Malibu Boats, Inc.

Good morning and welcome to Malibu Boats conference call to discuss third quarter fiscal year 2021 results. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time. Please be advised that the reproduction of this call in whole or in part is not permitted without written authorization of Malibu Boats. And as a reminder, this call is being recorded. On the call today for management are Mr. Jack Springer, Chief Executive Officer, Mr. Wayne Wilson, Chief Financial Officer, and Mr. Richie Anderson, Chief Operating Officer. I will turn the call over to Mr. Wilson to get started. Please go ahead, sir.

Thank you, and good morning, everyone. On the call, Jack will provide commentary on the business, and I will discuss our third quarter financials. We will then open the call for questions. A press release. covering the company's fiscal third quarter 2021 results was issued today, and a copy of that press release can be found in the investor relations section of the company's website. I also want to remind everyone that management's remarks on this call may contain certain forward-looking statements, including predictions, expectations, estimates, or 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 them for any new information or future events. Factors that might affect future results are discussed in our filings with 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 fully distributed net income, and adjusted fully distributed net income per share. Reconciliations of these non-GAAP financial measures to GAAP financial measures are included in our earnings release. I will now turn the call over to Jack Springer.

Thank you, Wayne, and thank you for joining the call. We delivered another record-setting quarter, marking the best quarter in the company's history from a unit ship, revenue, gross profit, and earnings perspective. Simply put, an exceptional quarter as the retail environment remains on fire, and we continue to perform very well. Importantly, Maverick was icing on the cake, adding additional growth on top of an already outstanding quarter. Our results once again highlight the agility of our team and strength of our flexible business model, which allowed us to post breakneck production levels for Malibu and Pursuit that significantly exceeded historical levels. Further, we wasted no time igniting our newest addition, Maverick Boat Company, as they scored their fourth best production month in their history in the month of March. All of this was achieved despite the unique set of supply chain constraints and logistics issues resulting from COVID repercussions, the Texas winter storm, and the Kansas record-setting freeze. For the fiscal third quarter, net sales increased nearly 50 percent to $273 million. Gross margin increased to 26.4 percent. Adjusted EBITDA increased 57 percent to $57 million. And adjusted EBITDA margin increased 90 basis points to 20.9 percent. We fully anticipate reaching our fiscal year 2021 guidance we raised last quarter, and we are increasing our guidance again this quarter. As the boating industry continues to experience blistering consumer demand, we are committed to delivering as many boats as possible to our sustainable and loyal customer base. In addition, the magnitude of new customers we are seeing enter the marine space is ice cream on the apple pie. The foundation of our business, industry-leading innovation, a well-developed vertical integration infrastructure, and operational excellence will power our steadfast path toward continued industry domination. Customers continue to place custom orders, flocking toward larger, more expensive boats, and invariably selecting additional features and options which command higher ASPs and fuel the margin profile per boat. Demand has continued its unprecedented trajectory with approximately 90 percent of all boats being built in our fiscal fourth quarter being retail sold. This is unprecedented. By relying on our proven operational excellence initiatives, we remain confident that we will be able to maintain this record momentum throughout the remainder of our fiscal year 2021 and into 2022. However, while we continue to post production work rates well ahead of historic levels during the third quarter, the supply chain remains fragile as a result of COVID-related challenges, which to date we have been able to expertly navigate. The corridor brought additional unique supply chain challenges with the Texas winter storms and Kansas freeze that tempered our growth somewhat at cobalt. During a period of February record low temperatures in Kansas, we paused cobalt operations in the Otishe for three days to conserve power for the town. As the largest user of power in the town, we felt it was necessary to support our surrounding communities during this trying time and make sure citizens had the power to heat their homes. Petroleum-related plants in Texas were also significantly hampered by the Texas storms, affecting the availability of key materials, primarily resin, that is needed to build boats. The storm's direct impact resulted in Malibu and cobalt production being curtailed at various points during the quarter. I am extremely proud of our teams at each of our brands to quickly navigate the resulting supply constraints and still deliver a record-setting quarter. During the quarter, we did not let off the accelerator as we sped toward our production, development, and