Malibu Boats (NASDAQ: $MBUU) is a leading manufacturer of watersports towboats, holding over a third of the world’s market share. Its boats are sold under various brands, including Malibu, Axis, Pursuit, Cobalt, Cobia, Hewes, and Pathfinder. Based in Loudon, TN, it operates in the US, Australia, and New Zealand. On Tuesday, January 30, 2024, the company released its Q2 fiscal 2024 results, before markets opened, to a negative market reception.
Malibu Boats Q224 Earnings Report
According to the Q224 report, net sales fell by 37.7% to $211.1 million. Additionally, unit volume was down by 43.7% to 1,373 units. Its gross profit fell 50.5% for the quarter to $37.5 million, while net income fell 72.1% to $10.1 million.
Its adjusted EBITDA also declined by 60.2% to $22.9 million. The company reported a diluted EPS of $0.49, a decline of 71.5%. Its adjusted EPS for the quarter was $0.57, representing a 68.9% decline. Malibu Boats reported a gross profit margin of 17.8% for the quarter, compared to the 22.3% reported in the same quarter last year. Its net income margin was 4.8%, compared to 10.7% last year.
Adjusted earnings per share topped analysts’ prediction of $0.47. However, net sales were below analysts’ forecast of $219.7 million.
Why Malibu Boats Underperformed in Q224
Malibu Boats stated it had seen an overall decline in unit volumes in all segments. It blamed the poor performance on falling retail demand and increased dealer flooring program costs. Both of which were due to rising interest rates and inventory levels.
A good showing in the Malibu and Saltwater Fishing segments partially offset losses. The company also blamed inflation-based year-over-year increases in pricing for falling sales. Malibu Boats experienced lower wholesale volume shipments for the quarter, driven by lower retail sales.
Commenting on the Q2 results, Jack Springer, the Malibu Boats CEO, said the quarter was historically their slowest. He added that the upcoming board show season would help them gauge the retail demand recovery. Springer said that would “reflect the continuing consumer interest for our larger, feature-rich boats.”
Fiscal 2024 Outlook
Malibu Boats said it expects a decline in net sales by mid to high thirties percentage, year-over-year. Additionally, it anticipates its EBITDA margin to drop by 800-900 basis points compared to fiscal 2023.
Malibu Boats Stock Performance
The market reacted negatively to the release of Malibu Boats’ Q2 earnings report. MBUU stock was down 15.62% during early morning trading on Tuesday, January 30, 2024, at 10:38 AM in New York.
In the past 12 months, the stock is down 24.85%. It is currently valued at $43.06 per share. The massive double-digit decline was in response to the worse-than-expected results. Additionally, its gloomy forecast for fiscal 2024 forced investors to take flight.
Malibu Boats stock has lost 20.42% of its value since the start of 2024, compared to the S&P 500’s gain of 3.85% in the same period.
MBUU Stock Forecast
Analysts give MBUU stock a consensus buy rating. They have set a broad target range for the stock, predicting a high of $62 and a low of $48. The media target for MBUU stock is $56, a 30.48% upside based on the last price. In the next earnings report, slated for May 2024, analysts predict an EPS of $2.26 and sales of $348.6 million.
Should You Add MBUU Stock To Your Portfolio?
Malibu Boats stock has historically performed quite well. Since its listing a decade ago, it has seen a CAGR growth of around 11%. Most of its costs are variable, making adjusting to declining demand easy. As such, the company will easily navigate the current headwinds as it waits for demand to recover.
In the short term, the company will experience a decline in demand due to harsh macroeconomic conditions. Additionally, it will experience a decline due to normalization in demand from the COVID highs. Looking at its strengths, Malibu Boats has retained strong margins in the high teens, even amid worsening headwinds.
Its long-term position as the leading watersports towboats maker is secure, thanks to management’s quick reaction to current conditions. Consequently, the buy rating by analysts accurately depicts its performance in the long term.
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