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 May 2, 2018 |
Malibu Boats, Inc. | ||
Date: May 2, 2018 | /s/ Jack Springer | |
Jack Springer | ||
Chief Executive Officer |
• | Net sales increased 82.0% to $140.4 million compared to the third quarter of fiscal 2017. |
• | Unit volume increased 69.4% to 1,786 boats compared to the third quarter of fiscal 2017. |
• | Net sales per unit increased 7.4% to $78,628 and net sales per unit for Malibu U.S. increased 6.2% to $77,260 compared to the third quarter of fiscal 2017. |
• | Gross profit increased 70.2% to $36.4 million compared to the third quarter of fiscal 2017. |
• | Net income increased 89.9% to $16.8 million, or $0.76 per share compared to the third quarter of fiscal 2017. |
• | Adjusted EBITDA increased 70.1% to $28.5 million compared to the third quarter of fiscal 2017. |
• | Adjusted fully distributed net income increased 105.1% to $19.4 million compared to the third quarter of fiscal 2017. |
• | Adjusted fully distributed net income per share increased 81.6% to $0.89 on a fully distributed weighted average share count of 21.8 million shares of Class A Common Stock as compared to the third quarter of fiscal 2017. |
Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(In thousands, except unit and per unit data) | ||||||||||||||||
Net sales | $ | 140,429 | $ | 77,149 | $ | 358,343 | $ | 206,831 | ||||||||
Cost of sales | 104,066 | 55,787 | 271,541 | 151,833 | ||||||||||||
Gross profit | 36,363 | 21,362 | 86,802 | 54,998 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling and marketing | 3,263 | 1,789 | 9,974 | 6,362 | ||||||||||||
General and administrative | 7,862 | 5,997 | 22,371 | 15,514 | ||||||||||||
Amortization | 1,291 | 550 | 3,903 | 1,649 | ||||||||||||
Operating income | 23,947 | 13,026 | 50,554 | 31,473 | ||||||||||||
Other (expense) income, net: | ||||||||||||||||
Other income | 17 | 41 | 27,753 | 116 | ||||||||||||
Interest expense | (923 | ) | (416 | ) | (4,136 | ) | (883 | ) | ||||||||
Other (expense) income, net | (906 | ) | (375 | ) | 23,617 | (767 | ) | |||||||||
Income before provision for income taxes | 23,041 | 12,651 | 74,171 | 30,706 | ||||||||||||
Provision for income taxes | 6,245 | 3,805 | 56,545 | 9,897 | ||||||||||||
Net income | 16,796 | 8,846 | 17,626 | 20,809 | ||||||||||||
Net income attributable to non-controlling interest | 1,124 | 833 | 2,452 | 2,115 | ||||||||||||
Net income attributable to Malibu Boats, Inc. | $ | 15,672 | $ | 8,013 | $ | 15,174 | $ | 18,694 | ||||||||
Unit volumes | 1,786 | 1,054 | 4,584 | 2,811 | ||||||||||||
Net sales per unit | $ | 78,628 | $ | 73,196 | $ | 78,173 | $ | 73,579 |
Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net sales | $ | 140,429 | $ | 77,149 | $ | 358,343 | $ | 206,831 | |||||||
Cost of sales | 104,066 | 55,787 | 271,541 | 151,833 | |||||||||||
Gross profit | 36,363 | 21,362 | 86,802 | 54,998 | |||||||||||
Operating expenses: | |||||||||||||||
Selling and marketing | 3,263 | 1,789 | 9,974 | 6,362 | |||||||||||
General and administrative | 7,862 | 5,997 | 22,371 | 15,514 | |||||||||||
Amortization | 1,291 | 550 | 3,903 | 1,649 | |||||||||||
Operating income | 23,947 | 13,026 | 50,554 | 31,473 | |||||||||||
Other (expense) income, net: | |||||||||||||||
Other income | 17 | 41 | 27,753 | 116 | |||||||||||
Interest expense | (923 | ) | (416 | ) | (4,136 | ) | (883 | ) | |||||||
Other (expense) income, net | (906 | ) | (375 | ) | 23,617 | (767 | ) | ||||||||
Income before provision for income taxes | 23,041 | 12,651 | 74,171 | 30,706 | |||||||||||
