Delaware | 5075 Kimberly Way Loudon, Tennessee 37774 | 46-4024640 | ||
(State or other jurisdiction of incorporation or organization) | (Address of principal executive offices, including zip code) | (I.R.S. Employer Identification No.) | ||
(865) 458-5478 | ||||
(Registrant’s telephone number, including area code) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Exhibit No. | Description | |
Press Release dated February 9, 2018 |
Malibu Boats, Inc. | ||
Date: February 9, 2018 | /s/ Jack Springer | |
Jack Springer | ||
Chief Executive Officer |
• | Net sales increased 69.0% to $114.4 million compared to the second quarter of fiscal 2017. |
• | Unit volume increased 61.1% to 1,489 boats compared to the second quarter of fiscal 2017. |
• | Net sales per unit increased 4.9% to $76,812 and net sales per unit for Malibu U.S. increased 4.3% to $76,239 compared to the second quarter of fiscal 2017. |
• | Gross profit increased 54.5% to $27.5 million compared to the second quarter of fiscal 2017. |
• | Net income decreased 172.2% to a net loss of $5.6 million, or $0.31 per share compared to the second quarter of fiscal 2017. The decrease in net income was driven by tax reform enacted in the second quarter. |
• | Adjusted EBITDA increased 51.3% to $20.6 million compared to the second quarter of fiscal 2017. |
• | Adjusted fully distributed net income increased 55.0% to $11.4 million compared to the second quarter of fiscal 2017. |
• | Adjusted fully distributed net income per share increased 39.5% to $0.53 on a fully distributed weighted average share count of 21.7 million shares of Class A Common Stock as compared to the second quarter of fiscal 2017. |
Three Months Ended December 31, | Six Months Ended December 31, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(In thousands, except unit and per unit data) | ||||||||||||||||
Net sales | $ | 114,373 | $ | 67,661 | $ | 217,914 | $ | 129,682 | ||||||||
Cost of sales | 86,857 | 49,848 | 167,475 | 96,046 | ||||||||||||
Gross profit | 27,516 | 17,813 | 50,439 | 33,636 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling and marketing | 3,122 | 2,150 | 6,711 | 4,573 | ||||||||||||
General and administrative | 7,435 | 3,453 | 14,509 | 9,517 | ||||||||||||
Amortization | 1,304 | 549 | 2,612 | 1,099 | ||||||||||||
Operating income | 15,655 | 11,661 | 26,607 | 18,447 | ||||||||||||
Other income (expense), net: | ||||||||||||||||
Other income | 30,333 | 58 | 27,736 | 75 | ||||||||||||
Interest expense | (1,014 | ) | (37 | ) | (3,213 | ) | (467 | ) | ||||||||
Other income (expense), net | 29,319 | 21 | 24,523 | (392 | ) | |||||||||||
Income before provision for income taxes | 44,974 | 11,682 | 51,130 | 18,055 | ||||||||||||
Provision for income taxes | 50,558 | 3,945 | 50,300 | 6,092 | ||||||||||||
Net (loss) income | (5,584 | ) | 7,737 | 830 | 11,963 | |||||||||||
Net income attributable to non-controlling interest | 799 | 836 | 1,328 | 1,282 | ||||||||||||
Net (loss) income attributable to Malibu Boats, Inc. | $ | (6,383 | ) | $ | 6,901 | $ | (498 | ) | $ | 10,681 | ||||||
Unit volumes | 1,489 | 924 | 2,798 | 1,757 | ||||||||||||
Net sales per unit | $ | 76,812 | $ | 73,226 | $ | 77,882 | $ | 73,809 |
Three Months Ended December 31, | Six Months Ended December 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net sales | $ | 114,373 | $ | 67,661 | $ | 217,914 | $ | 129,682 | |||||||
Cost of sales | 86,857 | 49,848 | 167,475 | 96,046 | |||||||||||
Gross profit | 27,516 | 17,813 | 50,439 | 33,636 | |||||||||||
Operating expenses: | |||||||||||||||
Selling and marketing | 3,122 | 2,150 | 6,711 | 4,573 | |||||||||||
General and administrative | 7,435 | 3,453 | 14,509 | 9,517 | |||||||||||
Amortization | 1,304 | 549 | 2,612 | 1,099 | |||||||||||
Operating income | 15,655 | 11,661 | 26,607 | 18,447 | |||||||||||
Other income (expense), net: | |||||||||||||||
Other income | 30,333 | 58 | 27,736 | 75 | |||||||||||
Interest expense | (1,014 | ) | (37 | ) | (3,213 | ) | (467 | ) | |||||||
Other income (expense), net | 29,319 | 21 | 24,523 | (392 | ) | ||||||||||
