What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2022-08-25 compared with 2021-08-26 · 88 added, 63 removed, 424 unchanged (26% of the section changed)

34 unchanged sentences

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 Boating Industry Magazine's "Top Product" award for the new Pursuit S 358 Sport in 2022, 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 2021 and 2020 WakeWorld "Readers Choice" Wakeboard and Wakesurf Boat of the Year for the Malibu Wakesetter 23 LSV,

• the “Trailers, Parts and Trailer Accessories” category at the illustrious Miami Boat Show and a Water Sports Industry Association Product Innovation Award at the annual WISA Summit for the Malibu Wakesetter 25 LSV,

• the Pursuit S 428 was voted most Innovative product in the Center Console/Walkaround Fishing Boats category during the 2022 Discover Boating Miami International Boat Show,

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

4 unchanged sentences

We devote significant time and resources to find, develop and improve the performance of our dealers and believe our dealer network gives us a distinct competitive advantage.

Impact of COVID-19 Pandemic

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.

As a result, we were not able to ship boats to our dealers during the period of shut-down, which negatively impacted our net sales for the second half of fiscal year 2020.

During the first half of fiscal 2021, we constrained our production levels 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.

The increase in retail sales during fiscal year 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 year 2021 resulted in lower inventory levels at our dealers throughout fiscal year 2021 and continued into fiscal year 2022.

Fiscal year 2022 retail demand continued at a strong pace, albeit at lower levels than the record fiscal year 2021 levels, and in spite of limited inventory.

Increases in fiscal year 2022 wholesale production combined with lower retail demand levels, as compared to fiscal year 2021, have combined to increase inventory levels modestly at our Malibu and Cobalt segment dealers at the end of fiscal year 2022.

Saltwater Fishing segment dealers remain low on inventory.

inventories continue to be well below historical levels and a full recovery to historical inventory levels will depend on the ability of our supply chain to provide materials to us timely and the level of retail demand during the upcoming year.

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.

26 unchanged sentences

Focus on Vertical 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 soft grip flooring.

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

We believe our engine marinization initiative will reduce our reliance on our previous engine suppliers for our Malibu and Axis brands while reducing the risk that a change in cost or production from any engine supplier for such brands could adversely affect our business.

Recently we began producing soft grip flooring for our Malibu, Axis and new Cobalt models.

Vertical integration of key components of our boats gives us the ability to increase incremental margin per boat sold by reducing our cost base and improving the efficiency of our manufacturing process.

In fiscal year 2022, we acquired a facility to begin manufacturing our own wiring harnesses.

As a result of this acquisition, we reduced the risk of production delays due to delays in receipt of wiring harnesses from third-party suppliers.

Vertical integration of key components of our boats also gives us the ability to increase incremental margin per boat sold by reducing our cost base and improving the

efficiency of our manufacturing process.

Additionally, it allows us to have greater control over design, consumer customization options, construction quality, and our supply chain.

3 unchanged sentences

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.

14 unchanged sentences

Our marketing efforts are conducted using an array of strategies, which include digital advertising, social media engagement, advertisements in endemic media and the sponsorship of grass-roots boating and watersport events.

Additionally, our boats, their innovative features, our sponsored athletes and our dealers all frequently win industry awards, which we believe further boosts our brand recognition and reputation for excellence.

We believe our marketing strategies and accomplishments enhance our profile in the industry, strengthen our credibility with consumers and dealers, and increase the appeal of our brands.

9 unchanged sentences

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 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 our Malibu and Axis brands, this includes Surf Gate, Malibu Command Center with Wireless Charging, Power Wedge III, Tower Mister, Hard Tank Ballast with Fast Fill and Fast Drain 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 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.

In addition, other new features have included Splash and Stow,

the hydraulic submersible swim platform, new electronic flip down Swim Step and MakeFast powered Sun Awning.

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 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.

6 unchanged sentences

Continue to Seek Vertical Integration Opportunities.

Over the past several years, we have focused on expanding our vertical integration capabilities, having brought in-house the production of towers and tower accessories, trailers, machined and billet parts, and, most recently, producing our own engines for our Malibu and Axis boats and soft grip flooring for our Malibu, Axis and new Cobalt models.

Over the past several years, we have focused on expanding our vertical integration capabilities.

We have successfully integrated the production of our own towers and tower accessories, trailers, machine and billet parts, Malibu Monsoon engines, soft grip flooring and most recently, wiring harnesses.

Additional vertical integration opportunities exist across our product portfolio and we are aggressively monitoring these opportunities.

2 unchanged sentences

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

In February 2022, we acquired a facility to begin manufacturing our own wiring harnesses.

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.

31 unchanged sentences

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.

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

Pursuit also has introduced the industry first Electric Sliding Entertainment Center and sliding second row center console seating.

Maverick Boat Group has introduced first of its kind "Hybrid" and "Open" Bay Boat designs in recent years.

We won the Boating Industry Magazine's "Top Product" award for the Pursuit S 358 Sport in 2022, 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.

