Welcome to Malibu Boats' earnings conference call for the three months ended September 30th, 2026. I am David Black, Chief Financial Officer, and joining me today is Steve Menneto, our President and Chief Executive Officer.

Before we begin, as you may have seen in our press release today, our board approved a change in our fiscal year-end from June 30th to December 31st. As a result, the quarter we are reporting today ended September 30th, 2026, is the first quarter of a six-month transition period and is compared to the quarter ended September 30th, 2025.

A press release covering these results was issued today and can be found in the Investor Relations section of our website. Today's outlook covers the three months ended December 31st, 2026, and the six-month transition period, which I will discuss in more detail later in the call.

I also want to remind everyone that remarks on the call may contain certain forward-looking statements, including predictions, expectations, estimates, and other information that might be considered forward-looking, and that actual results could differ materially from those projected on today's call. You should not place undue reliance on these forward-looking statements, which speak only as of today, and the company undertakes no obligation to update these for any new information or future events.

Factors that might affect future results are discussed in our filings with the SEC, and we encourage you to review our SEC filings for a more detailed description of these risk factors. Please also note that we will be referring to certain non-GAAP financial measures on today's call, such as adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted net income per share, and free cash flow.

Reconciliations of these GAAP financial measures to non-GAAP financial measures are included in the earnings release. I will now turn the call over to Steve.

Thank you, David. Good morning, everyone.

Our results for the September quarter reflect a retail environment that softened over the summer and our decision to manage wholesale shipments with discipline to protect dealer health. Net sales increased 29.9% to $252.9 million, modestly below our guided range, and adjusted EBITDA increased 21.7% to $14.3 million, at the low end of our outlook.

Cobalt and our saltwater brands grew volume, and Saxdor contributed meaningfully to growth, which was partially offset by a softer ski/wake category and lower profitability at Malibu, which I'll come back to. Looking across the portfolio, Cobalt and the saltwater brands both grew volume as they lapped last year's dealer inventory reset.

The softer retail environment showed up most in the ski/wake boat category, which was under pressure across the industry through the summer. To be clear, this is a category dynamic, not a Malibu-specific issue.

We continue to gain share across our portfolio, including at Malibu, even as the category has softened. As a result, we shipped fewer boats and leaned in to support our dealers, consistent with the guiding principle we have spoken to for the last few years, and it is how we will keep running the business through this part of the cycle.

Saxdor contributed $51.1 million of net sales in the quarter. The brand is tracking to our plan, with margins consistent with the fourth quarter.

As we said in August, Saxdor's margins in the July through December period reflect our investment in the production ramp, and we expect them to step up in the first half of calendar year 2027 as domestic manufacturing scales and our mix shifts towards larger, more margin-accretive models. David will walk you through that in more detail.

The real highlight this quarter was Fort Pierce, where U.S. production of Saxdor is now well underway.

We are tracking ahead of schedule. Production began in July, and our first U.S.-built Saxdor 320 GTO was successfully completed ahead of our original goal for this fall, and serial production is underway.

Right now, the focus is on efficient assembly, and I want to commend our team for their focus on this seamless ramp. We continue to see a runway to 200 Saxdor builds a year in Fort Pierce before investing in plant expansion.

Going back to our rationale behind the acquisition, having Saxdor built in the U.S. puts the brand much closer to its North American dealers and customers, and it is where the investment we have made in the platform really starts to work for us.

We are also widening Saxdor's reach, adding new dealers across the Americas and working with MarineMax to expand distribution in the U.S. The team continues to bring new products to market, including the 460 GTS, which made its debut in Cannes Yachting Festival in September.

Last week, we kicked off the boat show season in Fort Lauderdale with seven of our brands on display, and it is always a great week to be on the docks with our dealers and customers. Cobalt officially launched the completely redesigned 265 Coastal Edition, a luxury runabout built with big water and coastal lifestyle in mind.

Several of our newest models were at the show for the first time, including the Pursuit S 288 and the newly refined OS 445, Pursuit's flagship, and the all-new Cobia 250 DC, which expands Cobia's dual-console offering. Saxdor brought the 460 GTC, the largest and most advanced model in the range and the brand's entry into the 45-foot to 50-foot category, along with the 350 GTW alongside our partners at MarineMax.

