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Item 1. Business

2021-08-26 compared with 2020-08-31 · 174 added, 137 removed, 313 unchanged (50% of the section changed)

Unless otherwise expressly indicated or the context otherwise requires, in this Annual Report on Form 10-K:

• we use the terms “Malibu Boats,” the “Company,” “we,” “us,” “our” or similar references to refer (1) prior to the consummation of our IPO on February 5, 2014, to Malibu Boats Holdings, LLC, or the LLC, and its consolidated subsidiaries and (2) after our IPO, to Malibu Boats, Inc.

• we use the terms “Malibu Boats,” the “Company,” “we,” “us,” “our” or similar references to refer (1) prior to the consummation of our initial public offering, or "IPO" on February 5, 2014, to Malibu Boats Holdings, LLC, or the LLC, and its consolidated subsidiaries and (2) after our IPO, to Malibu Boats, Inc.

and its consolidated subsidiaries;

• we refer to our initial public offering of Class A common stock on February 5, 2014, as our “IPO”;

• we refer to the owners of membership interests in the LLC immediately prior to the consummation of the IPO, collectively, as our “pre-IPO owners”;

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• references to “fiscal year” refer to the fiscal year of Malibu Boats, which ends on June 30 of each year;

• we refer to our Malibu branded boats as "Malibu", our Axis Wake Research branded boats as "Axis", our Cobalt branded boats as "Cobalt", and our Pursuit branded boats as "Pursuit";

• we refer to our Malibu branded boats as "Malibu", our Axis Wake Research branded boats as "Axis", our Pursuit branded boats as "Pursuit", our Maverick Boat Group branded boats as "Maverick Boat Group", and our Cobalt branded boats as "Cobalt";

• we use the term “recreational powerboat industry” to refer to our industry group, which includes performance sport boats, sterndrive and outboard boats;

• we use the term “performance sport boat category” to refer to the industry category, consisting primarily of fiberglass boats equipped with inboard propulsion and ranging from 19 feet to 26 feet in length, which we believe most closely corresponds to (1) the inboard ski/wakeboard category, as defined and tracked by the National Marine Manufacturers Association, or NMMA, and (2) the inboard skiboat category, as defined and tracked by Statistical Surveys, Inc., or SSI;

• we use the term “performance sport boat category” to refer to the industry category, consisting primarily of fiberglass boats equipped with inboard propulsion and ranging from 19 feet to 26 feet in length, which we believe most closely corresponds to (1) the inboard ski/wakeboard category, as defined and tracked by the National Marine Manufacturers Association, or NMMA, and (2) the inboard ski boat category, as defined and tracked by Statistical Surveys, Inc., or SSI;

• we use the terms “sterndrive” and “outboard” to refer to the industry category, consisting primarily of sterndrive and outboard boats ranging from 20 feet to 40 feet, which most closely corresponds to the sterndrive and outboard categories, as defined and tracked by NMMA, and the sterndrive and outboard propulsion categories, as defined and tracked by SSI;

in some instances, we provide market information based on specific boat lengths or boat types within the sterndrive or outboard categories to reflect our performance in those specific markets in which we offer products;

• references to certain market and industry data presented in this Form 10-K are determined as follows:

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manufacturers of exports to international markets of boats in any powerboat category for any period is based on data from the Port Import Export Reporting Service, available through March 31, 2021, and excludes such data for Australia and New Zealand.

This Annual Report on Form 10-K includes our trademarks, such as “Surf Gate,” “Wakesetter,” “SurfBand,” “Swim Step,” and “TrueWave” which are protected under applicable intellectual property laws and are the property of Malibu Boats.

This Annual Report on Form 10-K includes our trademarks, such as “ Monsoon,” “Surf Gate,” “Wakesetter,” “Surf Band,” and “Swim Step,” which are protected under applicable intellectual property laws and are the property of Malibu Boats.

This Form 10-K also contains trademarks, service marks, trade names and copyrights of other companies, which are the property of their respective owners.

Solely for convenience, trademarks and trade names referred to in this Form 10-K may appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks and trade names.

We are a leading designer, manufacturer and marketer of a diverse range of recreational powerboats, including performance sport boats, sterndrive and outboard boats under four brands—Malibu, Axis, Cobalt, and Pursuit.

We have the #1 market share position in the United States in the performance sport boat category through our Malibu and Axis brands and the #1 market share position in the United States in the 24’—29’ segment of the sterndrive category through our Cobalt brand, and we are among the leading market share positions in the fiberglass outboard fishing boat market with our Pursuit brand.

Our product portfolio of premium brands are used for a broad range of recreational boating activities including, among others, water sports such as water skiing, wakeboarding and wake surfing, as well as general recreational boating and fishing.

Our passion for consistent innovation, which has led to propriety technology such as Surf Gate, has allowed us to expand the market for our

products by introducing consumers to new and exciting recreational activities.

We are a leading designer, manufacturer and marketer of a diverse range of recreational powerboats, including performance sport boats, sterndrive and outboard boats under eight brands—Malibu, Axis, Pursuit, Maverick, Cobia, Pathfinder, Hewes and Cobalt.

Our product portfolio of premium brands are used for a broad range of recreational boating activities including, among others, water sports such as water skiing,

wakeboarding and wake surfing, as well as general recreational boating and fishing.

Our passion for consistent innovation, which has led to propriety technology such as Surf Gate, has allowed us to expand the market for our products by introducing consumers to new and exciting recreational activities.

We design products that appeal to an expanding range of recreational boaters and water sports enthusiasts whose passion for boating and water sports is a key aspect of their lifestyle and provide consumers with a better customer-inspired experience.

With performance, quality, value and multi-purpose features, our product portfolio has us well positioned to broaden our addressable market and achieve our goal of increasing our market share in the expanding recreational boating industry.

Our flagship Malibu boats offer our latest innovations in performance, comfort and convenience, and are designed for consumers seeking a premium performance sport boat experience.

Our flagship Malibu boats are designed for consumers seeking a premium performance sport boat experience and offer our latest innovations in performance, comfort and convenience.

Our Axis boats appeal to consumers who desire a more affordable performance sport boat product but still demand high performance, functional simplicity and the option to upgrade key features.

Our Cobalt boats consist of mid to large-sized luxury cruisers and bowriders that we believe offer the ultimate experience in comfort, performance and quality.

Our Pursuit boats expand our product offerings into the saltwater outboard fishing market and include center console, dual console and offshore models.

Retail prices for our boat models range from $60,000 to $800,000 .

Our Maverick Boat Group family of boats, including Maverick, Cobia, Pathfinder and Hewes, are highly complementary to Pursuit and its saltwater outboard offerings with a focus in length segments under 30 feet.