Income before provision for income taxes | 44,974 | 11,682 | 51,130 | 18,055 | |||||||||||
Provision for income taxes | 50,558 | 3,945 | 50,300 | 6,092 | |||||||||||
Net (loss) income | $ | (5,584 | ) | $ | 7,737 | 830 | 11,963 | ||||||||
Net income attributable to non-controlling interest | 799 | 836 | 1,328 | 1,282 | |||||||||||
Net (loss) income attributable to Malibu Boats, Inc. | $ | (6,383 | ) | $ | 6,901 | $ | (498 | ) | $ | 10,681 | |||||
Comprehensive income: | |||||||||||||||
Net (loss) income | $ | (5,584 | ) | $ | 7,737 | $ | 830 | $ | 11,963 | ||||||
Other comprehensive (loss) income, net of tax: | |||||||||||||||
Change in cumulative translation adjustment | (66 | ) | (846 | ) | 234 | (489 | ) | ||||||||
Other comprehensive (loss) income, net of tax | (66 | ) | (846 | ) | 234 | (489 | ) | ||||||||
Comprehensive (loss) income, net of tax | (5,650 | ) | 6,891 | 1,064 | 11,474 | ||||||||||
Less: comprehensive income attributable to non-controlling interest, net of tax | $ | 806 | $ | 746 | 1,360 | 1,230 | |||||||||
Comprehensive (loss) income attributable to Malibu Boats, Inc., net of tax | $ | (6,456 | ) | $ | 6,145 | $ | (296 | ) | $ | 10,244 | |||||
Weighted average shares outstanding used in computing net (loss) income per share: | |||||||||||||||
Basic | 20,429,627 | 17,786,122 | 19,804,192 | 17,760,256 | |||||||||||
Diluted | 20,429,627 | 17,842,138 | 19,804,192 | 17,817,842 | |||||||||||
Net (loss) income available to Class A Common Stock per share: | |||||||||||||||
Basic | $ | (0.31 | ) | $ | 0.39 | $ | (0.03 | ) | $ | 0.60 | |||||
Diluted | $ | (0.31 | ) | $ | 0.39 | $ | (0.03 | ) | $ | 0.60 |
December 31, 2017 | June 30, 2017 | ||||||
Assets | |||||||
Current assets | |||||||
Cash | $ | 36,731 | $ | 32,822 | |||
Trade receivables, net | 9,943 | 9,846 | |||||
Inventories, net | 44,273 | 23,835 | |||||
Prepaid expenses and other current assets | 4,539 | 2,470 | |||||
Income tax receivable | 1,065 | 1,111 | |||||
Total current assets | 96,551 | 70,084 | |||||
Property, plant and equipment, net | 39,232 | 24,123 | |||||
Goodwill | 32,591 | 12,692 | |||||
Other intangible assets, net | 96,926 | 9,597 | |||||
Deferred tax asset | 62,801 | 107,088 | |||||
Other assets | 282 | 79 | |||||
Total assets | $ | 328,383 | $ | 223,663 | |||
Liabilities | |||||||
Current liabilities | |||||||
Accounts payable | $ | 21,264 | $ | 12,722 | |||
Accrued expenses | 30,699 | 21,616 | |||||
Income taxes and tax distribution payable | 534 | 515 | |||||
Payable pursuant to tax receivable agreement, current portion | 4,323 | 4,332 | |||||
Total current liabilities | 56,820 | 39,185 | |||||
Deferred tax liabilities | 522 | 552 | |||||
Payable pursuant to tax receivable agreement | 51,525 | 77,959 | |||||
Long-term debt | 108,301 | 53,403 | |||||
Other long-term liabilities | 630 | 328 | |||||
Total liabilities | 217,798 | 171,427 | |||||
Stockholders' Equity | |||||||
Class A Common Stock, par value $0.01 per share, 100,000,000 shares authorized; 20,509,103 shares issued and outstanding as of December 31, 2017; 17,937,687 issued and outstanding as of June 30, 2017 | 204 | 179 | |||||
Class B Common Stock, par value $0.01 per share, 25,000,000 shares authorized; 17 shares issued and outstanding as of December 31, 2017; 19 shares issued and outstanding as of June 30, 2017 | — | — | |||||
Preferred Stock, par value $0.01 per share; 25,000,000 shares authorized; no shares issued and outstanding as of December 31, 2017 and June 30, 2017 | — | — | |||||
Additional paid in capital 1 | 106,996 | 48,328 | |||||
Accumulated other comprehensive loss | (1,129 | ) | (1,363 | ) | |||
Accumulated (deficit) earnings | (380 | ) | 151 | ||||
Total stockholders' equity attributable to Malibu Boats, Inc. | 105,691 | 47,295 | |||||
Non-controlling interest 1 | 4,894 | 4,941 | |||||
Total stockholders’ equity | 110,585 | 52,236 | |||||
Total liabilities and stockholders' equity | $ | 328,383 | $ | 223,663 |
Three Months Ended December 31, | Six Months Ended December 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net (loss) income | $ | (5,584 | ) | $ | 7,737 | $ | 830 | $ | 11,963 | ||||||