expansion targets. More specifically, during the quarter, we completed the final phase of COBOS expansion and improvement project, allowing further increases in production count that we will begin to see in fiscal 2022. This expansion and improvement of the gelcoat and lamination areas, along with our footprint expansions for small boats and cruisers, already completed in Phases 1 and 2, will enable up to a 50% revenue capacity increase over time. At the end of the third quarter, we broke ground to begin our 110,000 square foot addition at Maverick. This project is expected to take about 12 months and positions Maverick to increase production by 30% to 40% in units, and even more in revenue as we will be able to build a greater number of larger boats with higher margin profiles. This expansion will enable us to seize additional untapped demand. This formula may sound familiar, as it is almost exactly what we did at Pursuit, and this year we are seeing that huge payback as Pursuit has outperformed even our expectations for every financial metric. As summer approaches, we are selling more boats than roasted peanuts at a baseball game. The lack of boat shows has had exactly zero impact on orders. Given the virtual environment, we had a state-of-the-art virtual boat show format for Malibu and Axis, which generated a huge increase in leads. We hosted VIP events for Pursuit and Cobalt, showcasing our new models and engaging with prospects and purchasers alike in a very healthy control environment. Lastly, we place an increased emphasis on our digital marketing for all brands, ultimately driving substantial lead generation and reducing the sales cycle. As a result, all brands are sold out for the rest of model year 2021. Once model year 2022 is open for orders, we fully expect the first half of the year to be booked, confirming the insatiable thirst for innovative and industry-leading boats. Maverick is proving to be another home run and a perfect fit with our Malibu family of brands. The integration has gone very smoothly, and we are already seeing positive results from our demonstrated integration methodology while identifying many opportunities for growth to come. As we mentioned before, orders in-house for Maverick provide a 12- to 18-month runway without taking another order. While we have a strong opportunity to expand distribution for Maverick products, We will not act on this opportunity until we can supply existing dealers with all of the boats that they need. Whether it be Maverick, Pursuit, or our other brands, we are committed to servicing our current dealers first. This will likely put any dealer expansion plans on hold until fiscal 2023. Channel inventories remain at their lowest historical levels ever, and when 90% of boats produced in the fourth quarter are already retail sold, It means there will be very little provision for stock inventory at dealers. We see most orders continuing to be retail sold well into fiscal 2022 and now believe any meaningful increase in channel inventory will not be until fiscal 2023 at some point. We also believe that inventory in the channel will not reach historically acceptable levels until fiscal 2024. In our view, we have an unprecedented 24 to 36-month ramp period to get back to normal levels based on the current retail environment. Had it not been for the unique supply chain disruptions in the third quarter, sales and growth production rates would have been even stronger. We have seen a continuation of supply chain constraints in April, specifically with resin and some outboard engines, which are either in port on the West Coast or waiting to be accepted into the West Coast ports. We expect to continue to manage through supply chain issues through the fourth quarter, and I have the utmost confidence in our team's ability to navigate any additional headwinds as demonstrated by our revised outlook for the fiscal year that we increased today. Looking ahead, our team's unwavering commitment to our growth strategy will enable us to continue progressing on our strategic initiatives and advancement of innovation within the marine industry. We view this as a great opportunity for our brands to sustain growth, allowing dealers to have only the newest and the best models. Aged inventory and promotions are almost nonexistent, allowing dealers to command high margins, making them stronger as well. We continue to see gross margin benefit from our operational excellence efficiencies and our unparalleled vertical integration strategy, which allows us to take control of a greater portion of our supply chain, further differentiating Malibu from our competition. And as always, our proven acquisition strategy of acquiring premium companies with improvement opportunities remains the focus. As we wrap up fiscal year 2021, I could not be prouder of our teams at each brand. They have been the reason that we were able to report such record-setting results quarter after quarter. Our team's commitment to leading the boating industry is our recipe for consistent victory and our largest catalyst for future growth. The people on our team and our dealers make this happen. We are achieving long-term sustainable success, and I am confident we will continue to be the clear winner in the voting space to deliver value to our shareholders. I will now turn the call over to Wayne to take you through our financial performance in more detail.