Our Cobalt boats consist of mid to large-sized luxury cruisers and bowriders that we believe offer the ultimate experience in comfort, performance and quality.

Our boats are constructed of fiberglass, available in a range of sizes, hull designs and propulsion systems (i.e., inboard, sterndrive and outboard).

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Our engineering teams closely collaborate with our manufacturing personnel in order to improve product quality and process efficiencies.

The results of this collaboration are reflected in our receipt of numerous industry awards, including the Boating Industry Magazine's "Top Product" award for the Malibu M240 in 2020, Pursuit S 378 in 2020, Malibu 25 LSV in 2019, Surf Band in 2018 and for our Integrated Surf Platform ("ISP") in 2016, as well as the Boating Industry's Best New and Innovative Products in 2019 for the Cobalt A29.

We have also been recognized as Sounding Trade Only Today’s “2019 Top Most Innovative Marine Companies,” and we earned the honors of "WSIA Innovation of Year" award for our Malibu M240 M-Line Hull with Surf Gate Fusion in 2020, Malibu Monsoon Engines in 2019 and our Malibu Command Center in 2017.

The results of this collaboration are reflected in our receipt of numerous industry awards, including;

• the WakeWorld 2020 Riders Choice Award for Wakesurfing and Wakeboarding Boat of the Year for the Malibu Wakesetter 23 LSV,

• the WakeWorld 2019 Innovation of the Year for the Power Wedge III,

• the Boating Industry Magazine's "Top Product" award for the new Malibu M220 in 2021, Malibu M240 in 2020, Pursuit S 378 in 2020, Malibu 25 LSV in 2019, Surf Band in 2018 and for our Integrated Surf Platform ("ISP") in 2016,

• the Boating Industry's Best New and Innovative Products in 2019 for the Cobalt A29,

• the Sounding Trade Only Today’s “Top Most Innovative Marine Companies" for 2020 and 2019, and

• the "WSIA Innovation of Year" award for our Malibu M240 M-Line Hull with Surf Gate Fusion in 2020, Malibu Monsoon Engines in 2019 and our Malibu Command Center in 2017.

We sell our boats through a dealer network that we believe is the strongest in the recreational powerboat industry.

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Impact of COVID-19 Pandemic

The COVID-19 pandemic has significantly impacted health and economic conditions throughout the United States and world, and it had a significant impact on our operations and financial results for fiscal year 2020.

On March 24, 2020, we elected to suspend operations at all of our facilities, and we subsequently resumed operations at our facilities in late April and May 2020.

As a result of the suspension of our production of boats, our net sales declined by $30.9 million, or 4.5%, and our unit sales decreased by 918 units, or 12.5%, for fiscal year 2020 compared to fiscal 2019.

However, sales at our dealers, while impacted negatively by COVID-19 in late March and through April, improved materially from May through July 2020 and that increase has depleted inventory at our dealers.

For more information on how the COVID-19 pandemic has impacted us and may continue to impact us, see the risk factor “The COVID-19 pandemic is adversely affecting, and is expected to continue to adversely affect, our operations, and those of our dealers and suppliers, thereby adversely affecting our business, financial condition and results of operations.” under Part I.

The COVID-19 pandemic has impacted our operations and financial results since the third quarter of fiscal year 2020 and continues to have an impact on us.

We elected to suspend operations at all of our facilities from March 2020 until late April and early May 2020, depending on the facility.

During the first half of fiscal 2021, we constrained our production levels in an attempt to allow our supply chain to more fully recover from the impacts of COVID-19 in preparation of higher wholesale manufacturing volumes that we planned for the second half of fiscal 2021.

While our net sales for fiscal year 2021 were impacted by our lower production levels, retail sales improved during fiscal year 2021 as consumers turned to boating as a form of outdoor, socially distanced recreation during the COVID-19 pandemic.

The increase in retail sales during fiscal 2021 combined with our lower wholesale shipment levels during the second half of fiscal year 2020 and constrained production in the first half of fiscal 2021 resulted in lower inventory levels at our dealers as of June 30, 2021 compared to last year.

We expect these lower inventory levels, while having the potential to impact retail sales in the near-term, will provide us strong order flow for our model year 2022 product, unless broader economic activity meaningfully contracts and negatively impacts customer demand.

For more information on how the COVID-19 pandemic has impacted us and may continue to impact us, see the risk factor “Our operations and sales have been adversely impacted by the COVID-19 pandemic, and we must successfully manage the demand, supply, and operational challenges associated with the actual or perceived effects of COVID-19 and the related

widespread public health crisis..” under Part I.

of this Form 10- K, and “Management’s Discussion and Analysis of Financial Conditions and Results of Operations-- Impact of the COVID-19 Pandemic” under Part I., Item 7.

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During calendar year 2020, retail sales of new recreational powerboats in the United States totaled $13.9 billion.

Of the recreational powerboat categories defined and tracked by the NMMA, we serve the top three categories of outboard, sterndrive and performance sport boat representing an addressable market of nearly $9.8 billion in retail sales through our Malibu, Axis, Cobalt, and Pursuit brands.

Of the recreational powerboat categories defined and tracked by the NMMA, we serve the top three categories of outboard, sterndrive and performance sport boat representing an addressable market of nearly $11.7 billion in retail sales through our Malibu, Axis, Pursuit, Maverick Boat Group and Cobalt brands.

The following table illustrates the size of our addressable market in units and retail sales for calendar year 2020:

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Leading Market Share Positions .

According to SSI, we have held the number one market share position, based on unit volume, in the United States among manufacturers of performance sport boats for each calendar year since 2010 including 2019.

We maintain a leading market share position in a number of recreational boating categories with our various brands.

According to SSI, in 2020 we held the number one market share position in the United States for performance sport boats with our Malibu and Axis brands, the number one market share position in the United States for the 24’—29’ segment of the sterndrive boat category through our Cobalt brand, and the number two market share position in the outboard fiberglass fishing market that our Pursuit and Maverick Boat Group brands serve, in each case based on unit volume.

We have grown our U.S.

market share in this category through our Malibu and Axis brands from 24.5% in 2010 to 32.7% in 2019.

Furthermore, we also hold the number one market share position in the 24’—29’ segment of the sterndrive boat category, through our Cobalt brand according to SSI.

Cobalt has expanded its market share in this segment from 14.2% in 2010 to 35.0% in 2019.

With our Pursuit brand we hold the number two market share position in the offshore boat category for calendar year 2019.