Seeing everything together really shows the breath of this portfolio, from family runabouts to offshore center consoles to luxury day boats, each built for the different kind of boater. Turning to the backdrop, although the industry retail environment got tougher over the summer, it's important to note that we haven't seen any changes in the fundamentals.

Based on the preliminary SSI data, industry powerboat registrations were down approximately 11% for the July through September period, with the fiberglass segments where we compete, and ski/wake in particular, more pressured than the broader market. September was the best month of the year for the industry, down only 2%, and our brands have outperformed the industry for several consecutive months, with our towboat brands combined seeing growth in September.

Elevated finance costs and a cautious consumer continue to keep the payment buyer on the sidelines, and that buyer coming back is ultimately what will drive the broader inflection in industry unit volumes and the cycle overall. Recent interest rate increases don't help, but we haven't seen much change in the buyer behavior.

The pressure is most visible in the ski/wake category, where promotional activity and dealer incentive costs increased across the industry. We expect incentives to remain elevated relative to historical levels, and we will continue to align Malibu shipments with retail demand, both of which are reflected in our outlook for the December quarter.

Where we can help that buyer, we are. MBI Acceptance gives our dealers financing and extended service tools to close the sale with a payment-sensitive customer, and is one of the most practical levers we have until rates and confidence start working in our favor.

Looking ahead, our dealers are heading into the winter in good shape, with inventories healthier than a year ago and aged inventory low across the portfolio, which is right where we want them as the show season builds. In a market like this, the work that matters most is the work we control, and the MBI Advantage was built for exactly this kind of environment.

We continue to push it further, with deeper vertical integration, centralized sourcing, and category management across our brands, and now bringing Saxdor into the sourcing organization so it gets the benefit of our scale. Beyond sourcing, we are controlling what we can on cost.

Our cost structure is 80% to 90% variable, made up mostly of materials and direct labor, which lets us flex with demand and protect profitability and cash through the cycle. We continue to work the levers we outlined at Investor Day, including lean manufacturing, vertical integration, dual sourcing, and supplier rationalization, and we are not waiting for the mid-cycle market to go after the 250 basis points of outperformance opportunity we identified.

As we reinvest behind new models and ramp production, we would expect some of those dynamics to shift, but our approach to cost is not changing. We are operating in a market that is not giving us much help right now, and we are managing the business accordingly.

At the same time, we are making tangible progress on our long-term priorities. From U.S.

production of Saxdor at Fort Pierce to the new models we just brought to market, we remain intentional about our outlook until we see more durable evidence of a broader recovery. Our conviction in build, innovate, and grow and the mid-cycle opportunity in front of us remains strong.

With that, I'll turn the call over to David for the detailed review of our financial results. David?

Thanks, Steve. The takeaway for the quarter: we navigated a softer ski/wake category with discipline, Saxdor drove top-line growth, and the cash we used was seasonal and inventory-driven.

Throughout my remarks, I'll make select references to both consolidated results and legacy results, which exclude Saxdor, to provide a clear view of underlying sales drivers and year-over-year comparability. For the quarter ended September 30th, 2026, net sales increased $58.2 million, or 29.9%, to $252.9 million, compared to the prior year, inclusive of $51.1 million from our Saxdor segment.

On a legacy basis, net sales were approximately $201.8 million, an increase of approximately 3.6%, driven by increased unit volumes at Cobalt and saltwater fishing segments, a favorable model mix in our Cobalt segments, and a favorable segment mix and year-over-year price increases, partially offset by decreased unit volumes in the Malibu segments and increased dealer incentive costs in the Malibu and saltwater fishing segments. Total unit volume increased 15.1% to 1,299 units.

This was composed of our legacy unit volume, which increased approximately 2.7% to 1,160 units, while Saxdor contributed 139 units in the quarter. By segment, net sales attributable to Malibu decreased 9.1% to $71.5 million on lower wholesale shipments driven by lower retail activity during the period and increased dealer incentive costs.

Saltwater fishing net sales increased 7.1% to $68.9 million on higher wholesale shipments against a prior-year period impacted by elevated dealer inventory levels. Cobalt net sales increased 18.8% to $61.5 million, also on higher wholesale shipments against a prior-year comparison, along with a favorable model mix.

