives for new model introduction and feature integration - As of June 30, 2025, the product development and engineering team consisted of approximately 123 professionals[51] - The strategy involves introducing new boat models for underserved segments and integrating innovative features, managed through a formalized phase gate process[52][53] Manufacturing This section describes Malibu Boats' manufacturing operations, including facility locations, vertical integration strategies, and their objectives for efficiency and quality control - The company operates eight manufacturing facilities across four U.S. states (Tennessee, Kansas, Florida, California) and Australia[54] - Key components like Malibu Monsoon engines, boat trailers, towers, machined/billet parts, soft grip flooring, and wiring harnesses are vertically integrated[56] - Vertical integration aims to increase incremental margin, improve manufacturing efficiency, and enhance control over design, customization, quality, and the supply chain[56] Suppliers This section discusses the company's key supplier relationships for critical components, particularly engines, and recent supply chain conditions - The most significant component by cost is engines, with supply agreements with General Motors (through model year 2026) for Malibu/Axis/Cobalt sterndrive blocks, and Yamaha (expires June 30, 2027) for Pursuit/Cobalt/Maverick Boat Group outboards, and Volvo for Cobalt sterndrive assemblies[57][58][59] - Systemic supply chain disruptions experienced from fiscal year 2020 through the first half of fiscal 2023 were largely rectified during fiscal year 2025[60] Insurance and Product Warranties This section outlines the company's product warranty policies across its various brands, detailing coverage periods for structural and bow-to-stern components - Malibu and Axis brand boats have a limited warranty of up to five years[62] - Cobalt brand boats offer a structural warranty of up to ten years and a five-year bow-to-stern warranty[62] - Pursuit brand boats have a five-year structural warranty and a two-year bow-to-stern warranty[62] - Maverick, Pathfinder, and Hewes brand boats have a five-year structural warranty and a one-year bow-to-stern warranty[62] - Cobia brand boats have a ten-year structural warranty and a three-year bow-to-stern warranty[62] Strategic Acquisitions This section describes Malibu Boats' growth strategy through targeted acquisitions, highlighting past transactions and their objectives for market expansion and synergy realization - The company's growth strategy includes targeted acquisitions, such as Maverick Boat Group (2020), Pursuit (2018), and Cobalt (2017)[63] - Acquisition objectives include expanding market presence, entering new product categories, and realizing synergies through cost savings and revenue growth[63][64] Intellectual Property This section outlines how Malibu Boats protects its intellectual property through patents and trademarks for its innovative technologies and brand names - The company protects its intellectual property through patents (e.g., Surf Gate, Swim Step, Power Wedge) and trademarks (e.g., Malibu, Axis, Monsoon, Pursuit, Cobia, Maverick, Cobalt)[65][66] Seasonality This section addresses the seasonal nature of retail demand for boats and the company's strategies to mitigate its impact on manufacturing and sales - Retail demand for boats is seasonal, with most sales occurring during the first and fourth fiscal quarters (spring and summer)[67] - The company mitigates seasonality through manufacturing management and dealer incentives, such as volume rebates and free flooring for off-season orders[67] Safety and Regulatory Matters This section details the extensive environmental, health, safety, and product design regulations that Malibu Boats' operations and products must comply with in the U.S. and Australia - Operations are subject to extensive environmental, health, and safety regulations in the U.S. and Australia, including hazardous materials, air quality (Clean Air Act, CARB), and workplace safety (OSHA, SafeWork NSW)[68][69][71][73][74] - Boats must comply with U.S. Coast Guard regulations and EU Directive 2013/53/EU for design and construction standards[75] Human Capital Management This section describes Malibu Boats' human capital strategies, including employee numbers, talent retention, development programs, and commitment to workplace safety - As of June 30, 2025, the company had approximately 2,200 employees worldwide, none covered by collective bargaining agreements[76] - The company focuses on talent retention and development through competitive pay, benefits, annual performance evaluations, supervisor training, and internal promotions (88% of production leaders are internal promotions)[77][78] - Safety is a core value, with a commitment to an injury-free workplace through training and safety initiatives[79] Organizational Structure This section outlines Malibu Boats' corporate structure, including its holding company status, ownership interests in its LLC, and the nature of its common stock classes - Malibu Boats, Inc. is a holding company that owns an interest in Malibu Boats Holdings, LLC (LLC) As of June 30, 2025, MBI held approximately 98.6% of the economic interest in the LLC[84][86][537] - The company has Class A Common Stock (economic and voting rights) and Class B Common Stock (voting rights tied to LLC