Pursuit has expanded its market share in this segment from 17.7% in 2010 to 18.8% in 2019.

market share in the performance sports boat category from 24.5% in 2010 to 31.7% in 2020 and we have expanded our market share in the 24’-29’ segment of the sterndrive boat category from 14.2% in 2010 to 36.1% in 2020.

Our Pursuit brand has gained share within its market since our acquisition of Pursuit and we are positioned to gain a broader share of the overall outboard fiberglass fishing market with our Maverick Boat Group brands.

Industry-leading Product Design and Innovation.

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Our commitment to developing new boat models and introducing new features are reflected in the fact we consistently and successfully bring multiple new model introductions year after year.

Focus on V ertical Integration Opportunities.

We have vertically integrated a number of key components of our manufacturing process, including the manufacturing of our own engines, boat trailers, towers and tower accessories, machined and billet parts, and tooling.

Focus on Vertical Integration Opportunities.

We began including our engines, branded as Malibu Monsoon engines, in our Malibu and Axis boats for model year 2019.

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Among the most innovative and sought after features on our boats has been Surf Gate.

Together with Power Wedge and Surf Band, we believe that these patented technologies will continue to drive demand for our products and increase margins across our brands.

Together with Power Wedge and Surf Band, we believe that these patented technologies will continue to drive demand for our

products and increase margins across our brands.

In fiscal 2018 we acquired Swim Step, through our acquisition of Cobalt, which further increases the appeal of our product portfolio.

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Highly Recognized Brands.

We believe our Malibu, Axis, Cobalt and Pursuit brands are widely recognized in the recreational powerboat industry, which helps us reach a growing number of target consumers.

We believe our Malibu, Axis, Pursuit, Maverick Boat Group and Cobalt brands are widely recognized in the recreational powerboat industry, which helps us reach a growing number of target consumers.

For over 30 years, our Malibu brand has generated a loyal following of recreational boaters and water sports enthusiasts who value the brand’s premium performance and features, while our Axis brand has grown rapidly as consumers have been drawn to its more affordable price point and available optional features.

We also acquired two well-known brands in Cobalt and Pursuit.

Cobalt has developed into one of the industry’s most recognizable and respected brands over its 50-year history.

For over the past 40 years, Pursuit has established a premium brand through its extensive dealer network and longstanding commitment to customers.

We also have acquired six well-known brands in Pursuit, Cobia, Pathfinder, Maverick, Hewes and Cobalt.

For the past 35 years, Pursuit has established a premium brand in the saltwater outboard fishing market through its extensive dealer network and longstanding commitment to customers and Maverick Boat Group has developed a strong reputation for saltwater outboard product offerings with its brands of center console and bay boats.

Cobalt has developed into one of the industry’s most recognizable and respected large-sized luxury cruiser brands over its 50-year history.

We build on our brand recognition and support through a series of marketing initiatives coordinated with our dealers or executed directly by us.

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We are able to engage consumers across multiple categories within the recreational powerboat industry.

Malibu and Axis are market leaders in the performance sport boat category, Cobalt operates in the sterndrive category and has also expanded into wake surfing and outboard product lines, and Pursuit competes in the saltwater outboard fishing boat market with center console, dual console and offshore models.

We intend to capitalize on the recovery in the recreational powerboat industry through the following strategies:

Malibu and Axis are market leaders in the performance sport boat category, Pursuit and Maverick Boat Group compete in the saltwater outboard fishing boat market with center console, dual console, offshore models, flats and bay boats, and Cobalt operates in the sterndrive category and has also expanded into wake surfing and outboard product lines.

We intend to grow our leading market share positions within recreational powerboat industry through the following strategies:

Continue to Develop New and Innovative Products in Our Categories.

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Second, we seek to develop and integrate innovative new or enhanced optional feature offerings into our boats.

For our Malibu and Axis brands this includes Surf Gate, Malibu Command Center, Power Wedge III, Tower Mister, Fast Fill Ballast System, G5 Tower and integrated flip down Swim Step.

For our Malibu and Axis brands, this includes Surf Gate, Malibu Command Center with Wireless Charging, Power Wedge III, Tower Mister, Fast Fill Ballast System, G5 and the power actuated Gx Towers, integrated Garmin touch screens on all new model Axis, and integrated flip down Swim Step, including the electric version on some new Malibu models.

For Cobalt, it includes outboard propulsion models to expand its addressable market.

Cobalt has been able to achieve growth in recent years partly by pivoting and expanding into the sterndrive surfing category through its Cobalt Surf series, which now features Surf Gate.

In addition, other new features have included Splash and Stow and a new electronic flip down Swim Step for model year 2021 boats.

For the Pursuit brand, the focus has been on expanding our award winning Dual Console, Sport and Offshore product offerings that continue to combine innovative features and dependable performance in refined designs that accommodate a broad array of activities on the water, including the Electric Sliding Entertainment Center on the new S 378.

We intend to continue releasing new products and features multiple times during the year, which we believe enhances our reputation as a leading-edge boat manufacturer and provides us with a competitive advantage.

Cobalt has been able to achieve growth in recent years partly by expanding its presence in the sterndrive surfing category through its Cobalt Surf series, which now features Surf Gate.

In addition, other new features have included Splash and Stow, the hydraulic submersible swim platform and a new electronic flip down Swim Step.

For the Pursuit brand, the focus has been on expanding our award winning Dual Console and Sport product offerings that continue to combine innovative features and dependable performance in refined designs that accommodate a broad array of activities on the water, including the Electric Sliding Entertainment Center on the S 378 and the sliding second row center console seating on the S 428.

We intend to continue releasing new products and features

multiple times during the year, which we believe enhances our reputation as a leading innovator in boat manufacturing and provides us with a competitive advantage.

We are in the early stages of developing enhanced product development roadmaps for our Maverick Boat Group brands and believe our experience driving innovation at our other brands will translate to enhanced innovation there.

Further Strengthen Our Dealer Network.

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One of our growth strategies is to drive growth in our business through targeted acquisitions that add value while considering our existing brands and product portfolio.

We have focused on growth through acquisitions both domestically and abroad, as evidenced by our acquisition of Pursuit in October 2018, our acquisition of Cobalt in July 2017 and our acquisition of our Australian licensee in October 2014.

The primary objectives of our acquisitions are to expand our presence in new or adjacent categories, to expand into other product lines and business that may benefit from our

operating strengths, and to increase the size of our addressable market.

We acquired Maverick Boat Group in December 2020, Pursuit in October 2018, and Cobalt in July 2017.

The primary objectives of our acquisitions are to expand our presence in new or adjacent categories, to expand into other product lines that may benefit from our operating strengths, and to increase the size of our addressable market.

When we identify potential acquisitions, we attempt to target companies with a leading market share, strong cash flows, and an experienced management team and workforce that provide a fit with our existing operations.