From a mix perspective, on a legacy basis, Malibu represented approximately 43% of unit sales, saltwater fishing represented 27%, and Cobalt made up the remaining approximately 30%. Net sales per unit increased 12.9% to $194,720 per unit on a consolidated basis, primarily driven by incremental increase related to our new Saxdor segment, a favorable segment mix, and year-over-year price increases.

On a legacy basis, net sales per unit increased approximately 1% to $174,000. While not included in this metric for the sake of comparability, Saxdor's net sales per unit was approximately $368,000 for the quarter.

Turning to profitability, gross profit increased 35.5% to $37.8 million, and gross margin as a percent of sales was 15%. This represents an increase of approximately 70 basis points compared to the prior-year period.

The increased gross margin was driven primarily by the gross margin of newly acquired Saxdor. For some further context on Saxdor's performance, the segment delivered adjusted EBITDA margin of 8% during the period, as we continued investing in the production ramp at Fort Pierce.

Selling and marketing expenses increased 32.4% in the three-month period. The increase was driven primarily by higher personnel-related expenses and an incremental increase due to the new Saxdor segment.

As a percentage of sales, selling and marketing expenses was relatively consistent with prior year at 3.3%. General and administrative expenses decreased 43.9%, or $9.1 million.

The decrease was driven primarily by $15 million reduction resulting from the derecognition of a liability related to the insurance proceeds previously received from Starr Indemnity & Liability Company that are no longer subject to reservation of rights, as well as decrease in incentive pay, partially offset by acquisition and related expenses incurred due to the new Saxdor acquisition and an incremental increase due to the new Saxdor segment. As a percentage of sales, G&A expenses were 4.6%.

GAAP net income for the period was $6.1 million, or 30 cents per diluted share, which includes the $15 million G&A benefit I just described. Adjusted EBITDA increased 21.7% to $14.3 million, and adjusted EBITDA margin was 5.7%.

Included in this amount was Saxdor segment adjusted EBITDA of approximately $4.1 million. Excluding Saxdor, adjusted EBITDA was approximately $10.3 million, compared to $11.8 million last year, with the decline driven by Malibu, as described earlier.

Adjusted net income per share remained consistent at 15 cents on a basic weighted average share count of approximately 19.7 million shares. Both adjusted EBITDA and adjusted net income exclude the $15 million benefit from the Starr insurance proceeds, which is reflected in the professional and fees line of our reconciliation.

Turning to the balance sheet and cash flow for the three-month period ended September 30th, 2026, we ended the period with $40.3 million of cash, $172.9 million of debt, and approximately $213.5 million of total available liquidity, giving us ample flexibility to support the business through the cycle. Net cash used in operating activities was $31.1 million, compared to $6.5 million of cash provided in the prior year.

As a reminder, the September quarter is seasonally our heaviest working capital quarter, and we also rebuilt inventory of approximately $32 million after ending fiscal 2026 with an unusually lean balance. The rebuild is our own inventory, not dealer inventory, and we continue to align wholesale shipments with retail demand.

We also paid annual compensation and dealer incentives during the period. We expect working capital needs to decrease through the first half calendar 2027.

We also invested $8.4 million in capital expenditures, resulting in a negative free cash flow of $39.5 million for the quarter, compared to free cash flow $2.3 million in the prior-year period. The change was more than accounted for by the inventory rebuild and the annual compensation and dealer incentive payments.

For context, free cash flow was negative $17 million in the September quarter of fiscal 2025 and positive for that full year. In fiscal 2026, we generated approximately $43 million of free cash flow and roughly 58% of adjusted EBITDA.

As a reminder, the refinancing we completed in July extended our maturity to 2031 and enhanced our financial flexibility with no change in our capital allocation priorities. On capital allocation, during the three-month period, we did not repurchase any shares, and our $70 million share repurchase authorization, which runs through June 30th, 2027, remains in place.

Net leverage was approximately 1.5 times at September 30th on a pro forma basis, up from approximately 1.0 times at June 30th, reflecting the seasonal use of cash and well within our stated maximum of 2.5 times. We remain balanced and disciplined in allocating capital and well positioned to keep investing in the business alongside returning capital to shareholders.

Turning to our outlook, as I mentioned at the start of the call, on November 3rd, our board approved a change in our fiscal year-end from June 30th to December 31st. As a result, the six months from July through December 31st, 2026 will be a transition period, which we will report on a transition report on Form 10-KT, and our first full fiscal year under the new calendar will be the 12 months ended December 31st, 2027.