Thanks, Jack. In the third quarter, net sales increased 49.8% to $273.2 million, and unit volume increased 36.6%. to 2,454 boats compared to the prior year period. This increase was driven by broad-based strength in our market, as evidenced by larger, more expensive models across all businesses, additional volume at Malibu in pursuit, and our acquisition of Maverick. The Malibu and Axis brands represented approximately 57% of unit sales, or 1,385 boats. Cobalt represented 21%, or 504 boats. and saltwater fishing made up the remaining 565 boats. Consolidated net sales per unit increased 9.7% to approximately $111,300 compared to the prior period, primarily driven by a favorable mix across all of our brands. Gross profit increased 57.1% to $72 million, and gross margin was 26.4%. an increase of 130 basis points from the prior year period. Selling and marketing expenses increased 2.1 percent or $0.1 million to $4.7 million in the third quarter of 2021 compared to the 2022 period. As a percentage of sales, selling and marketing expense decreased 80 basis points. General administrative expenses increased 90.8 percent or $8.8 million to $18.4 million as compared to the prior period. The increase was primarily driven by acquisition and integration-related costs due to the acquisition of Maverick. The percentage of sales, G&A expense, excluding amortization, increased 140 basis points to 6.7%. Net income for the third quarter increased 47.2% to $35.1 million. Adjusted EBITDA for the third quarter increased 56.7% to $57 million, and adjusted EBITDA margin increased 90 basis points to 20.9%. Non-GAAP adjusted fully distributed net income per share increased 61.1% to $1.82 per share. This is calculated using a normalized C-Corp tax rate of 23.6% and a fully distributed weighted average share count of approximately 21.7 million shares. For reconciliation of adjusted EBITDA and adjusted fully distributed net income per share to gap metrics, please see the table in our earnings release. Our team continues to execute at an extraordinarily high level as we deliver robust growth and margin expansion in spite of the challenges thrown our way. We look forward to the remainder of our fiscal year 2021 with continued confidence as we leverage unparalleled retail demand for all of our brands, drive further innovation, deliver on our proven acquisition strategy, and capitalize on our operational excellence. We now expect full-year revenue growth approaching 38% year-over-year and adjusted EBITDA margins of approximately 20.5%. As mentioned last quarter, this takes into account the impact of our acquisition of Maverick Boat Group for the second half of the fiscal year. In closing, our team continues to excel in today's dynamic environment. We are encouraged by the sustained heightened retail demand that our brands have been able to capture and are confident in our team's ability to harness and capitalize on this record momentum into fiscal 2022 and beyond. With that, I'd like to open the call up for questions.

If you would like to ask a question, please press star then the number one on your telephone keypad. Again, that is star, then the number one. And your first question is from Brett Andrews with KeyBank.

Hey, good morning, guys. So rolling all these variables together, like Texas, Kansas, et cetera, is there any way to frame up maybe what unconstrained production or unconstrained margins look like for you in this environment? I guess just any sense of what you think is being left on the table here in the near term.

You know, I think in the third quarter, the primary brands that were affected were Cobalt and Malibu. Cobalt was in the neighborhood of 75 to 80 units or so because of three days and various things like that. Malibu was not particularly any days lost, but just based upon how the supply chain was working. Certain days we might not have done the same number of boats. That's in the neighborhood of 70 boats or so. So, Brett, I think that that kind of speaks to the quarter You know, we're making tweaks. I think that as we get into model year 22, we're going to be able to take production up even more than where we have it today. And the other thing that I would point to is that, you know, the supply chain is going to continue to improve, in my opinion. Excuse me. The further that we get away from the Texas freeze, the better off we are. There's going to be more and more of the plants coming online, and it's not going to be the issue. And then I think that largely from a COVID aspect, We're a year into this and people have recognized the constraints that are there and the number of people that they need and the environment that we're in from a hot retail standpoint. So I think we'll continue to be able to build into 2022.

Got it. Okay. And then just a few around retail. You know, one, what are you seeing so far in April here in terms of retail trends? And then two, as we get into May and June with inventories so low in the how are you thinking about either your ability or the industry's ability to satisfy demand? I mean, are you still seeing customers put down deposits and wait for their boat even until after summer?

Yeah. So to the first question, Brad, it is not mitigated whatsoever. Talking to our dealers, it is just as hot as it has been. And I think that when you speak in terms of 90% of our units for the fourth quarter are retail sold, that bears that out. We are still seeing, I mean, I guess a couple of dealers have told me, and I think this is pervasive across the industry, is that there are waiting lists. The shortage of used boats is just as significant as it is for new boats. And so people are literally getting into a mantra or a mindset of, I'm going to get my name on a list and I'll take the boat whenever it's available.