After completing an acquisition, we focus on integrating the company with our existing business to provide additional value to the combined entity through cost savings and revenue synergies, such as the optimization of manufacturing operations, improved processes around product development, enhancement of our existing dealer distribution network, administrative cost savings, shared procurement, vertical integration and cross-selling opportunities.

After completing an acquisition, we focus on integrating the company with our existing business to provide additional value to the combined entity through cost savings and revenue synergies, such as the optimization of manufacturing operations, improved processes around product development, enhancement of our existing dealer distribution network, accelerated innovation, administrative cost savings, shared procurement, vertical integration and cross-selling opportunities.

Our Products and Brands

We design, manufacture and sell recreational powerboats, including performance sport boats, sterndrive and outboard boats across four world-renowned brands:

Malibu, Axis, Cobalt and Pursuit.

We believe we deliver superior performance for general recreational purposes with a significant focus on water sports, including wakeboarding, water skiing and wake surfing

as well as general recreational boating and fishing.

We design, manufacture and sell recreational powerboats, including performance sport boats, sterndrive and outboard boats across eight world-renowned brands:

Malibu, Axis, Pursuit, Maverick, Cobia, Pathfinder, Hewes, and Cobalt.

We believe we deliver superior performance for general recreational purposes with a significant focus on water sports, including

wakeboarding, water skiing and wake surfing as well as general recreational boating and fishing.

In addition, we also offer various accessories and aftermarket parts.

The following table provides an overview of our product offerings by brand:

Brand Number of

Reportable Segment Brand Number of

Models Lengths Retail Price

(In thousands) Description

Malibu 11 20'-25' $60-$210 Founded in 1982, Malibu targets consumers seeking a premium boating experience with our latest innovations in performance, comfort and convenience.

Malibu is comprised of three product lines:

• Wakesetter Series - Our line of highly-customizable boats offering our most innovative technologies and premium features, with the newest color options and interior finishes.

• M Series - Our line of ultra-premium towboats, featuring the Malibu M240, loaded with every technologically innovative feature we offer including our Integrated Surf Platform, premium luxury interiors, most advanced helm in the industry, and our most powerful engine.

• Response Series - Our line of high-performance water ski focused towboats completely redesigned in 2017.

Malibu Malibu 12 20'-25' $65-$215 Founded in 1982, Malibu targets consumers seeking a premium boating experience with our latest innovations in performance, comfort and convenience.

Across our three product lines, we offer a variety of products to customers from our Response Series tailored for high-performance water ski to highly customizable options in our Wakesetter series to our ultra premium models in the M Series.

Axis 5 20’-24’ $70-$120 Launched in 2009, Axis was formed to target a younger demographic by providing a more affordably priced, high quality, entry-level boat with high performance, functional simplicity and the option to upgrade key features such as Surf Gate.

Axis currently features five models.

Cobalt 16 20’-36’ $60-$450 Founded in 1967, Cobalt is a premium luxury sterndrive and outboard boat manufacturer available in five product lines:

• Gateway Series - Our entry level fiberglass sterndrive sporting the refined quality of Cobalt boats.

The Gateway series is designed to allow for the comfort, convenience, and performance typically found on much larger Cobalt boats while allowing for an “athletic” use.

• R Series - Our mid-range premium fiberglass sterndrive boat in the largest segment that has a sleek, powerful look with a smooth ride and exceptional performance.

• A Series - Our super premium fiberglass sterndrive boat that blends yacht-like qualities with a unique, powerful look as well as a smooth ride and exceptional performance.

• SC Series - Our line of outboard boats designed for increased saltwater durability and ease of maintenance.

• Surf Series - Focused on watersports and based on our Gateway Series and R Series.

Features a sport tower for higher tow point, storage racks, integrated billet board racks, optional tower lights, ballast, surf systems and directional speakers with a look designed to appeal to our younger customers

Pursuit 15 22'-44' $80-$800 Launched in 1977, Pursuit is a premium brand of saltwater outboard fishing boats available in three product lines:

• Sport Center Console Series - Our center console series provides a central helm and open hull to provide 360-degree access to the water and is ideal for fishing.

• Dual Console Series - Our dual console series offers a versatile design ideal for casual cruising and entertainment provided by the superior and comfortable seating yet makes for an ideal fishing boat.

• Offshore Series - Our offshore series combines seaworthiness and fishability with the luxury of a cruiser and is designed for the conditions of the open sea and rigged with equipment for offshore fishing trips.

Saltwater Fishing Pursuit 14 24'-44' $100-$1,200 Launched in 1977, Pursuit is a premium brand of saltwater outboard fishing boats available in three product lines including our sports center consoles, dual consoles and our offshore series to provide customers with options for ideal fishing as well as casual cruising and luxury entertainment.

Cobia 14 20'-35' $55-$475 Founded in 1985, and acquired by Maverick Boat Group in 2005, Cobia models consist of center console and dual console vessels that are designed to promote ease of boating and fishing for all levels of anglers and boaters.

Pathfinder 8 20'-27' $50-$220 Launched in 1984, by the Maverick Boat Group, Pathfinder provides the most versatile inshore fishing boat.

The product of bay boats provides for dedicated anglers to fish and do so with comfort, safety and proven technology.

Maverick and Hewes 6 16'-21' $45-$105 Maverick, since 1984 and Hewes for 60 years have been designed to tailor to shallow inshore flats anglers.

These boats, with vacuum infused (VARIS) construction and enhanced performance, provide a legacy of dependability, unmatched ride, and exceptional craftsmanship.

Cobalt Cobalt 16 22’-36’ $65-$500 Founded in 1967, Cobalt is a premium luxury sterndrive and outboard boat manufacturer available in five product lines.

Our products tailor sterndrive from entry level to premium with options to expand some models with the patented SurfGate, as well as our outboard series for increased saltwater use.

Innovative Features

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Among our most successful and most innovative has been Surf Gate.

Introduced in July

2012 and initially patented in September 2013, Surf Gate is available as an optional feature on all Malibu Wakesetter models and Axis brand boats.

Introduced in July 2012 and initially patented in September 2013, Surf Gate is available as an optional feature on all Malibu, Axis and certain Cobalt models.

Surf Gate has revolutionized the increasingly popular sport of wake surfing.

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By employing precisely engineered and electronically controlled panels, Surf Gate alleviates this time-consuming and cumbersome process, allowing boaters to easily surf behind an evenly weighted boat without the need to wait for ballast changes.

For the 2016 model year, we introduced our patented Surf Band technology that allows the rider to control the surf wave, shape, size and side.

