Malibu Boats, Inc.

Good morning and welcome to the Malibu Boats conference call to discuss fourth quarter and full fiscal year 2022 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 reproduction of this call in whole or in part is not permitted without written authorization of Malibu Boats. As a reminder, today's call is being recorded. On the call today from management are Mr. Jack Springer, Chief Executive Officer, and Mr. Wayne Wilson, Chief Financial Officer, and Mr. Richie Anderson, Chief Operating Officer. I will turn the call over to Mr. Wilson to get it 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 fiscal fourth quarter and full year 2022 financials. We will then open the call for questions. A press release covering the company's fiscal fourth quarter and full year 2022 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 all for joining the call. Fiscal year 2022 was another record year for Malibu boats, which included fantastic fourth quarter results that surpassed expectations. Despite persistent supply chain and inflationary headwinds impacting the broader marine industry, Our differentiated operating model, vertical integration capabilities, and strategic leadership continues to shine through, helping us persevere and be the market leader. For fiscal year 2022, net sales increased nearly 31% to a record $1.2 billion. Gross margin remained strong at 25.5%, and adjusted EBITDA grew 30% to a record $247 million, while adjusted EBITDA margin remained relatively consistent at 20.3%. During the fiscal year, we have met unwavering demand by amping up our production capabilities through our vertically integrated model. As a result, we supported strong order volumes and ultimately exceeded our full year guide. Malibu continues to set the tone, led by our operational excellence, premium brands, and unmatched manufacturing capabilities across our differentiated portfolio. We look to carry this momentum forward into the 2023 fiscal year, supported by our new model year products. Retail demand remained very strong and has continued to support extremely robust ASPs across all brands. During the fiscal year, we did a masterful job of optimizing price in a difficult, supply-constrained environment compared to the broader marine industry. With many competitors across our segments raising prices into the double digits year over year, we are proud to deliver our industry-leading innovation with minimal price increases comparatively, which will be a competitive advantage. As many boat manufacturers experience, we did see a slight pause with the delayed spring. However, retail demand bounced back with dealers seeing a quick recovery around Memorial Day that carried through the quarter end. As a result, we have orders extending well into the first half of fiscal year 2023, and they show no signs of slowing. The strength of the Malibu consumer has proven resilient. With our tried and true experience successfully navigating through challenging market cycles, we are confident in our strategic and operational capabilities coupled with our ability to execute in any macro environment. Across all of our brands, we are performing at very high levels. Led by Malibu and Cobalt, we have consistently increased production volumes to keep pace with strong retail orders and have already begun to build back inventory in the channel in these segments. At this time of year in a freshwater environment, that is important because buyers want the boat right away to enjoy the last few weeks of the season before cold weather. We believe this will give us an advantage over the first and early second quarters of fiscal 2023. While Malibu and Cobalt have begun to build back some of our channel inventory, our saltwater brands, which are still seeing higher than normal number of retail sold orders, have yet to make the same step forward, and channel inventories remain very low. Although, excuse me, Although marine-wide supply chain issues continue to limit the channel build across our brands, and especially in the saltwater brands, we now believe that if the supply chain cooperates, we will see inventory begin to build at a better pace in the second half of fiscal year 2023. We and other marine experts continue to believe that channel inventories will not reach normal levels until the end of calendar 2023 or the beginning of calendar 2024. This provides us with a great ramp-up opportunity despite any macroeconomic conditions that may exist. Headwinds driven by supply chain disruptions continue to be the limiting factor to normalizing production, with the biggest issues continuing to come from engines across all manufacturers, windshields, electronics, and imports from Asia driven by continuing port congestion on the west and east coast. As we have stated in the past, we maintain that any real improvement in the supply chain will not begin until the first half of calendar year 2023, and we are in an optimal position to execute as these headwinds improve and customers start coming back into dealerships looking for stock boats. Despite these headwinds, our production capabilities have never been stronger. Our recent acquisition of Malibu Electronics represents just another example of our strategic leadership and foresight in managing our supply chain. Importantly, we would not have been able to ship the volume that we did at Malibu and Cobalt without the addition of Malibu Electronics to our vertically integrated model. We will only continue to see the benefits compound as we ramp up production in the quarters to come. Turning to our market performance, we continue to hold our own in every brand. And in particular, I couldn't be prouder of the team at Cobalt. As you know from past calls, Cobalt was late to the game in the outboard market when we acquired them. It was an immediate product focus for us, and we have since expanded the number of models from three to seven