Malibu reports slowing in Q3 results
Malibu Boats, Inc. announced its financial results for the third quarter ended March 31, 2020.
“The fiscal third quarter of 2020 was a tale of two environments. Through the greater part of the quarter, we delivered strong performance, as early boat show season momentum extended into March. However, retail strength shifted nearly overnight as the COVID-19 virus ravaged the U.S. late in the quarter, CEO Jack Springer said. “I was incredibly proud of our team, as we adapted quickly to these unforeseen challenges. To prioritize the health and safety of our employees and align production to slowing demand levels, we suspended operations at our facilities in the last week of the quarter. Once again, the operational prowess of our team, coupled with our operational excellence and vertical integration infrastructure, allowed us to somewhat mitigate the substantial headwinds we faced, and deliver operating margins ahead of expectations.”
“In the fiscal third quarter of 2020, the COVID-19 pandemic has impacted our operations and financial results and we expect it to continue to impact our operations and financial results, including during any recovery period,” Springer added. “On March 24, 2020, we elected to suspend operations at all of our facilities due to the impact of the COVID-19 pandemic, which impacted the last week of fiscal third quarter of 2020. The shut-down continued into the fiscal fourth quarter of 2020 with operations resuming in late April and early May 2020, depending on the facility. “
Net sales for the three months ended March 31, 2020 decreased $17.6 million, or 8.8%, to $182.3 million as compared to the three months ended March 31, 2019. Unit volume for the three months ended March 31, 2020, decreased 298 units, or 14.2%, to 1,796 units as compared to the three months ended March 31, 2019. The decrease in net sales and unit volumes was driven primarily by the precautionary suspension of operations at all of our manufacturing facilities commencing on March 24, 2020 as a result of the COVID-19 pandemic. As a result of the company’s suspension of operations, they were not able to ship boats to dealers during the last week of the fiscal quarter, which negatively impacted our net sales for the quarter. In addition to the pandemic, but to a lesser effect, Malibu also had planned lower production rates at Cobalt to reduce wholesale shipments and dealer inventories that negatively impacted sales versus the prior year period. This decrease was partially offset by a higher average selling price due to model mix and year-over-year price increases.
Net sales attributable to our Malibu segment decreased $4.8 million, or 4.5%, to $102.6 million for the three months ended March 31, 2020, compared to the three months ended March 31, 2019. Unit volumes attributable to the Malibu segment decreased 167 units for the three months ended March 31, 2020, compared to the three months ended March 31, 2019. The decrease in net sales and unit volumes was driven primarily by the precautionary suspension of operations at Malibu and Axis facilities. The company said the decrease was partially offset by mix of new larger models and year-over-year price increases on all of the Malibu and Axis models.
Net sales from the Cobalt segment decreased $10.0 million, or 17.9%, to $46.0 million for the three months ended March 31, 2020, compared to the three months ended March 31, 2019. Unit volumes attributable to Cobalt decreased 124 units for the three months ended March 31, 2020 compared to the three months ended March 31, 2019. In addition to the pandemic, but to a lesser effect, the company said it had planned lower production rates at Cobalt to reduce wholesale shipments and dealer inventories that negatively impacted sales versus the prior year period.
Net sales from the company’s Pursuit segment decreased $2.8 million, or 7.6%, to $33.7 million, for the three months ended March 31, 2020. Unit volumes attributable to Pursuit decreased seven units for the three months ended March 31, 2020 compared to the three months in the previous year. The decrease in net sales and unit volumes were driven primarily by the precautionary suspension of operations. Additionally, the decrease in Pursuit net sales was driven by the lower average selling price due to the mix of models sold partially offset by year-over-year price increases on Pursuit models.
Overall consolidated net sales per unit increased 6.3% to $101,509 per unit for the three months ended March 31, 2020, compared to the three months ended March 31, 2019. Net sales per unit for our Malibu segment increased 9.5% to $90,083 per unit for the three months ended March 31, 2020, compared to the three months ended March 31, 2019, driven by higher sales of new, more expensive models and optional features and year-over-year price increases. Net sales per unit for our Cobalt segment increased 1.7% to $88,345 per unit for the three months ended March 31, 2020, compared to the three months ended March 31, 2019, driven by year-over-year price increases. Net sales per unit for Pursuit segment decreased 2.9% to $247,632 for the three months ended March 31, 2020, compared to the three months ended March 31, 2019, driven by a lower average selling price due to the mix of models sold offset slightly by year-over-year price increases.
Gross profit for the three months ended March 31, 2020 decreased $3.9 million, or 7.8%, to $45.8 million compared to the three months ended March 31, 2019. Gross margin for the three months ended March 31, 2020 increased 20 basis points from 24.9% to 25.1%.
“We have the right team in place to navigate through an unprecedented macro-economic landscape and have taken swift action to ensure we have the financial flexibility to support our operations and strategic investments. The core pillars of our business – operational excellence, vertical integration and industry-leading new product innovation – remain unchanged throughout a cycle and allow us to flex our cost structure and preserve our margins in the event of a prolonged lower demand environment. As we progress through murky waters, the extensive leadership experience of our management team through down cycles and our operational excellence will allow Malibu to further bolster our leadership position in marine,” Springer concluded.