Some of our other notable innovations include Power Wedge III, G5/GX Tower, Electronic Dashboard Controls, Swim Step, Tower Mister, Splash and Stow and TrueWave.

We won the Boating Industry Magazine's "Top Product" award for the Malibu M240 in 2020, Pursuit S 378 in 2020, Malibu 25 LSV in 2019, Surf Band in 2018 and for our Integrated Surf Platform ("ISP") in 2016, as well as the Boating Industry's Best New and Innovative Products in 2019 for the Cobalt A29.

We have also been recognized as Sounding Trade Only Today’s “2019 Top Most Innovative Marine Companies,” and we earned the honors of "WSIA Innovation of Year" award for the Malibu M240 M-Line Hull with Surf Gate Fusion in 2020, Malibu Monsoon Engines in 2019 and our Malibu Command Center in 2017.

We have also developed our patented Surf Band technology that allows the rider to control the surf wave, shape, size and side.

Some of our other notable innovations include Power Wedge III, G5 and the power actuated GX Tower, Electronic Dashboard Controls, Swim Step, Tower Mister, Splash and Stow and TrueWave.

We won the Boating Industry Magazine's "Top Product" award for the Malibu M220 in 2021, Malibu M240 in 2020, Pursuit S 378 in 2020, Malibu 25 LSV in 2019, Surf Band in 2018 and for our Integrated Surf Platform ("ISP") in 2016, as well as the Boating Industry's Best New and Innovative Products in 2019 for the Cobalt A29.

We have also been recognized as Sounding Trade Only Today’s “2020 and 2019 Top Most Innovative Marine Companies,” and we earned the honors of "WSIA Innovation of Year" award for the

Malibu M240 M-Line Hull with Surf Gate Fusion in 2020, Malibu Monsoon Engines in 2019 and our Malibu Command Center in 2017.

We also offer an array of less technological, but nonetheless value-added boat features such as gelcoat upgrades, upholstery upgrades, engine drivetrain enhancements (such as silent exhaust tips, propeller upgrades and closed cooling engine configuration), sound system upgrades, bimini tops, boat covers and trailers which further increase the level of customization afforded to consumers.

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We establish performance criteria that our dealers must meet as part of their dealer agreements to ensure our dealer network remains the strongest in the industry.

As a member of our network, dealers in North America may qualify for floor plan financing programs, rebates, seasonal discounts, promotional co-op payments and other allowances.

In Europe, dealers may qualify for floor plan financing programs.

We expect this will strengthen our dealers ability to sell our products in Europe.

As a member of our network, dealers may qualify for floor plan financing programs, rebates, seasonal discounts, promotional co-op payments and other allowances.

We believe our dealer network is the most extensive in the market.

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As of July 1, 2021, our dealer network consisted of over 300 dealer locations servicing the performance sport boat, sterndrive, and outboard markets strategically located throughout the U.S.

Approximately 50% of our dealer locations have been with us, or with Cobalt and Pursuit prior to our acquisition of them, for over ten years.

Approximately 50% of our dealer locations have been with us, or with Pursuit, Maverick Boat Group or Cobalt, prior to our acquisition of them, for over ten years.

Our top ten dealers represented 38.7%, 38.5% and 39.6%, of our net sales for fiscal year 2021, 2020 and 2019, respectively.

The top ten dealers for each of Malibu, Cobalt and Pursuit represented approximately 45.8%, 45.3% and 82.7%, respectively, of net sales in fiscal year 2020.

The top ten dealers for each of Malibu, Saltwater Fishing and Cobalt represented approximately 47.6%, 64.0% and 52.3%, respectively, of net sales in fiscal year 2021.

The top ten dealers for each segment are not the same across all segments.

Sales to our dealers under common control of OneWater Marine, Inc.

represented approximately 15.2%, 15.1% and 10.7% of consolidated net sales in fiscal years 2020, 2019, and 2018 respectively including approximately 7.6%, 15.7% and 34.5% of consolidated sales in fiscal year 2020 for Malibu, Cobalt and Pursuit, respectively.

represented approximately 16.3%, 15.2% and 15.1% of consolidated net sales in fiscal years 2021, 2020, and 2019 respectively including approximately 14.0%, 31.8% and 19.0% of consolidated sales in fiscal year 2021 for Malibu, Saltwater Fishing and Cobalt, respectively.

We consistently review our distribution network to identify opportunities to expand our geographic footprint and improve our coverage of the market.

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International

We have an extensive international distribution network for our Malibu, Axis, Cobalt and Pursuit brands.

We have an extensive international distribution network for our Malibu, Axis, Pursuit, Maverick Boat Group and Cobalt brands.

As of July 1, 2021, our dealer network consisted of over 100 dealer locations throughout Europe, Asia, Middle East, South America, South Africa, and Australia/New Zealand.

We service our independent dealers in the Australian and New Zealand markets who sell our Malibu and Axis brand boats through our Australian operations acquired in October 2014.

Dealer Management

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Our dealer agreements also are typically terminable without cause by the dealer with 60 days’ prior notice and by us for a dealer failing to meet performance criteria.

We may also generally terminate these agreements

immediately for cause upon certain events.

We may also generally terminate these agreements immediately for cause upon certain events.

Pursuant to our dealer agreements, the dealers typically agree to, among other things:

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Our brands employ dealer incentive programs that have been refined through decades of experience at each brand and may, from time to time, include the following elements:

• Rebates and Discounts .

Our domestic dealers agree to volume commitments that are used to determine applicable rebates or discounts.

Our domestic dealers agree to volume commitments that are used to determine applicable rebates.

The structure of the dealer incentive depends on the brand represented.

If a dealer meets its volume commitments as well as other terms of the dealer performance program, the dealer is entitled to the specified amounts subject to full compliance with our programs.

Failure to meet the commitment volume or other terms of the program may result in partial or complete forfeiture of the dealer’s rebate or discount.

Dealers of the Malibu, Axis and Pursuit product line may earn certain co-op reimbursements upon reaching a specified level of qualifying expenditures.

Failure to meet the commitment volume or other terms of the program may result in partial or complete forfeiture of the dealer’s rebate.

Dealers of the Malibu, Axis, Pursuit and Maverick Boat Group product line may earn certain co-op reimbursements upon reaching a specified level of qualifying expenditures.

• Free flooring .

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Our exposure under repurchase agreements with third-party lenders is mitigated by our ability to reposition inventory with a ne w dealer in the event that a repurchase event occurs.

The primary cost to us of a repurchase event is any margin loss on the

resale of a repurchased unit.

The primary cost to us of a repurchase event is any margin loss on the resale of a repurchased unit.

