Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Impact of the COVID-19 Pandemic
Factors Affecting Our Results of Operations
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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.
−Removed: We currently sell our boats under eight brands as shown in the table below, and we report our results of operations under three reportable segments, Malibu, Cobalt and Saltwater Fishing.
+Added: We currently sell our boats under eight brands as shown in the table below, and we report our results of operations under three reportable segments, Malibu, Saltwater Fishing and Cobalt.
We revised our segment reporting effective December 31, 2020 to account for our acquisition of Maverick Boat Group and to conform to changes in our internal management reporting based on our boat manufacturing operations.
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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.
−Removed: We are the market leader in the United States in the performance sport boat category through our Malibu and Axis Wake Research boat brands.
−Removed: Our Axis boats appeal to consumers who desire a more affordable performance sport boat product but still demand high performance,
−Removed: functional simplicity and the option to upgrade key features.
+Added: We are the market leader in the United States in the performance sport boat category through our Malibu and Axis boat brands.
+Added: 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.
Retail prices of our Malibu and Axis boats typically range from $80,000 to $300,000.
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Our Pursuit boats expand our product offerings into the saltwater outboard fishing market and include center console, dual console and offshore models.
−Removed: We recently acquired Maverick Boat Group in December 2020 and added Maverick, Cobia, Pathfinder and Hewes to our brands.
+Added: In December 2020, we acquired Maverick Boat Group and added Maverick, Cobia, Pathfinder and Hewes to our brands.
Our Maverick Boat Group family of boats are highly complementary to Pursuit, expanding our saltwater outboard offerings with a strong focus in length segments under 30 feet.
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We sell our boats through a dealer network that we believe is the strongest in the recreational powerboat category.
−Removed: As of July 1, 2022, our worldwide distribution channel consisted of over 400 dealer locations globally.
+Added: As of June 30, 2023, our worldwide distribution channel consisted of over 400 dealer locations globally.
Our dealer base is an important part of our consumers’ experience, our marketing efforts and our brands.
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.
−Removed: We achieved fiscal year 2022 net sales, net income and adjusted EBITDA of $1,214.9 million, $163.4 million and $246.5 million, respectively, which were an increase from $926.5 million, $114.3 million and $190.1 million, respectively, for fiscal year 2021.
+Added: We achieved fiscal year 2023 net sales, net income and adjusted EBITDA of $1,388.4 million, $107.9 million and $284.0 million, respectively, compared to $1,214.9 million, $163.4 million and $246.5 million, respectively, for fiscal year 2022.
For the definition of adjusted EBITDA and a reconciliation to net income, see “GAAP Reconciliation of Non-GAAP Financial Measures.”
−Removed: Impact of the COVID-19 Pandemic
−Removed: Our operations have continued to be impacted by a variety of external factors.
−Removed: 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.
−Removed: We elected to suspend operations at all of our facilities from March 2020 until late April and early May 2020, depending on the facility.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: Saltwater Fishing segment dealers remain low on inventory.
−Removed: Dealer 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.
−Removed: Additionally, we experienced supply chain disruptions throughout 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.
−Removed: 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.
−Removed: The future impact of COVID-19 and ongoing supply chain disruptions on our financial condition and results of operations may result in further constrained production and increased costs and will depend on a number of factors, including factors that we may not be able to forecast at this time.
−Removed: See the risk factors around COVID-19 impact, supply chain disruptions and increases in costs under Part I.
−Removed: of this Form 10-K
−Removed: Industry-wide marine retail registrations continue to recover from the years following the global financial crisis.
−Removed: According to Statistical Surveys, Inc., domestic retail registration volumes of performance sport boats, fiberglass sterndrive and fiberglass outboards increased at a compound annual growth rate of approximately 5% between 2011 and 2021, for the 50 reporting states.
−Removed: Within the recreational powerboat categories, the performance sport boats category, which we primarily serve with our Malibu and Axis brands, has produced a double-digit compound annual growth rate between 2011 and 2021.
−Removed: Outboard boats and fiberglass sterndrive boats have seen their combined market grow at a 4% compound annual growth rate between 2011 and 2021.
−Removed: This combined growth has been driven primarily by the outboard market.
−Removed: We target the outboard market with our Pursuit, Cobia, Pathfinder, Maverick and Hewes brands, as well as our Cobalt brand, which is a new entrant to the outboard market, and we plan to meaningfully expand our share of the fiberglass outboard category in the future.
−Removed: We cater to the sterndrive market through our Cobalt brand.
−Removed: While the market for sterndrive propulsion, particularly in lower foot length products, has been challenged, Cobalt’s performance continues to be helped by the higher foot length product market it serves, which has grown, and through gains in market share by Cobalt.
−Removed: Although retail growth in powerboats was negatively impacted by weak retail sales in March and April 2020 due to COVID-19, domestic retail demand growth for powerboats accelerated during calendar year 2020, in part because consumers turned to boating as a form of outdoor, socially-distanced recreation during the COVID-19 pandemic.