Provision for income taxes 1 | 50,558 | 3,945 | 50,300 | 6,092 | |||||||||||
Interest expense | 1,014 | 37 | 3,213 | 467 | |||||||||||
Depreciation | 1,687 | 1,026 | 3,417 | 1,994 | |||||||||||
Amortization | 1,304 | 549 | 2,612 | 1,099 | |||||||||||
Professional fees 2 | — | 917 | 26 | 1,986 | |||||||||||
Marine Power litigation judgment 3 | — | (1,330 | ) | — | (1,330 | ) | |||||||||
Acquisition and integration related expenses 4 | 322 | — | 2,137 | — | |||||||||||
Stock-based compensation expense 5 | 488 | 280 | 850 | 745 | |||||||||||
Engine development 6 | 1,140 | 460 | 2,587 | 460 | |||||||||||
Adjustments to tax receivable agreement liability 7 | (30,317 | ) | — | (27,702 | ) | — | |||||||||
Adjusted EBITDA | $ | 20,612 | $ | 13,621 | $ | 38,270 | $ | 23,476 | |||||||
Adjusted EBITDA margin | 18.0 | % | 20.1 | % | 17.6 | % | 18.1 | % |
(1) | Provision for income taxes for the three and six months ended December 31, 2017 reflects the impact of the Tax Act adopted in December 2017, which among other items, lowered the U.S. corporate income tax rate from 35% to 21%, effective January 1, 2018. As a result of the Tax Act, for the three and six months ended December 31, 2017, we recorded a non-cash provisional adjustment to income tax expense of $47.0 million for the re-measurement of deferred taxes on the enactment date and the deferred tax impact related to the reduction in the tax receivable agreement liability. |
(2) | For the six months ended December 31, 2017 and three and six months ended December 31, 2016, represents legal and advisory fees related to our litigation with MasterCraft Boat Company, LLC ("MasterCraft"). |
(3) | Represents the reduction in a one-time charge related to a judgment rendered against us in connection with a lawsuit by Marine Power where the court amended the judgment to $1.9 million. |
(4) | Represents legal and advisory fees as well as integration related costs incurred in connection with our acquisition of Cobalt. Integration related expenses include post-acquisition adjustments to cost of goods sold of $1.5 million for the fair value step up of inventory acquired, most of which was sold during the first quarter of fiscal 2018. |
(5) | Represents equity-based incentives awarded to key employees under the Malibu Boats, Inc. Long-Term Incentive Plan and profit interests issued under the previously existing limited liability company agreement of the LLC. |
(6) | Represents costs incurred in connection with our vertical integration of engines including product development costs and supplier transition performance incentives. |
(7) | For the three and six months ended December 31, 2017, we recognized other income as a result of a decrease in our estimated tax receivable agreement liability. The reduction in our tax receivable agreement liability resulted from the adoption of the Tax Act, which decreased the estimated tax rate used in computing our future tax obligations and, in turn, decreased the future tax benefit we expect to realize related to increased tax basis from previous sales and exchanges of LLC Units by our pre-IPO owners. |
Three Months Ended December 31, | Six Months Ended December 31, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Reconciliation of numerator for net (loss) income available to Class A Common Stock per share to Adjusted Fully Distributed Net Income per Share of Class A Common Stock: | ||||||||||||||||
Net (loss) income attributable to Malibu Boats, Inc. | $ | (6,383 | ) | $ | 6,901 | $ | (498 | ) | $ | 10,681 | ||||||
Provision for income taxes 1 | 50,558 | 3,945 | 50,300 | 6,092 | ||||||||||||
Professional fees 2 | — | 917 | 26 | 1,986 | ||||||||||||
Acquisition and integration related expenses 3 | 1,017 | — | 3,523 | — | ||||||||||||
Fair market value adjustment for interest rate swap 4 | (172 | ) | (580 | ) | (203 | ) | (825 | ) | ||||||||
Stock-based compensation expense 5 | 488 | 280 | 850 | 745 | ||||||||||||