Units, no economic rights)[85][529][531] - A tax receivable agreement with pre-IPO owners mandates payments of 85% of realized tax benefits from increases in tax basis due to LLC Unit exchanges or purchases[94][200][502] Item 1A. Risk Factors The company faces significant operational, market, dealer, litigation, regulatory, and capital structure risks - The company's large fixed-cost base can negatively impact profitability during sales declines[18][97] - Inability to accurately forecast demand can lead to inventory management issues, affecting business and results[18][100] - Reliance on a small group of suppliers for critical components (e.g., engines) poses risks of supply disruptions and increased costs[18][104] - Weak general economic conditions, high inflation, and heightened interest rates negatively impact consumer demand for discretionary products like boats[18][154][165] - The company is exposed to significant litigation risks, including product liability claims and securities class action lawsuits, which can result in substantial costs and reputational harm[19][172][177][179] - Obligations under the tax receivable agreement could be substantial, with estimated future payments of approximately $40.4 million over the next sixteen years, potentially impacting liquidity[21][201] Risks Related to our Business and Operations This section details risks associated with the company's business and operational aspects, including fixed costs, demand forecasting, and supply chain dependencies Risks Related to our Markets and the Recreational Powerboat Industry This section outlines risks stemming from market conditions and the recreational powerboat industry, such as economic downturns and competitive pressures Risks Related to our Dealers This section addresses risks associated with the company's reliance on its independent dealer network, including their financial health and performance Risks Related to Litigation and our Regulatory, Accounting and Tax Environment This section covers risks arising from potential litigation, compliance with various regulations, and complexities in accounting and tax environments Risks Related to our Capital Structure This section discusses risks pertinent to the company's capital structure, including debt obligations, tax receivable agreements, and potential impacts on liquidity Risks Related to our Common Stock This section outlines risks specifically related to the company's common stock, such as market price volatility and shareholder rights Item 1B. Unresolved Staff Comments There are no unresolved staff comments from the SEC Item 1C. Cybersecurity The company has implemented various information security processes to identify, assess, and manage cybersecurity risks to its Information Systems and Data - The company employs information security processes for identifying, assessing, and managing cybersecurity threats to its critical networks and data[217] - Cybersecurity risk management is overseen by the CIO (a CISSP with over 20 years of experience) and the Cybersecurity Steering Committee, and is integrated into the company's enterprise risk assessment[218][220][225] - The board of directors' audit committee is responsible for overseeing the company's cybersecurity risk management processes[224] Risk management and strategy This section details the company's processes for identifying, assessing, and managing cybersecurity risks to its information systems and data Governance This section describes the oversight structure for cybersecurity risk management, including the roles of the CIO, Cybersecurity Steering Committee, and the board's audit committee Item 2. Properties Malibu Boats operates eight manufacturing facilities across four U.S. states (Tennessee, Kansas, Florida, California) and Australia - Malibu and Axis boats are manufactured in Loudon, Tennessee (leased 197,000 sq ft) and Australia (leased 68,200 sq ft)[230][237] - Cobalt boats are manufactured in Neodesha, Kansas (owned 493,000 sq ft) and Lenoir City, Tennessee (owned 260,000 sq ft)[232][233] - Pursuit and Maverick Boat Group boats are manufactured in Fort Pierce, Florida (owned 398,000 sq ft for Pursuit, 330,000 sq ft for Maverick Boat Group) A new 116,000 sq ft Tooling Design Center was launched in Fort Pierce in March 2023[234][235] - A facility in Merced, California (leased 172,500 sq ft) houses product development and tower/accessory manufacturing[236] Item 3. Legal Proceedings Information regarding legal proceedings is incorporated by reference from Note 17 of the audited consolidated financial statements Item 4. Mine Safety Disclosures This item is not applicable to the company PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Malibu Boats' Class A Common Stock is listed on the Nasdaq Global Select Market under the symbol 'MBUU' - Class A Common Stock is listed on the Nasdaq Global Select Market under 'MBUU'[3] - As of August 25, 2025, there were approximately five holders of record for Class A Common Stock and 12 for Class B Common Stock[241] - The company has never declared or paid cash dividends on its capital stock[242] Stock Repurchase Activity (Fiscal Year Ended June 30, 2025) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :----------------------------------- | :------------------------------- | :--------------------------- | | April 1, 2025 through April 30, 2025 | 151,735 | $27.68 | | May 1, 2025 