−Removed: Despite the impact of COVID-19 early in 2020, the increased demand during 2020 was broad based across recreational powerboat categories leading to the highest growth rate the industry has seen in decades.
−Removed: We continued to see strong year-over-year retail growth during the first half of 2021.
−Removed: However, beginning in May 2021, we experienced lower growth and in certain markets year-over-year decreases in retail registrations driven by the lack of available inventory at our dealers and the high growth in those months during 2020.
−Removed: Retail registration activity declined meaningfully during the second half of calendar 2021 versus the comparable period in 2020 given the limited available inventory and the strong sales activity and resulting destocking in 2020 and the first half of 2021.
−Removed: The domestic retail market decreased year-over-year during calendar 2021 for the performance sport boat segment by 2%, while the fiberglass outboard and sterndrive segments were down a combined 7%, in line with expectations given the prior year retail environment.
−Removed: However, when compared to the pre-COVID market conditions of calendar year 2019, the performance sport boat segment and the combined fiberglass outboard and sterndrive segments increased 21% and 3%, respectively, in calendar year 2021 despite depleted channel inventory levels.
−Removed: The first half of calendar 2022 has continued to show year over year decreases in retail registration activity, much of which are in the double digits against significantly high comparative periods due to increased retail demand in the first half of calendar 2021.
−Removed: We believe that despite recent retail registration declines, retail activity at our dealers continued to be strong during much of fiscal year 2022 and but for a lack of inventory may have been higher.
−Removed: We believe the second half of 2022 will show year over year increases as the second half of calendar 2021 was significantly affected by decreased retail demand due to the lack of available dealer inventory.
−Removed: The combination of strong retail market activity through 2020 and into early 2021 and supply chain disruptions experienced in 2021 and continuing through 2022 have depleted our inventory levels at our dealers below pre-COVID levels throughout 2021 and 2022.
−Removed: Operational challenges and supply chain constraints created by severe winter weather delayed our ability to add to depleted inventory levels in the second half of fiscal 2021.
−Removed: We experienced an increase in supply chain disruptions throughout fiscal 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.
−Removed: The duration of these challenges is unknown, and they may meaningfully impact our ability to restock our dealers’ inventories in a timely manner.
−Removed: We believe supply chain disruptions will continue to challenge wholesale production output through at least the remainder of calendar 2022.
−Removed: As a result of lower dealer inventory levels and lower wholesale production volumes due to the foregoing factors, we expect to see meaningful wholesale demand to restock our dealer inventories into fiscal 2023 and potentially beyond, but the primary driver of restocking timing will be retail activity.
−Removed: We expect lower dealer inventory levels will support our wholesale shipments and financial performance in the first half of fiscal year 2023 and retail activity will be the key driver of wholesale production in the second half of fiscal 2023.
−Removed: The duration of such heightened dealer restocking demand may be extended by our suppliers' inability to increase production to match our desired wholesale production targets, however, it may alternatively be reduced if retail activity deteriorates materially from existing levels.
−Removed: We have also experienced elevated raw material, components and transportation costs, partly due to inflationary pressures, and we anticipate those costs to remain at elevated levels for the remainder of calendar year 2022 and likely beyond.
−Removed: To combat this, we implemented a surcharge across all brands effective December 1, 2021.
−Removed: We do not believe the surcharges impacted our wholesale shipments in fiscal 2022.
−Removed: We believe our competitors have increased prices at similar rates to us and we have therefore not been at a competitive disadvantage from a pricing perspective.
−Removed: At the beginning of fiscal 2023, we made our surcharges permanent price changes and have worked aggressively to minimize incremental price increases to lessen any volume impact associated with increased prices.
+Added: During the COVID-19 pandemic, domestic retail demand for recreational powerboats increased to the highest levels seen by the industry in decades as consumers turned to boating as a form of outdoor, socially-distanced, recreation.
+Added: Retail registration activity in the recreational powerboat market, however, began declining meaningfully in the second half of calendar year 2021 as a result of limited available inventory due to the strong sales activity during the pandemic and supply chain disruptions that began impacting production levels.
+Added: During calendar year 2022, retail registration activity continued to decline at a lower year-over-year rate than the second half of calendar year 2021.
+Added: The declines in retail registration activity in the recreational powerboat market during calendar year 2022 were also impacted by the increased retail demand in calendar year 2021, resulting in an abnormally high comparative period.
+Added: We and our dealers have experienced similar impacts in retail demand, supply chain disruption and resulting low inventory levels as the industry.
+Added: The combination of strong retail market activity in calendar years 2020 and 2021 along with supply chain disruptions in calendar year 2021 that continued through calendar year 2022 depleted inventory levels at our dealers in calendar year 2022 below pre-COVID levels.