Historically, we have been able to resell repurchased boats at an amount that exceeds our cost.

In addition, the historical margin loss on the resale of repurchased units has often been below 10% of the repurchased amount.

For fiscal year 2021, we did not repurchase any boats under our repurchase agreements.

For fiscal year 2020, we repurchased two units from a lender of one of our former dealers and those units were subsequently resold in fiscal year 2020 above their cost and at a minimal margin loss.

For fiscal year 2019, we repurchased eight units from a lender of two of our former dealers and those units were subsequently resold in fiscal year 2020 above their cost and at minimal margin loss.

For fiscal year 2018, we did not repurchase any boats under our repurchase agreements.

Marketing and Sales

We believe that providing a high level of service to our dealers and end consumers is essential to maintaining our reputation.

Our sales personnel receive training on the latest Malibu, Axis, Cobalt, and Pursuit products and technologies, as well as training on our competitors’ products and technologies, and attend trade shows to increase their market knowledge.

Our sales personnel receive training on the latest Malibu, Axis, Pursuit, Maverick Boat Group and Cobalt products and technologies, as well as training on our competitors’ products and technologies, and attend trade shows to increase their market knowledge.

This training is then passed along to our dealers to ensure a consistent marketing message and leverage our marketing expenditures.

Malibu, Axis, Cobalt and Pursuit enjoy strong brand awareness, as evidenced by our substantial market share in their respective categories.

Our marketing strategy focuses on strengthening and promoting Malibu and Axis brands in the performance sport boat marketplace and the Cobalt and Pursuit brands in the outboard and sterndrive marketplaces.

In addition to the Malibu, Axis, Cobalt, and Pursuit websites and traditional marketing channels such as print advertising and tradeshows, we maintain an active digital advertising and social media platform for all brands, including use of Facebook and Twitter to increase brand awareness, foster loyalty and build a community of users.

In addition, we benefit from various Malibu, Axis, Cobalt and Pursuit user-generated videos and photos that are uploaded to websites including YouTube, Vimeo and Instagram.

Malibu, Axis, Pursuit, Maverick Boat Group and Cobalt enjoy strong brand awareness, as evidenced by our substantial market share in their respective categories.

Our marketing strategy focuses on building brand awareness and loyalty in the inboard towboat market with Malibu and Axis brands and the outboard and sterndrive markets with Pursuit, Maverick Boat Group and Cobalt brands.

Activating the marketing strategy involves creating custom content to be utilized in outbound marketing campaigns and social media to engage owners and prospects.

In addition to retail websites developed for each of those brands and their unique consumers, the brands also manage all other aspects of marketing including traditional print advertising and trade shows.

Product Development and Engineering

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Manufacturing

Malibu has five manufacturing facilities located in four U.S.

Malibu has six manufacturing facilities located in four U.S.

states and Australia.

We produce performance sport boats through our Malibu and Axis brands at our Tennessee and Australia manufacturing facilities and sterndrive and outboard boats through our Cobalt brand at our Kansas manufacturing facility and our Pursuit brand in Fort Pierce, Florida.

We completed expansion projects at our facilities in Kansas and Florida during fiscal year 2020.

We produce performance sport boats through our Malibu and Axis brands at our Tennessee and Australia manufacturing facilities;

we produce sterndrive and outboard boats through our Cobalt brand at our Kansas manufacturing facility;

and we produce saltwater outboard boats under our Pursuit and Maverick Boat Group brands in Fort Pierce, Florida.

We completed expansion projects at our facilities in Kansas (Cobalt) and Florida (Pursuit) during fiscal year 2020 and we are currently expanding in Florida (Maverick Boat Group) with expected completion in the first half of calendar 2022.

For our Malibu and Axis brands, we manufacture towers, tower accessories and stainless steel and aluminum billet at our California facility and engines and trailers at our Tennessee facility.

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Production of cruisers occurs on a dedicated line that allows for the increased time needed to add the additional content required for production of larger boats.

Trailers are also produced in a continuous flow manufacturing process involving cutting and bending of the main frame from raw top grade carbon steel,

painting using our state of the art system and installation of components.

We manufacture certain components and subassemblies for our boats, such as upholstery, stainless steel and aluminum billet and towers.

Our trailers are produced in a continuous flow manufacturing process involving cutting and bending of the main frame from raw top grade carbon steel, painting using our state of the art system and installation of components.

We also vertically integrated the production of our engines for Malibu and Axis and began installing our Malibu Monsoon Engines into our Malibu and Axis brand boats for model year 2019.

We manufacture certain components and subassemblies for our boats, such as upholstery, stainless steel and aluminum billet and towers, and soft grip flooring.

We procure other components, such as electronic controls, from third-party vendors and install them on the boat.

As noted elsewhere, we are marinizing our own engines for our Malibu and Axis brands.

We are marinizing our own engines for our Malibu and Axis brands.

Our tower-related manufacturing in California uses multiple computer-controlled machines to cut all of the aluminum parts required for tower assembly.

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We use disciplined mold maintenance procedures to maintain the usable life of our molds and to reduce surface defects that would require rework.

We have instituted scrap material reduction and recovery processes, both internally and with our supplier base, helping to manage our material costs.

We have instituted scrap material reduction and recovery processes, both internally and with our supplier base,

helping to manage our material costs.

Finally, we have implemented a quality management system to ensure that proper procedures and control measures are in place to deliver consistent, high-quality product, especially as our production volumes have increased.

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General Motors will provide up to a one-year warranty on the engines supplied to us and we have agreed to indemnify General Motors for claims and costs arising from or relating to the engines resulting from our actions.

In September 2019, in response to the United Auto Workers' ("UAW") strike against General Motors, we entered into purchase agreements with two suppliers for additional engines to supplement our inventory as General Motors suspended delivery of engine blocks to us during the UAW strike.

These agreements were fulfilled and completed during fiscal year 2020 and we have since continued the agreement with General Motors once their operations resumed after the labor strike.

In August 2018, in connection with our acquisition of Pursuit, we entered into a joint marketing agreement with Yamaha Motor Corporation, U.S.A., or Yamaha.

Under our agreement with Yamaha, in exchange for certain incentives we have agreed to purchase Yamaha outboard engines for use in at least 90% of all Pursuit and Cobalt branded boats that are pre-equipped with outboard motors when sold by us.

We must pay penalties to Yamaha if we do not achieve pre-determined purchase volume targets for each year of the agreement and for the entire term of the agreement, which is scheduled to expire on June 30, 2023, unless renewed by both parties.

No such penalties have been paid to date.

We have not experienced any material shortages in any of our raw materials, product parts or components.