Yeah, I mean, just to add to Jack, points there. With respect to April, we literally just saw the largest flooring payoff ever for a month of April. So I think that's an early indication for us of the strength of retail into April, while you don't have necessarily registration statistics, either from SSI or even internal, where they might lag a little bit. But that's a relatively real-time metric. So just incredible velocity.

Got it. And then just a quick one. How much is retail sold for fiscal 2022 at this point?

We've not put the orders in yet, but I suspect that for the first half of the year, you can't really speak to the second half yet. But for the first half, I think it's going to be probably well above 80%. All right.

Awesome. Thanks, guys.

Thanks.

Your next question is from Mike Schwartz with Truist Securities.

Hey, good morning, guys. I think, Jack, you made the comment and you prepared remarks about having visibility out 24 to 36 months just given the demand strength and the lack of inventory at retail. Maybe give us a sense, just from an operating or a production standpoint, what that level of visibility means when you're planning production and thinking about throughput over the next couple of years.

Yeah, I wouldn't say that we have visibility. What I was trying to convey, Mike, is that based upon the heavy retail selling, and we thought that by this time we would at least be starting to put inventory into the channel, we think that we have that ramp-up period of 24 to 36 months to get inventory levels back to where they would be. As far as the bill or tying it to the production plans, you know we've made a ton of investment in our facilities, Pursuit being one, We'll see that increase. We saw some of the increase this year. We'll continue to see that over the coming years. What we said is that we will be able to double revenue over about a three-year period. So we're well on our way to that. Maverick, we will have that completed in the fourth quarter of next year easily, barring anything that picks up. And so we'll be able to generate that, call it 40% to 50% increase in revenue over the coming period of time. With cobalt, we are already seeing it manifested in our cruisers. We've taken up the cruiser count there. And then as we finish now the small boat plant, then we'll see that start picking up in the second half of this year. And then we continue to make investments in Malibu. And there's some tweaks that we can make as well as additional investment that will help us to take Malibu up if this continues to be the case.

And then just maybe for Wayne, just in terms of the, I guess, the implied June quarter outlook relative to your four-year guidance, maybe give us a sense of what you're embedding in that outlook in terms of any production issues or issues sourcing product. Do you have maybe a cushion in there for anything that may go wrong?

Yeah, no, good question. Look, I would say, you know, If you look at our performance historically, Q3 has been the strongest of all our fiscal quarters, and this year is no different in that way. But as Jack said in his prepared remarks, the resident situation, I mean, there are challenges out there. There's some cushion. It's a relatively fluid situation. And so when we were on our last call, we said that there was a a decent amount of cushion, and I think we demonstrated that in the performance in the quarter. This quarter, I think that's a pretty solid guide. There's upside, but there's just a lot of variability in that scheduling right now.

OK, great. Thanks a lot. Thank you. Thank you.

Your next question is from Joe Altabella with Raymond James.

Thanks. Hey, guys. Good morning. Morning. Just want to shift over to the margin side for a second. You guys have gotten, obviously, to your target margin of 20%, even the margins earlier than you expected, in large part due to the work that you've done at Cobalt and Pursuit, for example. But what do you see as the big margin drivers going forward beyond the Pursuit playbook that you guys seem to be following now at Maverick, for example?

Beyond Maverick? Yeah, I think you hit it. I do want to kind of enunciate that a little bit. We'll continue to see margin uplift in pursuit. We've got plans for bigger boats, and then those bigger boats will have a higher margin per unit. Maverick, we're the same exact recipe in that we're going to be able to build more boats. We're going to be able to build larger boats. I think one of the things that I'll point out with Cobalt is you've seen a pretty big increase this quarter on the Cobalt ASP. And that's driven by a couple of things. A new product, the R6 series that we brought out at Cobalt, has been a huge impact in terms of that ASP. But the other is bringing that large plant expansion online and building more boats in those larger boats. That's also influencing that ASP. So then you move over to vertical integration. We always have two to three opportunities on the table. Vertical integration always adds tens basis points to our margin lines. And so we'll continue to grow that. And then, as you know, you can imagine, we had a phenomenal quarter, record-setting quarter. But when you have certain constraints that you're running into, it's going to have an impact on your efficiency. We'll continue to drive those efficiencies with all of our plants. And so, you know, if I boil it down, we probably have easily six to eight different variables that can continue to drive margins.