through May 31, 2025 | 47,250 | $29.63 | | June 1, 2025 through June 30, 2025 | — | — | | Total | 198,985 | $28.22 | - For the fiscal year ended June 30, 2025, the company repurchased 997,791 shares of Class A Common Stock for $36.0 million in cash[247] - A new $50.0 million stock repurchase program (2025 Repurchase Program) was authorized for July 1, 2025, to June 30, 2026[248] Market Information This section provides details on the market where the registrant's common equity is traded Dividends This section outlines the company's dividend policy and history regarding cash dividends on its capital stock Stock Performance Graph This section presents a graph comparing the cumulative total return of the company's common stock with a peer group and a broad market index Issuer Purchases of Equity Securities This section details the company's stock repurchase activities, including the number of shares purchased and the average price paid per share Unregistered Sales of Equity Securities This section provides information on any sales of equity securities that were not registered under the Securities Act of 1933 Equity Compensation Plan Information This section presents information regarding the company's equity compensation plans, including shares available for future issuance Item 6. [RESERVED] This item is reserved and contains no information Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Analysis of financial performance, net sales, profitability, and cash flows, highlighting macroeconomic impacts and strategic responses Consolidated Financial Highlights (Fiscal Years Ended June 30, in thousands) | Metric | FY2025 | FY2024 | FY2023 | | :----------------- | :---------- | :----------- | :------------ | | Net Sales | $807,561 | $829,035 | $1,388,365 | | Net Income (Loss) | $15,240 | $(56,443) | $107,910 | | Adjusted EBITDA | $74,770 | $82,237 | $284,036 | | Net Income (Loss) Margin | 1.9% | (6.8)% | 7.8% | | Adjusted EBITDA Margin | 9.3% | 9.9% | 20.5% | - Net sales decreased by 2.6% to $807.6 million in FY2025, driven by decreased unit volumes in Saltwater Fishing and Cobalt segments, partially offset by Malibu segment growth and price increases[289] - Unit volume decreased by 9.0% to 4,898 units in FY2025, primarily due to lower wholesale shipments driven by reduced retail activity and dealers' desire for less inventory[288][289] - The company expects continued reduced retail consumer demand and dealer inventory pressure in the near term due to macroeconomic uncertainty, inflation, and high interest rates[262][265] - Anticipates additional material costs of approximately 1.5% to 3% of Cost of Sales in fiscal year 2026 due to new tariff exposure, largely to be offset by price increases[264] Overview This section provides a high-level summary of the company's financial performance and key business trends for the reported periods Segment Revenue Contribution (% of Total Revenues) | Segment | FY2025 | FY2024 | FY2023 | | :---------------- | :----- | :----- | :----- | | Malibu | 38.7% | 33.7% | 45.8% | | Saltwater Fishing | 34.6% | 39.5% | 32.4% | | Cobalt | 26.7% | 26.8% | 21.8% | Outlook This section discusses the company's expectations for future financial performance and market conditions Factors Affecting Our Results of Operations This section identifies and explains the various internal and external factors that influence the company's financial results Components of Results of Operations This section breaks down the key line items within the consolidated statements of operations and their significance Results of Operations This section provides a detailed analysis of the company's financial performance, including net sales, gross profit, operating income, and net income for the reported fiscal years Consolidated Results of Operations (Fiscal Year Ended June 30, in thousands) | Metric | FY2025 | % Revenue | FY2024 | % Revenue | FY2023 | % Revenue | | :----------------------------------------- | :-------- | :-------- | :-------- | :-------- | :---------- | :-------- | | Net sales | $807,561 | 100.0% | $829,035 | 100.0% | $1,388,365 | 100.0% | | Cost of sales | $663,470 | 82.2% | $681,940 | 82.3% | $1,037,070 | 74.7% | | Gross profit | $144,091 | 17.8% | $147,095 | 17.7% | $351,295 | 25.3% | | Operating income (loss) | $21,761 | 2.7% | $(55,947) | (6.7)% | $144,784 | 10.4% | | Income (loss) before provision for income taxes | $20,263 | 2.5% | $(57,785) | (7.0)% | $141,491 | 10.2% | | Net income (loss) | $15,240 | 1.9% | $(56,443) | (6.8)% | $107,910 | 7.8% | Unit Volumes by Segment (Fiscal Year Ended June 30) | Segment | FY2025 Unit Volumes | % Total | FY2024 Unit Volumes | % Total | FY2023 Unit Volumes | % Total | | :---------------- | :------------------ | :------ | :------------------ | :------ | :------------------ | :------ | | Malibu | 2,223 | 45.3% | 2,181 | 40.5% | 5,127 | 52.0% | | Saltwater Fishing | 1,266 | 25.9% | 1,633 | 30.3% | 2,585 | 26.2% | | Cobalt | 1,409 | 28.8% | 1,571 | 29.2% | 2,151 | 21.8% | | Total Units | 4,898 | | 5,385 | | 9,863 | | Net Sales Per Unit (Fiscal Year Ended June 30) | Metric | FY2025 | FY2024 | FY2023 | | :---------------- | :---------- | :---------- | :---------- | | Consolidated | $164,876 | $153,953 | $140,765 | | Malibu Segment | $140,665 | $127,983 | | | Saltwater Fishing | $220,881 | $200,577 | | | Cobalt Segment | $152,752 | $141,542 | | - Gross margin increased slightly from 