Provision for income taxes | 6,245 | 3,805 | 56,545 | 9,897 | |||||||||||
Net income | $ | 16,796 | $ | 8,846 | 17,626 | 20,809 | |||||||||
Net income attributable to non-controlling interest | 1,124 | 833 | 2,452 | 2,115 | |||||||||||
Net income attributable to Malibu Boats, Inc. | $ | 15,672 | $ | 8,013 | $ | 15,174 | $ | 18,694 | |||||||
Comprehensive income: | |||||||||||||||
Net income | $ | 16,796 | $ | 8,846 | $ | 17,626 | $ | 20,809 | |||||||
Other comprehensive (loss) income, net of tax: | |||||||||||||||
Change in cumulative translation adjustment | (268 | ) | 867 | (34 | ) | 378 | |||||||||
Other comprehensive (loss) income, net of tax | (268 | ) | 867 | (34 | ) | 378 | |||||||||
Comprehensive income, net of tax | 16,528 | 9,713 | 17,592 | 21,187 | |||||||||||
Less: comprehensive income attributable to non-controlling interest, net of tax | 1,104 | 923 | 2,464 | 2,153 | |||||||||||
Comprehensive income attributable to Malibu Boats, Inc., net of tax | $ | 15,424 | $ | 8,790 | $ | 15,128 | $ | 19,034 | |||||||
Weighted average shares outstanding used in computing net income per share: | |||||||||||||||
Basic | 20,544,488 | 17,877,152 | 20,050,958 | 17,799,221 | |||||||||||
Diluted | 20,657,010 | 17,962,286 | 20,135,064 | 17,887,266 | |||||||||||
Net income available to Class A Common Stock per share: | |||||||||||||||
Basic | $ | 0.76 | $ | 0.45 | $ | 0.76 | $ | 1.05 | |||||||
Diluted | $ | 0.76 | $ | 0.45 | $ | 0.76 | $ | 1.05 |
March 31, 2018 | June 30, 2017 | ||||||
Assets | |||||||
Current assets | |||||||
Cash | $ | 53,156 | $ | 32,822 | |||
Trade receivables, net | 22,553 | 9,846 | |||||
Inventories, net | 43,761 | 23,835 | |||||
Prepaid expenses and other current assets | 4,448 | 2,470 | |||||
Income tax receivable | 136 | 1,111 | |||||
Total current assets | 124,054 | 70,084 | |||||
Property, plant and equipment, net | 40,741 | 24,123 | |||||
Goodwill | 32,478 | 12,692 | |||||
Other intangible assets, net | 95,598 | 9,597 | |||||
Deferred tax asset | 61,275 | 107,088 | |||||
Other assets | 420 | 79 | |||||
Total assets | $ | 354,566 | $ | 223,663 | |||
Liabilities | |||||||
Current liabilities | |||||||
Accounts payable | $ | 26,142 | $ | 12,722 | |||
Accrued expenses | 33,001 | 21,616 | |||||
Income taxes and tax distribution payable | 2,748 | 515 | |||||
Payable pursuant to tax receivable agreement, current portion | 4,323 | 4,332 | |||||
Total current liabilities | 66,214 | 39,185 | |||||
Deferred tax liabilities | 442 | 552 | |||||
Payable pursuant to tax receivable agreement | 51,750 | 77,959 | |||||
Long-term debt | 108,393 | 53,403 | |||||
Other long-term liabilities | 668 | 328 | |||||
Total liabilities | 227,467 | 171,427 | |||||
Stockholders' Equity | |||||||
Class A Common Stock, par value $0.01 per share, 100,000,000 shares authorized; 20,524,654 shares issued and outstanding as of March 31, 2018; 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 March 31, 2018; 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 March 31, 2018 and June 30, 2017 | — | — | |||||
Additional paid in capital 1 | 107,692 | 48,328 | |||||
Accumulated other comprehensive loss | (1,397 | ) | (1,363 | ) | |||
Accumulated earnings | 15,350 | 151 | |||||
Total stockholders' equity attributable to Malibu Boats, Inc. | 121,849 | 47,295 | |||||
Non-controlling interest 1 | 5,250 | 4,941 | |||||
Total stockholders’ equity | 127,099 | 52,236 | |||||
Total liabilities and stockholders' equity | $ | 354,566 | $ | 223,663 |
Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income | $ | 16,796 | $ | 8,846 | $ | 17,626 | $ | 20,809 | |||||||