now that that's very helpful jack thank you just one quick housekeeping item if you could break out uh... maybe the sales and unit contribution from maverick in the quarter

Yeah, I don't think we're planning on breaking that out. I mean, I think it's – you can probably back into it decently based off of ASP performance and the implied ASP within the segment. But what I would tell you is that, you know, sequentially in year-over-year, it's up. We have been able to get more units out. If I were to describe the fiscal year there, obviously – all of the sales in Q1 and Q2 were produced out of the new factory, and that meant for a meaningful increase in terms of boats actually produced out of our Fort Pierce factory. you've seen a sequential growth into Q3 in that business because we've kind of assimilated into that new factory and been able to increase throughput. So not going to break it out specifically, but I think part of the margin reflection is the strength of that pursuit business, and Maverick was right on top of our plan.

Understood. Okay. Thanks, guys.

Thank you.

Your next question is from Jamie Katz with Morningstar.

Hi. Good morning. Nice quarter. Thanks for taking my questions. Thank you. I'm curious if you have any commentary on inflation. It's something that we've been here creeping into a lot of commentaries across different industries. So maybe thinking about how that might constrain inflation. Gross margin upside. And then we've also heard that much of the purchase decision at retail is due to availability of product. And I think historically the story was that Malibu was faster than the competitive set on production and getting units to the dealer. But I'm wondering if maybe that hiccup this quarter with weather has changed that at least temporarily. Thanks.

Sure. On the inflation side, our politicians say there is no inflation. But we know that there's inflation. And so I think that what you heard from other industries is accurate. The thing I'll point out, we're going to have inflation. And it's going to manifest itself into model year 22. But I think that the important thing, and I believe this is the case for all marine companies, the inflation that's in place is going to be passed along. Now, as it relates to affecting the margin, This is such a white-hot environment, and there is such a scarcity of product that I don't think it's going to cause anybody a bad eyelash when you consider our demographics. I'm very bullish on the market as a whole, and that it'll continue to be very strong. On the availability of product, you know, when we're talking about the units we're talking about, it's a pretty small amount. So there is no doubt that in our minds, We can continue to outproduce our competition in almost every brand, certainly Malibu and Axis. In the Malibu, Axis, Cobalt pursuit, we're going to win the day, and we'll be able to outproduce our competition.

Okay, and then this might be a little premature to ask, but as you think about going into the year-end sales event, given the environment, does it make sense to maybe continue to prune the magnitude of that event? in order to true up the dealer inventory base?

No, because we didn't print it last year. We doubled it. So what we did is I think we put more retail customers in play. As long as we can ride, as long as you have a buyer that's going to buy a boat and put their seat in the seat of that boat, you want to capture that. And so I think it becomes incumbent upon us to continue to have the accelerator pressed to the floor. That's how we win. That's how we've always won. But then also do everything that we can to increase counts in the various brands and start putting inventory into the channel earlier, which we believe that we can do both.

Thanks. Your next question is from Alex Meraki with Barenberg.

Good morning, guys. Thanks for taking my questions. You noted that you can't really expand the distribution footprint until FY23. However, given the production capabilities that likely exceed some other manufacturers with the supply chain constraints, are you seeing potential dealer wins and share gains coming out of the problems on the back end of it?

Yeah, yeah, absolutely. I think, you know, if you add If you have the opportunity to increase your distribution today, that's going to add to the market share. But I think that just given our production capabilities and our dealers, I don't want to leave them out. We have phenomenal dealers. And then our product, I believe that we will continue to add those tens of basis points in every brand on market share.

Got it. Okay. And then it sounds like there's some money left on the table, especially at Malibu and Cobalt. Do you think there's actually a revenue benefit for the two segments, given that some people have to purchase a model year 22 boat at a higher cost? In short, would this just result in better revenues if you view the businesses over a two-year period?

Yeah, I think that's the case. And I believe that that's probably the case for all the marine companies. You know, there's only so much we're going to be able to do in 2022, and then it'll roll into 23. So I do think that there will be enhanced revenue that comes as a result of that. Great.

Thanks, Jack.

Your next question is from Kevin Condon with Bayard.