Temporary shortages, when they do occur, usually involve manufacturers of these products adjusting model mixes, introducing new product lines or limiting production in response to an industry-wide reduction in boat demand.

We also have two joint marketing agreements with Yamaha Motor Corporation, U.S.A., or Yamaha, that require us to supply most of our boats that are pre-rigged with outboard motors with Yamaha outboard engines.

In August 2018, we entered into a joint marketing agreement with Yamaha that became effective upon completion of our acquisition of Pursuit.

Under our agreement with Yamaha, in exchange for certain incentives, we have agreed to purchase Yamaha outboard engines for use in all Pursuit and Cobalt branded boats that are pre-equipped with outboard motors when sold by us, except for up to 10% of Pursuit and Cobalt branded boats for sale in the United States.

In addition, Maverick Boat Group has an agreement with Yamaha that we assumed when we acquired Maverick Boat Group.

Under that agreement, Maverick Boat Group, in exchange for certain incentives, has agreed to purchase Yamaha outboard engines for use in all Maverick Boat Group branded boats that are pre- equipped with outboard motors when sold by us, except for up to 15% of Maverick Boat Group branded boats for sale in the United States and certain other limited exceptions.

Our agreements with Yamaha that cover our Cobalt, Pursuit and Maverick Boat Group branded boats are scheduled to expire on June 30, 2023, unless extended by the parties to such agreement.

We have experienced intermittent supply chain delays throughout the pandemic and also as a result of severe winter weather in certain parts of the United States.

Limited parts availability led us to limit our production levels during the first half of fiscal 2021 in an attempt to allow our supply chain to partially recover in preparation for higher manufacturing volumes that we planned for the second half of fiscal 2021.

We continue to see supply chain disruptions that we believe are caused by the dislocation in the labor and logistics markets as well as upstream supply challenges.

Insurance and Product Warranties

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Pursuit brand boats have a (1) limited warranty for a period of up to five years on structural components such as the hull, deck and defects in the gelcoat surface of the hull bottom, and (2) a bow-to-stern warranty of two years (excluding hull and deck structural components).

Maverick, Pathfinder and Hewes brand boats have (1) a limited warranty for a period of up to five years on structural components such as the hull, deck and defects in the gelcoat surface of the hull bottom and (2) a bow to stern

warranty of one year (excluding hull and deck structural components).

Cobia brand boats have (1) a limited warranty for a period of up to ten years on structural components such as the hull, deck and defects in the gelcoat surface of the hull bottom and (2) a bow to stern warranty of three years (excluding hull and deck structural components).

For each boat brand, there are certain materials, components or parts of the boat that are not covered by our warranty and certain components or parts that are separately warranted by the manufacturer or supplier (such as the engine).

Engines that we manufacture for Malibu and Axis models have a limited warranty of up to five years or five-hundred hours.

Our Malibu Monsoon engines that we manufacture for Malibu and Axis models have a limited warranty of up to five years or five-hundred hours.

Intellectual Property

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This is an important part of our business and we intend to continue protecting our intellectual property.

We currently hold 36 U.S.

patents, four Australian patents, one Canadian patent and one Japanese patent.

We also have eight pending U.S.

patent applications and one pending European patent application.

We own 45 registered trademarks in various countries around the world, including 21 U.S.

trademarks, five Australian trademarks, six Canadian trademarks and three European trademarks, all owned by Malibu.

Additionally, Cobalt owns six U.S.

trademarks and Pursuit owns four U.S.

Such trademarks may endure in perpetuity on a country-by-country basis, provided that we comply with all statutory maintenance requirements, including continued use of each trademark in each such country.

We also have nine pending trademark applications in the U.S.

By law, our patent rights have limited lives and expire periodically.

Our boat patent rights relate to boat design, features and components that we feel are important to our competitive position in our business.

Some of our well known patents include our Surf Gate and Swim Step for our Malibu and Cobalt segments and Power Wedge for our Malibu segment.

Our trademarks which are registered in the U.S.

and various countries around the world, generally may endure in perpetuity on a country-by-country basis, provided that we comply with all statutory maintenance requirements, including continued use of each trademark in each such country.

Some of our well known trademarks include:

(i) for our Malibu segment, Malibu, Axis, Monsoon, Power Wedge, Surf Band, Surf Gate, and Wakesetter;

(ii) for our Saltwater Fishing Segment, Pursuit, Cobia, Maverick, and Redfisher;

and (iii) for our Cobalt segment, Cobalt and Splash & Stow.

The recreational powerboat industry, including the performance sport boat, sterndrive and outboard categories, is highly competitive for consumers and dealers.

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Competition in our industry is based primarily on brand name, price and product performance.

Environmental, Safety and Regulatory Matters

Safety and Regulatory Matters

Our operations and products are subject to extensive environmental, health and safety regulation under various federal, commonwealth, state, and local statutes, ordinances, rules and regulations in the United States and Australia where we manufacture our boats, and in other foreign jurisdictions where we sell our products.

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The handling, storage, release, treatment and recycling or disposal of these substances and wastes from our operations are regulated in Australia by the Australian Department of Environment and Energy, the New South Wales Environmental Protection Agency and other state and local authorities.

Failure by us to properly handle, store, release, treat, recycle or dispose of our hazardous materials and wastes could result in liability for us, including

fines, penalties, or obligations to investigate and remediate any contamination originating from our operations or facilities.

Failure by us to properly handle, store, release, treat, recycle or dispose of our hazardous materials and wastes could result in liability for us, including fines, penalties, or obligations to investigate and remediate any contamination originating from our operations or facilities.

We are not aware of any material contamination at our current or former facilities for which we could be liable under environmental laws or regulations, and we currently are not undertaking any remediation or investigation activities in connection with any contamination.

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In the United States, the federal Clean Air Act (“CAA”) and corresponding state and local laws and rules regulate emissions of air pollutants.

Because our manufacturing operations involve molding and coating of fiberglass materials, which involves the emission of certain volatile organic compounds, hazardous air pollutants, and particulate matter, we are required to maintain and comply with a CAA operating permit (Title V permit) for our Tennessee, Kansas and Florida facilities and local air permits for our California facilities.

Because our manufacturing operations involve molding and coating of fiberglass materials, which

involves the emission of certain volatile organic compounds, hazardous air pollutants, and particulate matter, we are required to maintain and comply with a CAA operating permit (Title V permit) for our Tennessee, Kansas and Florida facilities and local air permits for our California facilities.

Our air permits generally require us to monitor our emissions and periodically certify that our emissions are within specified limits.

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The engines used in our products are subject to these regulations.

CARB recently adopted an evaporative emissions regulation that applies to all spark-ignition marine watercraft with permanently installed fuel tanks sold in California.