Marine Power litigation judgment 6 | — | (1,330 | ) | — | (1,330 | ) | ||||||||||
Engine development 7 | 1,140 | 460 | 2,587 | 460 | ||||||||||||
Adjustments to tax receivable agreement liability 8 | (30,317 | ) | — | (27,702 | ) | — | ||||||||||
Net income attributable to non-controlling interest 9 | 799 | 836 | 1,328 | 1,282 | ||||||||||||
Fully distributed net income before income taxes | 17,130 | 11,429 | 30,211 | 19,091 | ||||||||||||
Income tax expense on fully distributed income before income taxes 10 | 5,704 | 4,057 | 10,060 | 6,777 | ||||||||||||
Adjusted fully distributed net income | 11,426 | 7,372 | $ | 20,151 | $ | 12,314 |
Three Months Ended December 31, | Six Months Ended December 31, | |||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||
Reconciliation of denominator for net (loss) income available to Class A Common Stock per share to Adjusted Fully Distributed Net Income per Share of Class A Common Stock: | ||||||||||||
Weighted average shares outstanding of Class A Common Stock used for basic net income per share: | 20,436,110 | 17,786,122 | 19,819,438 | 17,760,256 | ||||||||
Adjustments to weighted average shares of Class A Common Stock: | ||||||||||||
Weighted-average LLC units held by non-controlling unit holders 11 | 1,170,314 | 1,408,065 | 1,211,709 | 1,410,881 | ||||||||
Weighted-average unvested restricted stock awards issued to management 12 | 126,447 | 108,531 | 128,199 | 90,974 | ||||||||
Adjusted weighted average shares of Class A Common Stock outstanding used in computing Adjusted Fully Distributed Net Income per Share of Class A Common Stock: | 21,732,871 | 19,302,718 | 21,159,346 | 19,262,111 |
Three Months Ended December 31, | Six Months Ended December 31, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net (loss) income available to Class A Common Stock per share | $ | (0.31 | ) | $ | 0.39 | $ | (0.03 | ) | $ | 0.60 | ||||||
Impact of adjustments: | ||||||||||||||||
Provision for income taxes 1 | 2.47 | 0.22 | 2.54 | 0.34 | ||||||||||||
Professional fees 2 | — | 0.05 | — | 0.11 | ||||||||||||
Acquisition and integration related expenses 3 | 0.05 | — | 0.18 | — | ||||||||||||
Fair market value adjustment for interest rate swap 4 | (0.01 | ) | (0.03 | ) | (0.01 | ) | (0.05 | ) | ||||||||
Stock-based compensation expense 5 | 0.02 | 0.02 | 0.04 | 0.04 | ||||||||||||
Marine Power litigation judgment 6 | — | (0.07 | ) | — | (0.07 | ) | ||||||||||
Engine development 7 | 0.06 | 0.03 | 0.13 | 0.03 | ||||||||||||
Adjustment to tax receivable agreement liability 8 | (1.48 | ) | — | (1.40 | ) | — | ||||||||||
Net income attributable to non-controlling interest 9 | 0.04 | 0.05 | 0.07 | 0.07 | ||||||||||||
Fully distributed net income per share before income taxes | 0.84 | 0.66 | 1.52 | 1.07 | ||||||||||||
Impact of income tax expense on fully distributed income before income taxes 10 | (0.28 | ) | (0.23 | ) | (0.51 | ) | (0.38 | ) | ||||||||
Impact of increased share count 13 | (0.03 | ) | (0.05 | ) | $ | (0.06 | ) | $ | (0.05 | ) | ||||||
Adjusted Fully Distributed Net Income per Share of Class A Common Stock | $ | 0.53 | $ | 0.38 | $ | 0.95 | $ | 0.64 |
(1) | Provision for income taxes for the three and six months ended December 31, 2017 reflects the impact of the Tax Act adopted in December 2017, which among other items, lowered the U.S. corporate income tax rate from 35% to 21%, effective January 1, 2018. As a result of the Tax Act, for the three and six months ended December 31, 2017, we recorded a non-cash provisional adjustment to income tax expense of $47.0 million for the re-measurement of deferred taxes on the enactment and the deferred tax impact related to the reduction in the tax receivable agreement liability. |
(2) | For the six months ended December 31, 2017 and three and six months ended December 31, 2016, represents legal and advisory fees related to our litigation with MasterCraft Boat Company, LLC ("MasterCraft"). |