Hi. Good morning, everyone, and thanks for taking my question. I wanted to ask you a little bit about the retail sold orders that you guys have been talking about. You've had some success. you know, selling, you know, production slots rather than, I guess, a boat that already exists. And longer term as customers, you know, are okay now waiting for a boat, do you see a potential change in, you know, the way consumers purchase boats, you know, or maybe a greater desire to be able to specify exactly what they want for content? You know, it seems like it's been good for your ASPs and some of your virtual tools and virtual boat shows, you know, that some of that activity could stick around, you know, long term. post-pandemic, if you will. But just wanted to get your thoughts on that.

Yeah, I don't think it's going to be material. We may see some count. If you look at it, you talk about stock boats produced in a year versus retail sold boats. It may go up two or three or four percentage points. But one of the things that I've cautioned in every quarter is there will become a point in time in which we're back to normality. Dealers will have channel inventory and There'll be stock on the floor that a person can get right away. Depending on the time of year, you're going to have a higher stock than lower. And so I think there's going to be normality that comes back into play. It may not be until 2023 or 2024, but it will come back. So it may be slightly higher, but there is an element of being able to go into a dealer and buy a boat that day and have it delivered on Saturday. and I don't think that will ever be lost on the end consumer.

And our market already has had a, you know, probably out-indexed a lot of the broader marine market in that custom, and our business overall, you know, has already had a heavy element of that. It's just enhanced at this point in time.

Awesome. Thanks for that.

Thank you.

Your next question is from Eric Wold with B. Reilly Securities.

Thanks. Good morning, guys. A couple questions kind of on follow-ups. Going back to the supply chain issues that you saw in the quarter, was that predominantly just efficiency of the plants and availability of parts, or was there also a meaningful input cost impact of the suppliers raising prices? And if the latter, did you take price – to completely offset that even knowing that this is probably a short lived impact and those price hikes stick if you did?

No, we don't. I mean, in the middle of a quarter like this, we would not raise prices on our dealers or on our customers. You know, there were there were some minimal price increases, but you know, we just stomach them. The real issue comes back to resin, you know, the Texas plants being shut down, you have a one time phenomenon that had a short-term impact that's continuing to mitigate, we think, over the next couple of months. And that was really the driver for any lost opportunity.

Got it. And then last question, given the success you're seeing with the virtual events and digital marketing with zero impact on demand, why go back to – traditional kind of boat show experience in the past. I guess, you know, how do you think about how you'll adapt going forward? If there's no impact on volume from a physical to a virtual world, let's say, for example, what would be the cost savings or efficiency look at being 100% virtual?

Well, I think, again, it comes back to the environment that we're in. It's really driving that virtual. We could hold a boat show today, and if there were stock in the boat shows, people would go and they would touch and feel and buy that boat at the boat show. But in the case of today, you have a boat show and there's no inventory to look at. It comes back again to that normality. I do believe, without a doubt, that you have this new environment and it's going to be more important in the first in the future to be virtual and it's going to enhance your ability to sell both and i believe that it will enhance the quickness of the sales cycle but when we get back to a scenario where stock is in the channel and both shows are ongoing that that's going to be back to taking precedence got it thanks jack there are no further questions at this time i will now turn the call over

to Mr. Jack Springer for closing remarks.

Jack Springer Thank you very much. In summary of the quarter, we delivered a record-setting third quarter and the best quarter in the company's history on almost every financial and operating metric. We posted production levels for Malibu in pursuit that significantly exceeded historical levels for the quarter, and we posted the fourth best production month ever for Maverick in March. We have been and will continue to capitalize on the hot retail environment, which will further support growth and strong earnings. And we remain optimistic that these tailwinds will remain elevated beyond calendar year 2021. Our operational excellence and vertical integration strategies remain second to none and a competitive differentiator continuing to drive profitability and unlocking maximum value from our product portfolio. Leveraging the agility of our team and the strength of our flexible business model, our strong third quarter performance demonstrated Malibu's resilience providing us with even more confidence that we will reach our new fiscal year 2021 guidance that we raised this morning. As a clear leader in the industry and with a long track record of exceptional financial performance, we are very well positioned to deliver continued value creation for our shareholders. I would like to thank you for your continued support as we sustain our growth journey. I hope those and those around you remain safe and healthy. Have a great day.

This concludes today's conference call. Thank you for participating. You may now disconnect.