Because the 12 months ended June 30th, 2027 will not be a reporting period, the outlook we provided on August 27th is superseded by the outlook we issued today. For the three months ended December 31st, we anticipate net sales of $236 million to $248 million and adjusted EBITDA of $13 million to $15 million.

For the six-month transition period, which includes our September quarter net sales of $252.9 million and adjusted EBITDA of $14.3 million as reported, we anticipate net sales of $489 million to $501 million and adjusted EBITDA of $27.3 million to $29.3 million. Our outlook takes a prudent view of the industry retail demand given the macro backdrop.

It also reflects tariff costs embedded at the currently enacted rates and the pricing actions we have already taken in the market. July through December is a seasonally lower volume period for our business, the results for the transition period should not be annualized.

As we noted in August, margins in this period will be lower than in the following six months, primarily driven by our investment and ramp at Saxdor. That is playing out as we expected, and it includes Saxdor production mix that is weighted towards smaller boats today.

Beyond the transition period, as domestic manufacturing scales and the broader revenue mix shifts towards larger, more margin-accretive models, we continue to expect Saxdor margins to ramp up towards the 10% to 11% range we discussed in August, and also expect Saxdor growth to remain in the mid-teens range through the first half of the calendar 2027. Our thinking on that has not changed.

We expect to provide our initial calendar year 2027 outlook in March, when we report our December quarter and transition period results. As always, reconciliations of our guidance measures are addressed in our earnings release.

To close, our September quarter reflected a softer retail environment and our decision to protect dealer health, with Saxdor, Cobalt, and saltwater brands helping offset the softer ski/wake category. Our legacy operations executed with discipline through the demanding environment.

The Saxdor integration is progressing well, with U.S. production now underway at Fort Pierce, and our balance sheet gives us the flexibility to support the business through the cycle.

With a refinanced credit facility, our buyback authorization, and a differentiated portfolio, we are well positioned to execute through the transition period and into calendar 2027, and to capture the mid-cycle opportunity we framed for you at the Investor Day. We will keep aligning shipments with retail demand, and we look forward to providing our calendar 2027 outlook in March.

With that, I'd like to open the call up for questions.

Hey everyone, Mitchell Ingles on for Joe Altobello. My first question is, can you help us bridge from the September quarter to the December quarter on your guidance, particularly for the legacy side?

How should we think about the sequential revenue decline in terms of normal seasonality, and what's your view on retail demand and wholesale shipments, and how have demand trends performed quarter-to-date?

Hey, this is David. The way that I would think about that, as we talked about in our original guide, we expected the first half to be lower than the second half.

If you look at prior year from a cadence perspective, I would expect it to follow a similar trajectory. From a retail perspective, we expect the conditions currently to continue right through the first half of our transition period.

We're expecting somewhere in the neighborhood of a mid to high single-digit decline from the market perspective, with the towboat segment being kind of on the higher end of that decline.

That's helpful, thanks. Then on the ski/wake demand, can you provide some additional color on what you're seeing for that category?

I know the industry has been soft and you're gaining share. What are you seeing on the affordability financing side?

Any difference between the income cohorts, and how would you describe retail trends right now?

Mitchell, we're still seeing kind of the same trend persist, where payment buyer still on the sideline, for the most part. We're trying to help them out with our MBI Acceptance and with better financing rates and so forth.

We do see the feature-rich boats still in play, the custom orders coming in, from consumers and dealers and so forth. We still see that K-economy effect moving forward in the towboat segment.

Appreciate the color. Best of luck.

Hey, good morning, guys. Could you talk a little bit about inventory reduction expectations?

I guess a lot of other companies are talking about wholesale matching retail, but it sounds like we have maybe further reductions to go at Malibu. I guess where are we in the process, and what does that sort of look like over the course of the forward quarters?

Jaime,

go ahead, David.

No, hey, Jaime. I think what we've said is we expected inventory to modestly decrease on a year-over-year basis.

For the quarter ended September 30th, we actually saw low double-digit decline versus the prior year from a dealer inventory perspective. I think you're right it's category-specific.

I think as the market continues to be weak on the towboat side of things, we'd expect inventory to decline as kind of the value of the week decreases in tandem with that. We think as the year progresses, right, and as we said originally, we expect retail to match wholesale on a more equilibrium basis.