17.7% in FY2024 to 17.8% in FY2025, but decreased significantly from 25.3% in FY2023[295][308] - Operating expenses decreased by $80.7 million (39.8%) in FY2025, primarily due to an $88.4 million impairment charge related to Maverick Boat Group in FY2024 that did not recur[296] - General and administrative expenses increased by $16.1 million (21.1%) in FY2025, driven by a $3.5 million legal settlement, other legal fees, stock-based compensation, incentive pay, and salaries[297] GAAP Reconciliation of Non-GAAP Financial Measures This section provides reconciliations of non-GAAP financial measures, such as Adjusted EBITDA and Adjusted Net Income Per Share, to their most directly comparable GAAP measures Adjusted EBITDA Reconciliation (Fiscal Year Ended June 30, in thousands) | Metric | FY2025 | FY2024 | FY2023 | | :----------------------------------------- | :-------- | :-------- | :-------- | | Net income (loss) | $15,240 | $(56,443) | $107,910 | | Provision (benefit) for income taxes | $5,023 | $(1,342) | $33,581 | | Interest expense | $1,883 | $1,842 | $2,962 | | Depreciation | $31,794 | $26,178 | $21,912 | | Amortization | $6,799 | $6,811 | $6,808 | | Goodwill and other intangible asset impairment | — | $88,389 | — | | Abandonment of construction in process | — | $8,735 | — | | Litigation settlement | $3,500 | — | $100,000 | | Non-recurring professional fees | $4,962 | $3,096 | $4,781 | | Stock-based compensation expense | $5,916 | $4,935 | $5,894 | | Adjustment to tax receivable agreement liability | $(347) | $36 | $188 | | Adjusted EBITDA | $74,770 | $82,237 | $284,036 | Adjusted Net Income Per Share Reconciliation (Fiscal Year Ended June 30, in thousands, except per share data) | Metric | FY2025 | FY2024 | FY2023 | | :----------------------------------------- | :---------- | :---------- | :---------- | | Net income (loss) attributable to Malibu Boats, Inc. | $14,879 | $(55,912) | $104,513 | | Goodwill and other intangible asset impairment | — | $88,389 | — | | Litigation settlement | $3,500 | — | $100,000 | | Non-recurring professional fees | $4,962 | $3,096 | $4,781 | | Stock-based compensation expense | $5,916 | $4,935 | $5,894 | | Abandonment of construction in process | — | $8,735 | — | | Acquisition related amortization | $6,653 | $6,672 | $6,654 | | Provision (benefit) for taxes | $5,023 | $(1,342) | $33,581 | | Adjusted income before taxes | $40,933 | $54,573 | $255,423 | | Income tax expense on adjusted income before income taxes | $10,029 | $13,370 | $62,068 | | Adjusted net income | $30,904 | $41,203 | $193,355 | | Basic weighted-average shares outstanding | 19,664,337 | 20,439,449 | 20,501,844 | | Adjusted net income per share | $1.58 | $2.01 | $9.43 | Liquidity and Capital Resources This section analyzes the company's sources and uses of cash, its debt facilities, and overall liquidity position - Primary cash uses include working capital, capital investments, debt repayments, acquisitions, LLC distributions, tax receivable agreement payments, and stock repurchases[323][324] - Sources of cash are primarily operating cash flows, borrowings under the revolving credit facility, and debt financings[323] Cash Flows Summary (Fiscal Year Ended June 30, in thousands) | Activity | FY2025 | FY2024 | FY2023 | | :----------------------- | :-------- | :--------- | :---------- | | Operating activities | $56,506 | $55,558 | $184,733 | | Investing activities | $(27,374) | $(75,842) | $(54,638) | | Financing activities | $(18,820) | $(31,695) | $(134,574) | | Increase (decrease) in cash | $10,057 | $(51,992) | $(4,807) | - As of June 30, 2025, the company had $18.0 million outstanding borrowings under its $350.0 million revolving credit facility, with $330.3 million available[327][339][340] - The company made a $3.5 million settlement payment to Tommy's Boats estate on July 21, 2025, and anticipates the $7.8 million securities class action settlement will be fully covered by insurance[175][177] Critical Accounting Policies and Critical Accounting Estimates This section discusses the accounting policies and estimates that require significant judgment and can materially impact the company's financial statements - Key accounting policies involve significant judgment and estimates, including revenue recognition, product warranties, goodwill, intangible assets, and other long-lived assets[346][348] - A hypothetical 10% change in the estimated warranty liability as of June 30, 2025, would affect net income by approximately $4.1 million[353] - In FY2024, the company recognized an $88.4 million impairment charge ($49.2 million goodwill, $39.2 million trade names) related to the Maverick Boat Group reporting unit due to a decline in forecasts and macroeconomic conditions[113][183][296][357][361] - An $8.7 million non-cash charge was recorded in FY2024 for the abandonment of a company-wide ERP project[296][363] New Accounting Pronouncements This section outlines recently adopted and upcoming accounting pronouncements and their anticipated impact on the company's financial reporting - Adopted ASU 2023-07 (Segment Reporting) in Q4 FY2025, resulting in additional disclosures but no impact on financial condition, results of operations, or cash flows[459] - Assessing ASU 2023-09 (Income Tax Disclosures), effective FY2025, which will expand disclosures but not impact financial results[460] - Evaluating ASU 2024-03 (Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures), effective FY2027, for its potential effects[461] Item 7A. Quantitative and Qualitative Disclosures About Market Risk The company is primarily exposed to foreign exchange rate risk due to Australian operations and interest rate risk from variable-rate borrowings under its revolving credit facility - The company is exposed to foreign exchange rate risk due to operations in Australia, with immaterial foreign currency translation impacts in recent fiscal years[366] - Interest rate risk arises from variable-rate borrowings under the revolving credit facility; a 100 basis point increase in interest rates would increase annual interest expense by approximately $0.2 million based on June 30, 2025, outstanding debt[198][368] Item 8. Financial Statements and Supplementary Data Presents audited consolidated financial statements, including operations, balance sheets, equity, cash flows, and management/auditor reports Report of Management on Internal Control Over Financial Reporting This section presents management's assessment of the effectiveness of the company's internal control over financial reporting - Management concluded that the company's internal control over financial reporting was effective as of June 30, 2025, based on the COSO framework[375][376] Reports of Independent Registered Public Accounting Firm This section includes the independent auditor's reports on the company's consolidated financial statements and internal control over financial reporting - KPMG LLP issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of June 30, 2025[378] - KPMG LLP also issued an unqualified opinion on the consolidated financial statements for the three-year period ended June 30, 2025[379][385] - A critical audit matter identified was the evaluation of certain assumptions underlying the product warranty liability for Malibu and Axis branded boats, requiring subjective auditor judgment[390][391] Consolidated Statements of Operations and Comprehensive Income (Loss) This section presents the company's consolidated statements of operations and comprehensive income (loss) for the reported fiscal years Consolidated Balance Sheets This section provides the company's consolidated balance sheets, detailing assets, liabilities, and equity at the end of the reported fiscal years Consolidated Statements of Stockholders' Equity This section presents the changes in the company's consolidated stockholders' equity for the reported fiscal years Consolidated Statements of Cash Flows This section provides the company's consolidated statements of cash flows, categorizing cash activities into operating, investing, and financing Notes to Consolidated Financial Statements This note details the company's organization, significant accounting policies, and specific financial statement line items Note 1. Organization, Basis of Presentation, and Summary of Significant Accounting Policies This note provides an overview of the company's organizational structure, the basis of financial statement presentation, and a summary of its key accounting policies - Malibu Boats, Inc. is a holding company that consolidates the financial results of Malibu Boats Holdings, LLC (LLC), in which it held a 98.6% economic interest as of June 30, 2025[409][467] - The company's top ten dealers represented 42.8% of net sales in FY2025, indicating a concentration of business risk[416] - Goodwill and indefinite-lived intangible assets are tested for impairment annually (June 30) or more frequently if indicators arise A $49.2 million goodwill impairment charge was recognized in FY2024 for the Maverick Boat Group reporting unit[419][421] - Definite-lived intangible assets (dealer relationships, patents, trade names, non-compete agreements) are amortized over 10-20 years A $39.2 million impairment charge on trade names was recorded in FY2024 for Maverick Boat Group[422][425] Note 2. Revenue Recognition This note describes the company's policies and procedures for recognizing revenue from its various product offerings and services Revenue by Product and Geography (Fiscal Year Ended June 30, 2025, in thousands) | Segment | Boat and Trailer Sales | Part and Other Sales | Net Sales | North America | International | | :---------------- | :--------------------- | :------------------- | :--------- | :------------ | :------------ | | Malibu | $296,980 | $15,718 | $312,698 | $285,820 | $26,878 | | Saltwater Fishing | $277,218 | $2,417 | $279,635 | $265,250 | $14,385 | | Cobalt | $212,128 | $3,100 | $215,228 | $207,588 | $7,640 | | Consolidated | $786,326 | $21,235 | $807,561 | $758,658 | $48,903 | - Revenue is recognized when control of goods (boats, parts) is transferred to the customer upon shipment, net of marketing incentives and rebates[349][447][448] - Royalty income from proprietary wake surfing technology is recognized when used or sold by other manufacturers[352][451] Note 3. Non-controlling Interest This note explains the nature and accounting treatment of non-controlling interests in the company's consolidated financial statements LLC Ownership (As of June 30) | Ownership Type | FY2025 Units | FY2025 Ownership % | FY2024 Units | FY2024 Ownership % | | :---------------------------------- | :----------- | :----------------- | :----------- | :----------------- | | Non-controlling LLC unit holders | 276,419 | 1.4% | 321,419 | 1.6% | | Malibu Boats, Inc. | 19,225,848 | 98.6% | 20,181,542 | 98.4% | | Total | 19,502,267 | 100.0% | 20,502,961 | 100.0% | - Non-controlling interest represents the portion of net income/loss and net assets attributable to LLC Unit holders other than Malibu Boats, Inc[285][301][312][467] - Tax distributions to non-controlling LLC Unit holders were $0 in FY2025 and $890 thousand in FY2024, down from $3,401 thousand in FY2023[469] Note 4. Inventories, net This note provides a breakdown of the company's inventory balances, including raw materials, work in progress, and finished goods Inventories, net (As of June 30, in thousands) | Category | FY2025 | FY2024 | | :------------------ | :-------- | :-------- | | Raw materials | $97,089 | $107,245 | | Work in progress | $24,890 | $20,683 | | Finished goods | $20,184 | $16,392 | | Inventory subject to return | — | $1,253 | | Total inventories | $142,163 | $145,573 | Note 5. Prepaid Expenses and Other Current Assets This note details the components of prepaid expenses and other current assets, including insurance receivables and other miscellaneous receivables Prepaid Expenses and Other Current Assets (As of June 30, in thousands) | Category | FY2025 | FY2024 | | :---------------------------- | :-------- | :-------- | | Prepaid expenses | $4,257 | $5,808 | | Insurance receivables | $8,375 | — | | Other receivables | $2,002 | $662 | | Total | $14,634 | $6,470 | - Insurance receivables include approximately $7.8 million related to a claim filed with an insurance carrier, with recovery believed to be probable[474] Note 6. Property, Plant, and Equipment, net This note provides a detailed breakdown of the company's property, plant, and equipment, including land, buildings, machinery, and construction in process Property, Plant, and Equipment, net (As of June 30, in thousands) | Category | FY2025 | FY2024 | | :---------------------------- | :---------- | :---------- | | Land | $4,716 | $4,890 | | Building and leasehold improvements | $171,685 | $170,958 | | Machinery and equipment | $143,526 | $118,123 | | Furniture and fixtures | $16,609 | $15,466 | | Construction in process | $35,189 | $43,511 | | Less accumulated depreciation | $(135,848) | $(108,347) | | Total | $235,877 | $244,601 | - Depreciation expense was $31.8 million in FY2025, $26.2 million in FY2024, and $21.9 million in FY2023, primarily recorded in cost of sales[478] - In FY2024, a non-cash charge of $8.7 million was recorded for the abandonment of an ERP project, included in 'Abandonment of construction in process'[475] - Assets held for sale totaled $3.1 million as of June 30, 2025, related to the former Malibu Electronics manufacturing building[477] Note 7. Goodwill and Other Intangible Assets, net This note provides a detailed breakdown of the company's goodwill and other intangible assets, including impairment charges and amortization expense Goodwill by Segment (As of June 30, in thousands) | Segment | FY2025 | FY2024 | | :---------------- | :-------- | :-------- | | Malibu | $11,990 | $12,099 | | Saltwater Fishing | $19,525 | $19,525 | | Cobalt | $19,791 | $19,791 | | Consolidated | $51,306 | $51,415 | Other Intangible Assets, net (As of June 30, in thousands) | Category | FY2025 | FY2024 | | :-------------------------------- | :---------- | :---------- | | Definite-lived intangibles, net | $89,634 | $96,449 | | Indefinite-lived trade names, net | $79,000 | $79,000 | | Total | $168,634 | $175,449 | - An impairment charge of $49.2 million for goodwill and $39.2 million for trade names was recorded in FY2024 related to the Maverick Boat Group reporting unit[481] - Amortization expense for intangibles was $6.8 million for FY2025, FY2024, and FY2023[482] Note 8. Accrued Expenses This note provides a detailed breakdown of the company's accrued expenses, including warranties, dealer incentives, and legal fees Accrued Expenses (As of June 30, in thousands) | Category | FY2025 | FY2024 | | :-------------------------------- | :---------- | :---------- | | Warranties | $40,970 | $37,967 | | Dealer incentives | $7,057 | $28,911 | | Accrued compensation | $15,438 | $13,791 | | Current operating lease liabilities | $2,408 | $2,177 | | Accrued legal and professional fees | $33,729 | $22,467 | | Customer deposits | $3,508 | $4,270 | | Government grant | $4,089 | $5,867 | | Other accrued expenses | $2,571 | $3,980 | | Total | $109,770 | $119,430 | - Accrued legal and professional fees include $21.0 million in insurance coverage proceeds subject to reservation of rights and $7.8 million related to a probable insurance claim settlement[484] - A $3.5 million accrued amount relates to the settlement agreement with Tommy's Boats' Chapter 11 Trustee[484] - Government grant of $4.1 million is related to an Economic Development Grant from the State of Tennessee for job creation[485] Note 9. Product Warranties This note details the company's product warranty liability, including estimates, expenses, and claims paid Product Warranty Liability (Fiscal Year Ended June 30, in thousands) | Metric | FY2025 | FY2024 | FY2023 | | :------------------ | :-------- | :-------- | :-------- | | Beginning balance | $37,967 | $41,709 | $38,673 | | Add: Warranty Expense | $29,658 | $23,744 | $24,812 | | Less: Warranty claims paid | $(26,655) | $(27,486) | $(21,776) | | Ending balance | $40,970 | $37,967 | $41,709 | - The company estimates warranty costs based on historical claims trends, unit