with more to come. For context, in June of 2018, Cobalt's outboard market share was approximately 4.4% in our competitive segment. Based on the early June 2022 numbers released last month, Cobalt's outboard share is now up to 18.1% year to date. In just the last year alone, we have increased our outboard market share by 600 basis points and look to maintain this trajectory in the quarters to come. Whether it be Malibu, Axis, Cobalt, Pursuit, or Maverick, no one has a track record of success in designing and bringing new products and innovations to market. We win hands down on product and are very excited to release our incredible 2023 product lineup. For Malibu and Axis, we are again introducing four new boats, which is far more than any other competitor. This includes the all-new Malibu 22 LSV and 26 LSV and the Axis A225 and T235. We are especially excited about our new Malibu 26 LSV. This 26-foot monster of a wave and weight machine is the largest boat ever built by Malibu and will serve a market that is growing in demand at every turn. There are also compelling new features which will debut on this model and extend across our other Malibu models. While there is a plethora of new and compelling features, I will give you a taste of three in particular. For several years, our focus on features has been around functionality, what makes the customers experience more convenient, and ergonomics. Case in point, we are introducing the Max Pivot Seat, which smoothly changes between multiple positions and functional uses. And it now includes a bench seat, a bed, and a fully functional table. Our new Malibu stereo system now features amplifiers that are 70% smaller, subwoofers, speakers, improved DSP tuning capabilities, and a transom remote, which will take the user into the next stage of sound. And lastly for Malibu, our rudder position sensor, which displays on the command center's main screen, will help enable ease in docking, slow speed maneuvering, and takeoffs with riders. Turning to Cobalt, building on our R33 series with the stern drive boat release in fiscal year 2022, we have recently announced the R33 outboard version for our coastal customers. The hunger for these two boats has been loud and clear, with demand exceeding what we had initially projected by a large margin, which is a nice problem to have. In just three weeks at the Cobalt dealer meeting, we will be unveiling our new R35 stern and R35 outboard boats for a first look by our dealers. There's no doubt that these two exceptional boats will also be in high demand as we make them available to the public after the first of the year. Two features for Cobalt that I'm excited to talk about are the new seatkeeper option that eliminates up to 95% of boat roll. The marine industry has seen this feature become a must-have for boats over 30 feet in the saltwater environment, and we will make this feature available on our two new R33s as well as the two new R35s. Secondly, we are introducing a side boarding door option for the R33 standard and the R33 outboard, as well as the R35 standard and the R35 outboard. This option provides effortless side entry and access to the boat and is very similar to the version offered on many Pursuit models. At Pursuit, during the beginning of our fiscal year in July, we introduced our largest boat ever built at Pursuit with the OS 445. This offshore boat, which features massive living accommodations, first-in-class bow seating, and an incredible amount of storage, has already amassed orders for the next year and a half, despite just now being seen in the wild. In the next couple of months, we will introduce a new boat on the other end of the link spectrum, the brand-new S-248, which will capture that smaller saltwater market. There will be a third boat introduced in the second half of the model year that is a white space boat, that we expect will drive significant volume over the next few years. For Maverick Boat Company, we are launching our first new product since we acquired the company, with the unveiling of the new 2023 Pathfinder 2400 TRS, which will be introduced at the MBG dealer meeting next week. Our team at Pathfinder was given full reign to build the boat of their dreams and beat the competition at every turn. They have done just that. and we expect the line to buy this boat to be longer than a Sunday after church at a Golden Corral buffet. As we end another record year, I am proud of the significant progress our team continues to make. We are the best, and we continue to get better every single year. We have set ourselves in a unique position to continue our pace of ramping production. Heading into fiscal year 23, we are on track to start our channel build, and we remain confident in the outlook as demand remains high. As we have stated over the past 18 months, even if there is a downside scenario, our previous experience, best-in-class operations, and battle-tested strategic leadership will mitigate these potential headwinds, allowing us to maintain strong margins in the quarters to come. Overall, our team's hard work, commitment to excellence, and agility in the midst of a challenging supply chain environment has delivered superior results, allowing us to cruise past the competition, deliver more boats to our customers, and maintain our track record of success. As we embark on fiscal year 2023, we believe our future remains exceptionally bright. We have a winning playbook demonstrated by over a dozen years of continuing success. From unprecedented consumer demand, the introduction of our new model year 2023 products, historically low dealer inventories, our unbeatable culture of operational excellence and vertical integration, We are extremely well positioned to drive substantial growth and profitability, all the while delivering long-term value for our shareholders. I will now turn the call over to Wayne for further remarks on the quarter.