Right now, for the transition period, we expect the decline to continue.

Okay. Then how should we be thinking about the cadence of the buybacks from the authorization?

We have the share price down and compelling versus a difficult environment and maybe holding on to more dry powder. Has sort of the thought about the timing to buy back shares changed at all?

No, no no change there. I think, quarter, Q1 is typically our seasonally higher working capital use quarter.

We are we will still continue to be opportunistic as we move through kind of the remainder of the year and as we, have working capital needs, we'll focus on those as well and and, pay down debt and and invest organically. No real change there, and I'd expect us to be, opportunistic as we continue to move forward.

Great, thanks.

Hey, good morning, guys. Thanks for taking my question.

Was just wondering if you could add a little bit of color on early season boat show trends, kind of what you saw versus prior years or versus expectations. Ordering patterns, deposit activity, traffic, just really anything you could add would be helpful.

Hey, Mike. It's Steve.

We just got back from FLIBS and it's only one data point of FLIBS, but we were really excited about FLIBS. We year-over-year outpaced last year at FLIBS in terms of retail sales, actual sold boats.

The ASPs were up, the model mix was rich. It was a really compelling FLIBS for us across the seven brands that we had there.

We're walking away with one data point of, hey, that's a good start to the boat show season.

Thank you.

Hi, good morning. Thanks for taking my questions.

Wanted to follow up on some of the questions on retail. Wanted to bridge some of your comments in the prepared remarks.

On the one hand, we saw retail, it sounds like, get a little bit softer over the summer, but then you're saying fundamentally things haven't changed, and then we saw a much better September. I guess if you could connect the dots there, and maybe share some perspective on October following that relatively stronger September?

Thanks.

Sure. Hey, Anna.

To kind of bridge the difference there, we really saw kind of the weakness more than we expected, right, in the towboat segments. I think other segments are operating the way that we originally expected.

That coupled with a little bit more competitiveness on the promotional side is really kind of what's changed, right, from kind of the previous remarks that we had had. As we continue to move forward, we expect that trend to continue on the towboat side of things.

As Steve said, we had some very strong positivity coming out of FLIBS. We expect that to translate into kind of the back half of the year as we move back into the selling season.

Got it. As you're setting expectations for the coming fiscal year, given that we still see pressure with the payment buyer, potentially another rate hike in December, in that near to medium-term period, are you baking in any improvement to that buyer or expecting things to continue as they are now?

Thanks.

Anna, we're going to continue to expect to see the same, as we said in our prepared remarks. We're prepared if we see a change in that consumer.

We're using all of our tools that we can with MBI Acceptance, supporting the dealers, and being competitive with promo to help that buyer out. We're going to continue to operate in that mode in fiscal 2027 or calendar 2027.

David, you can add from what's in the guide.

No, and as I said, I expected that in the guide that we'd be that mid to high single digit for the transition period. No change there from kind of the payment make-up, from financing versus payment buyer.

Thanks.

Thank you. Good morning.

Hey, can you talk about the period expense that you had in the quarter owing to the startup of Saxdor in the U.S. and what kind of incremental expense you're expecting over the next several quarters as that ramp continues?

Hey, Gerrick. I think what we talked about is margins will get a little bit better for Saxdor as we move through the first half of the year.

You saw that kind of with Saxdor for the first quarter. As we continue to ramp up production, we expect that will continue to decrease, right, the investment piece of it, and our margins will continue to grow.

If you recall, we've said kind of lower margins in the first half versus the second half, and so we expect that to follow suit.

All right. Then maybe on gross margin, is there any perhaps bridge you can provide us, scale, Saxdor, promo, sourcing, efficiencies, commodities?

Yeah.

From a year-over-year, it was 70 basis points up. What I would tell you is about half of that was Saxdor's contribution, and the other portion of that is the legacy business on the incremental revenue, offset by higher promotional costs at Malibu and lower revenue at Malibu.

You also talked about incentives in saltwater. What brands were you putting some promos on there?

I think the promo environment just on a year-over-year basis was up,

but

it wasn't as significant as on the Malibu side. I would tell you it's very normal at this time of year, as you think about the boat show season coming in, for promos to be kind of a little bit more elevated in the saltwater group, and so I think it's just a smaller piece of that pie.

Okay. All right, thank you.