Provision for income taxes 1 | 6,245 | 3,805 | 56,545 | 9,897 | |||||||||||
Interest expense | 923 | 416 | 4,136 | 883 | |||||||||||
Depreciation | 1,685 | 1,050 | 5,102 | 3,044 | |||||||||||
Amortization | 1,291 | 550 | 3,903 | 1,649 | |||||||||||
Professional fees 2 | — | 1,159 | 26 | 3,145 | |||||||||||
Marine Power litigation judgment 3 | — | — | — | (1,330 | ) | ||||||||||
Acquisition and integration related expenses 4 | 144 | — | 2,281 | — | |||||||||||
Stock-based compensation expense 5 | 560 | 325 | 1,410 | 1,070 | |||||||||||
Engine development 6 | 899 | 630 | 3,486 | 1,090 | |||||||||||
Adjustments to tax receivable agreement liability 7 | — | — | (27,702 | ) | — | ||||||||||
Adjusted EBITDA | $ | 28,543 | $ | 16,781 | $ | 66,813 | $ | 40,257 | |||||||
Adjusted EBITDA margin | 20.3 | % | 21.8 | % | 18.6 | % | 19.5 | % |
(1) | Provision for income taxes for the three and nine months ended March 31, 2018 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. For the nine months ended March 31, 2018, we recorded a non-cash provisional adjustment to income tax expense of $47.2 million for the remeasurement of deferred taxes on the enactment date and the deferred tax impact related to the reduction in the tax receivables agreement liability. |
(2) | For the nine months ended March 31, 2018 and three and nine months ended March 31, 2017, represents legal and advisory fees related to our litigation with MasterCraft Boat Company, LLC ("MasterCraft") which was settled in May 2017. |
(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 for the nine months ended March 31, 2018 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 nine months ended March 31, 2018, 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 March 31, | Nine Months Ended March 31, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Reconciliation of numerator for net income available to Class A Common Stock per share to Adjusted Fully Distributed Net Income per Share of Class A Common Stock: | ||||||||||||||||
Net income attributable to Malibu Boats, Inc. | $ | 15,672 | $ | 8,013 | $ | 15,174 | $ | 18,694 | ||||||||
Provision for income taxes 1 | 6,245 | 3,805 | 56,545 | 9,897 | ||||||||||||
Professional fees 2 | — | 1,159 | 26 | 3,145 | ||||||||||||
Acquisition and integration related expenses 3 | 870 | — | 4,393 | — | ||||||||||||
Fair market value adjustment for interest rate swap 4 | (137 | ) | (116 | ) | (340 | ) | (941 | ) | ||||||||
Stock-based compensation expense 5 | 560 | 325 | 1,410 | 1,070 | ||||||||||||
Marine Power litigation judgment 6 | — | — | — | (1,330 | ) | |||||||||||
Engine development 7 | 899 | 630 | 3,486 | 1,090 | ||||||||||||
Adjustments to tax receivable agreement liability 8 | — | — | (27,702 | ) | — | |||||||||||
Net income attributable to non-controlling interest 9 | 1,124 | 833 | 2,452 | 2,115 | ||||||||||||
Fully distributed net income before income taxes | 25,233 | 14,649 | 55,444 | 33,740 | ||||||||||||
Income tax expense on fully distributed income before income taxes 10 | 5,854 | 5,201 | 15,914 | 11,978 | ||||||||||||
Adjusted fully distributed net income | 19,379 | 9,448 | $ | 39,530 | $ | 21,762 |
Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
Reconciliation of denominator for net 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: | 20,550,972 | 17,877,152 | 20,063,282 | 17,799,221 | ||||||||
Adjustments to weighted average shares of Class A Common Stock: | ||||||||||||
Weighted-average LLC units held by non-controlling unit holders 11 | 1,073,830 | 1,331,842 | 1,165,750 | 1,384,653 | ||||||||