The new regulation requires subject boat manufacturers to use specific CARB-certified components for the fuel systems in their boats, or to certify the boat meets a related performance standard.

The USEPA and CARB emissions regulations have increased the cost to manufacture our products.

CARB has adopted an evaporative emissions regulation that applies to all spark-ignition marine watercraft with permanently installed fuel tanks sold in California.

This regulation requires subject boat manufacturers to use specific CARB-certified components for the fuel systems in their boats, or to certify the boat meets a related performance standard.

While we believe that our boats meet all applicable emission standards, the USEPA and CARB emissions regulations have increased the cost to manufacture our products.

In the United States, the Occupational Safety and Health Administration (“OSHA”) standards address workplace safety generally, and limit the amount of emissions to which an employee may be exposed without the need for respiratory protection or upgraded plant ventilation.

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None of our recalls have had a material adverse impact on us.

Human Capital Management

Employee Profile

As of July 31, 2021, 2020 and 2019, we had approximately 2,645, 1,795 and 1,835 employees worldwide, respectively.

None of our employees are party to a collective bargaining agreement.

We believe that our relations with our employees are good.

None of our team members are party to a collective bargaining agreement.

We believe in working diligently to establish ourselves as an employer of choice.

Employee Well Being

We recognize employees are the heart of our organization and support them by offering a range of competitive pay, recognition and benefit programs.

We provide market-competitive pay and benefits to encourage performance that creates sustainable and long-term employment.

We believe in internal promotion where possible and are committed to developing our current team members to become the next generation of leaders throughout the organization.

Approximately 70% of our production leaders are internal promotions.

We provide tuition assistance programs and take advantage of leadership development where possible.

We hire students from across the country in our Engineering Internship Program and many come to work for us after attaining their degree.

Safety is a core value of our organization and we are committed to fostering a culture where safety is a number one priority.

The success of our business depends, in part, upon the prevention of accidents, the reduction and/or prevention of occupational injuries and illnesses, and compliance with established safety and health policies and requirements.

Dependent upon job tasks, some personnel will be required to have OSHA training and/or documentation to satisfy job requirements.

Workplace safety is a fundamental organizational-wide value, and we are committed to running an efficient program.

We remain focused on building a safer workplace for our employees and will continue to work toward an injury free workplace through the implementation of training and other industry-leading safety initiatives.

Culture and Values

Our mission statement is a formal summary of our core purpose and focus and clearly communicates who we are.

Our mission is to create the ultimate on the water lifestyle.

Our core values are the guiding principles that dictate how we make decisions and interact with each other daily.

We are committed to our core values of Safety, Integrity, People, Quality, Innovation, Customer Focus, and Continuous Improvement.

We design products that appeal to an expanding range of recreational boaters, fisherman and water sports enthusiasts whose passion for boating is a key component of their active lifestyle.

With our many awards and honors, we cultivate a culture of excellence and premier boat building.

Diversity and Inclusion

We are committed to maintaining an employee-first culture.

We are dedicated to protecting the well-being of our employees while creating a culture that promotes inclusivity, acceptance, equality and diversity.

Our employees bring a blend of diverse backgrounds to promote an inclusive workforce and the opportunity for career growth for all employees.

We seek to hire the best qualified individuals and do not discriminate on the basis of race, creed, color, religion, national origin, citizenship status, age, disability, marital status, sexual orientation, gender, gender identity and similar classification.

We continually are evaluating our internal processes and programs to further build on our diverse, equitable and inclusive culture.

We value our team and are committed to treating all employees with dignity and respect.

Community Involvement

We continually strive to make an impact on our local communities and serve them with gratitude.

Each year, we partner with community organizations where our facilities are located and support local schools.

In Tennessee, we partner with Toys for Tots and Angel Tree each holiday season.

Our corporate sponsorship with the local Kiwanis Club has allowed us to give back to children with disabilities while also helping students prepare for the upcoming school year.

We partner with the local Family Resources center each year to assist local students with cold-weather clothing fund and participates in additional local school initiatives to promote manufacturing trade jobs.

In Kansas, we support our community though recreational leagues as well as donations to local libraries, events and school fundraisers, among other initiatives.

In Florida, we give back to our local communities through the Treasure Coast Food Bank, Pet Food Drive for the Humane Society, Ready to Work Boot Camp, and the Everglades Foundation, Recreational Fishing Alliance and Coastal Conservation Association.

Additionally, we are proud participants in and sponsors of the Making Strides Against Breast Cancer walk every year.

We are proud of our partnerships with these outstanding organizations, and of the funds raised by our employees for children and families in the communities within which we operate.

Organizational Structure

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was incorporated as a Delaware corporation on November 1, 2013 in anticipation of our IPO to serve as a holding company that owns only an interest in Malibu Boats Holdings, LLC.

Immediately after the completion of our IPO and

the recapitalization we completed in connection with our IPO, Malibu Boats, Inc.

Immediately after the completion of our IPO and the recapitalization we completed in connection with our IPO, Malibu Boats, Inc.

held approximately 49.3% of the economic interest in the LLC, which has since increased to approximately 97.2% of the economic interest in the LLC as of June 30, 2021.

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Each holder of Class B Common Stock is entitled to the number of votes equal to the total number of LLC units held by such holder multiplied by the exchange rate specified in the exchange agreement with respect to each matter presented to our stockholders on which the holders of Class B Common Stock are entitled to vote.

Accordingly, the holders of LLC Units collectively have a number of votes that is equal to the aggregate number of LLC Units that they hold.

Accordingly, the holders of LLC Units collectively have a number of votes that is equal to the aggregate number of LLC Units

that they hold.

As the LLC members sell LLC Units to us or subsequently exchange LLC Units for shares of Class A Common Stock of Malibu Boats, Inc.

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In connection with our IPO and the recapitalization we completed in connection with our IPO, we entered into an exchange agreement with the pre-IPO owners of the LLC under which (subject to the terms of the exchange agreement) each pre-IPO owner (or its permitted transferee) has the right to exchange its LLC Units for shares of our Class A Common Stock on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications, or, at our option, except in the event of a change in control, for a cash payment equal to the market value of the Class A Common Stock.

The exchange agreement provides, however, that such exchanges must be for a minimum of the lesser of 1,000 LLC Units, all

of the LLC Units held by the holder, or such amount as we determine to be acceptable.

The exchange agreement provides, however, that such exchanges must be for a minimum of the lesser of 1,000 LLC Units, all of the LLC Units held by the holder, or such amount as we determine to be acceptable.

The exchange agreement also provides that an LLC member will not have the right to exchange LLC Units if Malibu Boats, Inc.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business