(3) | Represents legal and advisory fees as well as integration related costs incurred in connection with our acquisition of Cobalt. Integration related expenses include post-acquisition adjustments to cost of goods sold of $1.5 million for the fair value step up of inventory acquired, most of which was sold during the first quarter of fiscal 2018. In addition, integration related expenses includes $0.7 million in depreciation and amortization associated with our fair value step up of property, plant and equipment and intangibles acquired in connection with the acquisition of Cobalt. |
(4) | Represents the change in the fair value of our interest rate swap entered into on July 1, 2015. |
(5) | Represents equity-based incentives awarded to certain of our employees under the Malibu Boats, Inc. Long-Term Incentive Plan and profit interests issued under the previously existing limited liability company agreement of the LLC. |
(6) | Represents the reduction in a one-time charge related to a judgment rendered against us in connection with a lawsuit by Marine Power where the court amended the judgment to $1.9 million. |
(7) | Represents costs incurred in connection with our vertical integration of engines including product development costs and supplier transition performance incentives. |
(8) | For the three and six months ended December 31, 2017, we recognized other income as a result of a decrease in our estimated tax receivable agreement liability. The reduction in our tax receivable agreement liability resulted from the adoption of the Tax Act, which decreased the estimated tax rate used in computing our future tax obligations and, in turn, decreased the future tax benefit we expect to realize related to increased tax basis from previous sales and exchanges of LLC Units by our pre-IPO owners. |
(9) | Reflects the elimination of the non-controlling interest in the LLC as if all LLC members had fully exchanged their LLC Units for shares of Class A Common Stock. |
(10) | Reflects income tax expense at an estimated normalized annual effective income tax rate of 33.3% and 35.5% of income before income taxes for the three months ended December 31, 2017 and 2016, respectively, assuming the conversion of all LLC Units into shares of Class A Common Stock. The estimated normalized annual effective income tax rate is based on the federal statutory rate plus a blended state rate adjusted for deductions under Section 199 of the Internal Revenue Code of 1986, as amended, state taxes attributable to the LLC, and foreign income taxes attributable to our Australian based subsidiary. The decrease in the normalized annual effective income tax rate to 33.3% for the three months ended December 31, 2017, is primarily the result of an updated blended state rate, which considers the impacts of the Cobalt acquisition as well as a recent law change in Tennessee. The assumed annual effective income tax rate for the three months ended December 31, 2017 does not reflect the blended statutory rate of 28% used in our consolidated financial statements or any other impact of the Tax Act because the lower corporate tax rate of 21% was not effective until January 1, 2018. For periods beginning after January 1, 2018, our estimated normalized annual effective income tax rate is expected to range between 23% and 24% in computing our Adjusted Fully Distributed Net Income per share as a result of the Tax Act. |
(11) | Represents the weighted average shares outstanding of LLC Units held by non-controlling interests assuming they were exchanged into Class A Common Stock on a one-for-one basis. |
(12) | Represents the weighted average unvested restricted stock awards included in outstanding shares during the applicable period that were convertible into Class A Common Stock and granted to members of management. |
(13) | Reflects impact of increased share counts assuming the exchange of all weighted average shares outstanding of LLC Units into shares of Class A Common Stock and the conversion of all weighted average unvested restricted stock awards included in outstanding shares granted to members of management. |
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