Weighted-average unvested restricted stock awards issued to management 12 | 137,146 | 134,744 | 131,182 | 105,564 | ||||||||
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: | 21,761,948 | 19,343,738 | 21,360,214 | 19,289,438 |
Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net income available to Class A Common Stock per share | $ | 0.76 | $ | 0.45 | $ | 0.76 | $ | 1.05 | ||||||||
Impact of adjustments: | ||||||||||||||||
Provision for income taxes 1 | 0.30 | 0.21 | 2.82 | 0.56 | ||||||||||||
Professional fees 2 | — | 0.06 | — | 0.18 | ||||||||||||
Acquisition and integration related expenses 3 | 0.04 | — | 0.22 | — | ||||||||||||
Fair market value adjustment for interest rate swap 4 | (0.01 | ) | (0.01 | ) | (0.02 | ) | (0.05 | ) | ||||||||
Stock-based compensation expense 5 | 0.03 | 0.02 | 0.07 | 0.06 | ||||||||||||
Marine Power litigation judgment 6 | — | — | — | (0.07 | ) | |||||||||||
Engine development 7 | 0.04 | 0.04 | 0.17 | 0.06 | ||||||||||||
Adjustment to tax receivable agreement liability 8 | — | — | (1.38 | ) | — | |||||||||||
Net income attributable to non-controlling interest 9 | 0.05 | 0.05 | 0.12 | 0.12 | ||||||||||||
Fully distributed net income per share before income taxes | 1.21 | 0.82 | 2.76 | 1.91 | ||||||||||||
Impact of income tax expense on fully distributed income before income taxes 10 | (0.28 | ) | (0.29 | ) | (0.79 | ) | (0.67 | ) | ||||||||
Impact of increased share count 13 | (0.04 | ) | (0.04 | ) | $ | (0.13 | ) | $ | (0.11 | ) | ||||||
Adjusted Fully Distributed Net Income per Share of Class A Common Stock | $ | 0.89 | $ | 0.49 | $ | 1.84 | $ | 1.13 |
(1) | Provision for income taxes for the three and nine months ended March 31, 2018 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. For the nine months ended March 31, 2018, we recorded a non-cash provisional adjustment to income tax expense of $47.2 million for the remeasurement of deferred taxes on the enactment date and the deferred tax impact related to the reduction in the tax receivables agreement liability. |
(2) | For the nine months ended March 31, 2018 and three and nine months ended March 31, 2017, represents legal and advisory fees related to our litigation with MasterCraft Boat Company, LLC ("MasterCraft") which was settled in May 2017. |
(3) | Represents legal and advisory fees as well as integration related costs incurred in connection with our acquisition of Cobalt. Integration related expenses for the nine months ended March 31, 2018 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 nine months ended March 31, 2018, 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 23.2% and 35.5% of income before income taxes for the three months ended March 31, 2018 and 2017, 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 23.2% for the three months ended March 31, 2018, is primarily the result of the Tax Act which was effective for periods after January 1, 2018, lowering the corporate tax rate to 21%, as well as an updated blended state rate, which considers the impacts of the Cobalt acquisition and a recent law change in Tennessee. The estimated normalized effective income tax rate for the nine months ended March 31, 2018 reflects a blended rate of 28.7% of income before income taxes assuming the conversion of all LLC Units into shares of Class A Common Stock. For the nine months ended March 31, 2017, the estimated normalized effective income tax rate used was 35.5%. |
(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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