sales, and cost per claim, with a hypothetical 10% change in estimate affecting net income by approximately $4.1 million[353][487][488] Note 10. Financing This note provides information on the company's financing arrangements, including its revolving credit facility and outstanding debt Outstanding Debt (As of June 30, in thousands) | Category | FY2025 | FY2024 | | :------------------ | :-------- | :-------- | | Revolving credit loan | $18,000 | — | | Total debt | $18,000 | — | | Long-term debt less current maturities | $18,000 | — | - The company has a $350.0 million revolving credit facility maturing July 8, 2027, with $18.0 million outstanding and $330.3 million available as of June 30, 2025[327][339][491] - Borrowings bear variable interest rates (Base Rate or SOFR plus applicable margin), with the rate at 7.75% as of June 30, 2025[493] - The company was in compliance with all financial covenants of the Credit Agreement as of June 30, 2025 and 2024[497] Note 11. Leases This note provides details on the company's lease arrangements, including right-of-use assets and lease liabilities Operating Lease Liabilities (As of June 30, in thousands) | Category | FY2025 | FY2024 | | :-------------------------------- | :---------- | :---------- | | Right-of-use assets | $6,551 | $6,883 | | Current operating lease liabilities | $2,408 | $2,177 | | Long-term operating lease liabilities | $4,915 | $5,763 | | Total lease liabilities | $7,323 | $7,940 | - The weighted average remaining lease term was 3.02 years in FY2025, with a weighted average discount rate of 4.64%[501] Note 12. Tax Receivable Agreement Liability This note explains the company's tax receivable agreement liability, including its calculation and anticipated payments Tax Receivable Agreement Liability (As of June 30, in thousands) | Metric | FY2025 | FY2024 | | :----------------------------------------- | :-------- | :-------- | | Beginning balance | $40,613 | $43,465 | | Additions (reductions) to tax receivable agreement | $167 | $1,320 | | Adjustment for change in estimated state tax rate or benefits | $(347) | $36 | | Payment under tax receivable agreement | — | $(4,208) | | Ending balance | $40,433 | $40,613 | | Less current portion | $(271) | — | | Total | $40,162 | $40,613 | - The liability represents 85% of the tax benefits from increased tax basis due to LLC Unit exchanges, determined on an undiscounted basis[502][507] - The next payment under the agreement is anticipated after considering net operating loss utilization and sufficient taxable income[507] Note 13. Income Taxes This note provides detailed information on the company's income tax expense, effective tax rate, deferred tax assets and liabilities, and unrecognized tax benefits Income Tax Expense (Benefit) (Fiscal Year Ended June 30, in thousands) | Category | FY2025 | FY2024 | FY2023 | | :------------------ | :-------- | :-------- | :-------- | | Current tax expense | $1,472 | $3,127 | $49,864 | | Deferred tax expense (benefit) | $3,551 | $(4,469) | $(16,283) | | Total | $5,023 | $(1,342) | $33,581 | Effective Tax Rate Reconciliation (Fiscal Year Ended June 30) | Factor | FY2025 | FY2024 | FY2023 | | :----------------------------------------- | :----- | :----- | :----- | | Federal tax provision (benefit) at statutory rate | 21.0% | (21.0)% | 21.0% | | State income taxes, net of federal benefit | 2.4% | (0.3)% | 3.5% | | Impairment charges - Maverick | — | 17.9% | — | | Non-controlling interest | (0.5)% | (0.2)% | (0.5)% | | Total income tax (benefit) continuing operations | 24.8% | (2.3)% | 23.7% | - The effective tax rate for FY2025 was 24.8%, increased by stock-based compensation shortfall, federal tax code limitations, and state taxes, partially offset by research tax credits[300] - A valuation allowance of $17.5 million (FY2025) and $17.4 million (FY2024) was recorded against deferred tax assets, primarily for state net operating losses[516] - Unrecognized tax benefits totaled $1.8 million as of June 30, 2025, with $0.3 million reasonably possible to reverse within 12 months[518] Note 14. Stockholders' Equity This note provides information on the company's capital stock, including authorized shares, issued and outstanding shares, and stock repurchase programs - The company is authorized to issue 100 million shares of Class A Common Stock, 25 million shares of Class B Common Stock, and 25 million shares of Preferred Stock[521] - As of June 30, 2025, 12 shares of Class B Common Stock were issued and outstanding[524] - The company repurchased 997,791 shares of Class A Common Stock for $36.0 million in cash during FY2025 under its repurchase programs[247][527] - A new $50.0 million stock repurchase program (Fiscal 2026 Repurchase Program) was authorized for July 1, 2025, to June 30, 2026[528] Note 15. Stock-Based Compensation This note details the company's stock-based compensation plans, including expense recognition, unrecognized costs, and shares available for issuance - Stock compensation expense for all equity awards was $5.9 million in FY2025, $4.9 million in FY2024, and $5.9 million in FY2023[565] - As of June 30, 2025, total unrecognized compensation cost related to nonvested, share-based compensation was $9.2 million, expected to be recognized over a weighted-average period of two years[564] - The 2024 Performance Incentive Plan (2024 Plan) replaced the 2014 Incentive Plan, effective October 23, 