Malibu Trailers took the coveted NMMA Innovation Award at the Miami International Boat Show in 2022.

The Malibu Wakesetter 23 LSV has won Wakeworld “Readers Choice” Wakeboard and Wakesurf Boat of the Year for 2020 and 2021.

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.

8 unchanged sentences

Our top ten dealers represented 39.9%, 38.7% and 38.5%, of our net sales for fiscal year 2022, 2021 and 2020, respectively.

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 of the Malibu, Saltwater Fishing and Cobalt segments represented approximately 51.1%, 57.9% and 50.6%, respectively, of net sales in fiscal year 2022.

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

9 unchanged sentences

Dealer Management

Our relationship with our dealers is governed through dealer agreements.

Our relationship with our dealers is governed by dealer agreements.

Each dealer agreement has a finite term lasting between one and three years.

37 unchanged sentences

For fiscal year 2022, we did not repurchase any boats under our repurchase agreements.

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.

Marketing and Sales

4 unchanged sentences

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.

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.

12 unchanged sentences

Manufacturing

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

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

states and Australia.

2 unchanged sentences

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.

We completed expansion projects at our facilities in Kansas (Cobalt) and Florida (Pursuit) during fiscal year 2020 and at our other Florida facility (Maverick Boat Group) in fiscal year 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.

For our Malibu, Axis and Cobalt brands, we produce wiring harnesses at our Alabama facility.

Our boats are built through a continuous flow manufacturing process that encompasses fabrication, assembly, quality management and testing.

1 unchanged sentence

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.

We have vertically integrated key components of our manufacturing process, including the manufacturing of our own engines, boat trailers, towers and tower accessories, machined and billet parts, soft grip flooring, and most recently, wiring harnesses.

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

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.

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.

We are the only performance sport boat company that manufacturers towers in-house.

We believe that the vertical integration of these components is a distinct competitive advantage that allows us to control key design elements of our boats and generate higher margins.

We are committed to continuous improvement in our operations, and we believe our efforts in this regard have resulted in higher gross margins.

Specifically, we have increased labor efficiency and reduced cost of materials.

In fiscal year 2022, we acquired a facility to begin manufacturing our own wiring harnesses.

As a result of this acquisition, we reduced the risk of production delays due to delays in receipt of wiring harnesses from third-party suppliers.

Vertical integration of key components of our boats also gives us the ability to increase incremental margin per boat sold by reducing our cost base and improving the efficiency of our manufacturing process.

Additionally, it allows us to have greater control over design, consumer customization options, construction quality, and our supply chain.

We continually review our manufacturing process to identify opportunities for additional vertical integration investments across our portfolio of premium brands.

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

We are committed to continuous improvement in our operations, with the goal of increased labor efficiencies and reduced costs of materials resulting in higher gross margins.

Our production engineers evaluate and seek to optimize the configuration of our production line given our production volumes and model mix.

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.

2 unchanged sentences

Through our vertical integration initiative to marinize our own engines, we entered into an engine supply agreement with General Motors LLC (“General Motors”) in November 2016 for the supply of engine blocks to use in our Malibu and Axis brand boats which began in our model year 2019 and will continue through model year 2023.

We adopted this strategy in order to more directly control product path (design, innovation, calibration and integration) of our largest dollar procured part, to differentiate our product from our competitors, and to increase our ability to respond to ongoing changes in the marketplace.

We are currently working to renew our agreement with General Motors and anticipate having a new deal complete before the expiration of the existing agreement.

We adopted this strategy to more directly control product path (design, innovation, calibration and integration) of our largest dollar procured part, to differentiate our product from our competitors, and to increase our ability to respond to ongoing changes in the marketplace.

Pursuant to the engine supply agreement, we will submit purchase orders for engines to General Motors and, so long as we are not in breach of the engine supply agreement, General Motors will deliver engines pursuant to the purchase orders.

12 unchanged sentences

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.

We experienced supply chain disruptions during fiscal year 2022 that we believe were driven by numerous factors, including labor shortages, ongoing domestic logistical constraints, West Coast port challenges and rising prices to our suppliers, in part due to inflationary pressures.

Such supply chain disruptions along with increased costs for raw materials, parts and components, shipping and labor, are having industry-wide impacts affecting us and our suppliers, dealers and customers.

We believe supply chain disruptions will continue to challenge wholesale production output for the remainder of calendar year 2022.

Insurance and Product Warranties

2 unchanged sentences

Our Malibu and Axis brand boats have a limited warranty for a period up to five years.

Our Cobalt brand boats have (1) a structural warranty of up to ten years which covers the hull, deck joints, bulkheads, floor, transom, stringers, and motor mount, and (2) a five year bow-to-stern warranty on all components manufactured or purchased (excluding hull and deck structural components), including canvas and upholstery.

Our Cobalt brand boats have (1) a structural warranty of up to ten years which covers the hull, deck joints, bulkheads, floor, transom, stringers, and motor mount,

and (2) a five year bow-to-stern warranty on all components manufactured or purchased (excluding hull and deck structural components), including canvas and upholstery.

Gelcoat is covered up to three years for Cobalt and one year for Malibu and Axis.

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).

19 unchanged sentences

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

Our dealers experience seasonality in their business.

Retail demand for boats is seasonal, with a significant majority of sales occurring during peak boating season, which coincides with our first and fourth fiscal quarters.

In order to minimize the impact of this seasonality on our business, we manage our manufacturing processes and structure dealer incentives to tie our annual volume rebates program to consistent ordering patterns, encouraging dealers to purchase our products throughout the year.

In this regard, we may offer free flooring incentives to dealers from the beginning of our model year through April 30 of each year.

Further, in the event that a dealer does not consistently order units throughout the year, such dealer’s rebate is materially reduced.

We may offer off-season retail promotions to our dealers in seasonally slow months, during and ahead of boat shows, to encourage retail demand.

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.

Our operations and products are subject to extensive environmental and 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.

We believe we are in material compliance with those requirements.

2 unchanged sentences

Hazardous Materials and Waste

Certain materials used in our manufacturing, including the resins used in production of our boats, are toxic, flammable, corrosive or reactive and are classified as hazardous materials by the national, state and local governments in those jurisdictions where we manufacture our products.

The handling, storage, release, treatment and recycling or disposal of these substances and wastes from our operations are regulated in the United States by the United States Environmental Protection Agency (“USEPA”), and state and local environmental agencies.

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.

Certain materials used in our manufacturing, including the resins used in production of our boats, are toxic, flammable, corrosive, or reactive and are classified as hazardous materials by the national, state and local governments in those

jurisdictions where we manufacture our products.

The handling, storage, release, treatment, and recycling or disposal of these substances and wastes from our operations are regulated in the United States by the United States Environmental Protection Agency (“EPA”), and state and local environmental agencies.

In the United States, handling, storage, release, treatment, and recycling or disposal of hazardous materials is regulated under Subtitle C of the Resource Conservation and Recovery Act (“RCRA”).

The EPA works with state regulatory agencies to implement a compliance monitoring program with the goal of evaluating compliance with companies’ RCRA obligation.

Our manufacturing facilities can be subject to on-site compliance evaluation inspections (CEIs) or targeted enforcement actions.

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 Climate Change, Energy, the Environment and Water, the New South Wales Environmental Protection Authority 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.

2 unchanged sentences

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 requirements under Title V of the CAA (“Part 70 Permits”) 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.

To date, we have not had material difficulty complying with those limits.

The USEPA and the California Air Resources Board (“CARB”) have adopted regulations stipulating that many marine propulsion engines and watercraft meet certain air emission standards.

The EPA and the California Air Resources Board (“CARB”) have, under the CAA, adopted regulations stipulating that many marine propulsion engines and watercraft meet certain air emission standards.

Some of these standards require fitting a catalytic converter to the engine.

These regulations also require, among other things, that engine manufacturers provide a warranty that their engines meet USEPA and CARB emission standards.

These regulations also require, among other things, that engine manufacturers provide a warranty that their engines meet EPA and CARB emission standards.

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

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

CARB has adopted an evaporative emissions regulation that applies to all spark-ignition marine watercraft with permanently installed fuel tanks sold in California (the Spark-Ignition Marine Watercraft Program).

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.

2 unchanged sentences

Our facilities are regularly inspected by OSHA and by state and local inspection agencies and departments.

Our California facilities are also subject to California indoor air quality regulations, overseen by California’s Division of Occupational Safety and Health.

We believe that our facilities comply in all material aspects with these regulations.

5 unchanged sentences

Boat Design and Manufacturing Standards

Powerboats sold in the United States must be manufactured to meet the standards of certification required by the United States Coast Guard.

In addition, boats manufactured for sale in the European Community must be certified to meet the European Community’s imported manufactured products standards.

In the United States, the U.S.

Coast Guard promulgates regulations related to the minimum construction and safety requirements for recreational boats.

In addition, boats manufactured for sale in the European Community must be certified to meet the requirements of the applicable laws and standards, including Directive 2013/53/EU on recreational craft and personal watercraft.

These certifications specify standards for the design and construction of powerboats.

We believe that all of our boats meet these standards.

In addition, safety of recreational boats in the United States is subject to federal regulation under the Boat Safety Act of 1971, which requires boat manufacturers to recall products for replacement of parts or components that have demonstrated defects affecting safety.

We have instituted recalls for defective component parts produced by certain of our third-party suppliers, including a recall on our fuel pumps supplied by a third party during fiscal year 2019.

In addition, safety of recreational boats in the United States is subject to federal regulation under the Boat

Safety Act of 1971, which requires boat manufacturers to recall products for replacement of parts or components that have demonstrated defects affecting safety.

We have instituted recalls for defective component parts produced by certain of our third-party suppliers, including a recall on fuel pumps supplied by a third party during fiscal year 2019.

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

39 unchanged sentences

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.

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

11 unchanged sentences

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.

50 unchanged sentences

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