2024, with 864,430 shares available for future issuance[557] Note 16. Net Earnings (Loss) Per Share This note provides the calculation of basic and diluted net earnings (loss) per share, including the reconciliation of weighted-average shares outstanding Net Income (Loss) Per Share (Fiscal Year Ended June 30) | Metric | FY2025 | FY2024 | FY2023 | | :----------------------------------------- | :------- | :------- | :------- | | Basic net income (loss) per share | $0.76 | $(2.74) | $5.10 | | Diluted net income (loss) per share | $0.76 | $(2.74) | $5.06 | | Basic weighted-average shares outstanding | 19,664,337 | 20,439,449 | 20,501,844 | | Diluted weighted-average shares outstanding | 19,694,677 | 20,439,449 | 20,641,173 | - The calculation of diluted EPS excludes antidilutive shares (494,980 in FY2025, 612,277 in FY2024, 516,205 in FY2023)[570] Note 17. Commitments and Contingencies This note discloses the company's various commitments and contingencies, including floor plan financing, legal proceedings, and insurance claims - The total amount financed under floor plan financing programs with repurchase obligations was $364.1 million as of June 30, 2025[571] - In FY2025, the company repurchased 22 units (including 19 related to Tommy's Boats bankruptcy) under repurchase agreements, with no reserve carried as of June 30, 2025[572][573] - The company settled the Batchelder product liability matters for $100.0 million in FY2023 and is pursuing claims against insurance carriers for full recovery, having received $21.0 million as of June 30, 2025[179][332][579][580] - A securities class action lawsuit was filed in April 2024, with a proposed settlement of $7.8 million in July 2025, expected to be covered by insurance[177][584] - Multiple derivative actions and a customer class action lawsuit are ongoing, with the company intending to vigorously defend itself[178][179][585][586] Note 18. Related Party Transactions This note describes transactions between the company and its related parties, including compensation for non-employee directors - Two non-employee directors, who are also original shareholders, received $408 thousand in FY2025 for their services[587] Note 19. Segment Reporting This note provides financial information about the company's operating segments, including segment adjusted EBITDA Segment Adjusted EBITDA (Fiscal Year Ended June 30, 2025, in thousands) | Segment | Segment Adjusted EBITDA | | :---------------- | :---------------------- | | Malibu | $60,611 | | Saltwater Fishing | $26,672 | | Cobalt | $17,856 | | Total | $105,139 | - Segment Adjusted EBITDA is used by the Chief Operating Decision Maker (CODM) to evaluate segment performance, excluding interest, taxes, depreciation, amortization, impairment, and non-cash/non-operating expenses[588][591] Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure There have been no changes in or disagreements with accountants on accounting and financial disclosure Item 9A. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025 - Disclosure controls and procedures were deemed effective at a reasonable assurance level as of June 30, 2025[599] - KPMG LLP issued an attestation report on the effectiveness of internal control over financial reporting as of June 30, 2025[601] - No material changes in internal control over financial reporting occurred during the fourth quarter ended June 30, 2025[602] Item 9B. Other Information This item contains no other information Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to the company PART III Item 10. Directors, Executive Officers and Corporate Governance The company has adopted a Code of Business Conduct and a Code of Ethics applicable to its employees, directors, and officers - The company has a Code of Business Conduct and a Code of Ethics for employees, directors, and officers[605] - An insider trading policy and procedures are in place to govern securities transactions by directors, officers, and employees[606] Item 11. Executive Compensation Information regarding executive compensation is incorporated by reference from the Proxy Statement Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information regarding security ownership of certain beneficial owners and management, and related stockholder matters, is incorporated by reference from the Proxy Statement Item 13. Certain Relationships and Related Transactions, and Director Independence Information regarding certain relationships and related transactions, and director independence, is incorporated by reference from the Proxy Statement Item 14. Principal Accountant Fees and Services KPMG LLP is the company's independent registered public accounting firm - KPMG LLP, Nashville, TN, is the company's independent registered public accounting firm[610] PART IV Item 15. Exhibits and Financial Statement Schedules This section lists the consolidated financial statements included in Part II, Item 8, and provides an index of exhibits filed as part of this Annual Report on Form 10-K - The consolidated financial statements for fiscal years ended June 30, 2025, 2024, and 2023 are included in Part II, Item 8[615] - Exhibits include the Certificate of Incorporation, Bylaws, LLC Agreement, Tax Receivable Agreement, Credit Agreement, employment agreements, and incentive plans[614][616] Item 16. Form 10-K Summary This item indicates that no Form 10-K summary is provided SIGNATURES The repo