+Added: Some of the operational challenges and supply chain disruptions we experienced included labor shortages, domestic logistical constraints, West Coast port challenges and rising prices for our suppliers, in part due to inflationary pressures.
+Added: These operational challenges and supply chain constraints delayed our ability to add to depleted inventory levels throughout fiscal year 2022.
+Added: While retail activity at our dealers was strong during much of fiscal year 2022, it may have been higher but for a lack of inventory.
+Added: Current inventory levels at our Malibu and Cobalt dealers have returned to pre-pandemic levels and at our Saltwater Fishing dealers are continuing to normalize to pre-pandemic levels.
+Added: While retail activity at our dealers trended lower during fiscal year 2023, given low inventory levels at the beginning of the fiscal year, we continued to experience strong wholesale demand throughout the first three quarters of fiscal year 2023.
+Added: As channel inventory becomes more normalized, we believe wholesale demand will become more directly dependent on the underlying retail activity for our products.
+Added: As a result, we believe our wholesale demand in the upcoming quarters will largely be driven by the retail activity for our products into the first half of fiscal year 2024.
+Added: We aim to increase our market share across the boating categories in which we compete through new product development, improved distribution, new models, and innovative features.
+Added: Our industry, however, is highly competitive, and our competitors have become more aggressive in their product introductions, expanded their distribution capabilities, and launched surf systems competitive with our patented Surf Gate system.
+Added: Further, our ability to maintain inventory levels at our dealers will be important to sustain and grow our market share across our brands.
+Added: We believe our new product pipeline, strong dealer network and ability to increase production will allow us to maintain, and potentially expand, our leading market position in performance sports boats.
+Added: We also believe that our track record of expanding our market share with our Malibu and Axis brands is directly transferable to our Cobalt, Pursuit and Maverick Boat Group brands.
+Added: As discussed above, our financial results and operations have been, and could continue to be, impacted by events outside of our control, including COVID-19 and supply chain disruptions that we believe were driven by numerous factors, such as labor shortages, ongoing domestic logistical constraints, West Coast port challenges and rising prices for our suppliers, in part due to inflationary pressures.
Numerous other variables also have the potential to impact our volumes, both positively and negatively.
−Removed: For example, increasing interest rates that we are currently experiencing could reduce retail consumer appetite for our product or reduce the appetite or availability for credit for our dealers and retail consumers.
−Removed: Further, we believe
−Removed: a substantial increase or decrease in the price of oil, strength or weakness of the U.S.
−Removed: dollar and tariffs can result in greater or reduced demand for our boats in certain markets.
−Removed: Consumer confidence, expanded or eroded, is a variable that can also impact demand for our products in both directions.
−Removed: Other challenges that could impact demand for recreational powerboats include, fuel costs, a meaningful reduction in the value of global or domestic equity markets, the continued acceptance of our new products in the recreational boating market, our ability to compete in the competitive power boating industry, and the costs of labor and certain of our raw materials and key components.
−Removed: Retail demand may be negatively impacted in the second half of calendar year 2022 as a result of rising gas prices (albeit falling the past several months), increasing interest rates and continuing concerns over inflation, all of which are outside of our control.
−Removed: Since 2008, we have increased our market share among manufacturers of performance sport boats with new product development, improved distribution, new models, and innovative features.
−Removed: However, our market remains highly competitive and our competitors have become more aggressive in their product introductions, increased their distribution and launched surf systems competitive with our patented Surf Gate system.
−Removed: Notwithstanding this increasingly competitive environment, we expanded our market share lead in 2019 in the performance sport boats category over our nearest competitors.
−Removed: We believe decreased dealer inventory levels driven by strong retail growth and competitive new product introductions led to a reduction in our market share through 2021;
−Removed: however, we continue to maintain the leading market share in the performance sport boat category.
−Removed: In addition, we continue to be the market share leader in both the premium and value-oriented product sub-categories for performance sports boats, we continue to maintain the number one market share position in the United States for the 24’—29’ segment of the sterndrive boat category, and we have the number two market share position in the outboard fiberglass fishing market.
−Removed: Our ability to continue to increase inventory levels at our dealers will be important to maintain and grow our market share across our brands.
−Removed: We believe our new product pipeline, strong dealer network and ability to increase production will allow us to maintain and potentially expand our industry leading market position in performance sports boats.
−Removed: We believe that our track record of expanding our market share with our Malibu and Axis brands due to new product development, improved distribution, new models, and innovative features is directly transferable to our Cobalt, Pursuit and Maverick Boat Group acquisitions.
−Removed: We have seen the impact of this strategy at Cobalt as we have realized growing market share with the introduction of ten new products in the last twenty-one months.
−Removed: While Cobalt, Pursuit and the Maverick Boat Group brands are market leaders in certain areas, we believe our experience positions us to execute a strategy to drive enhanced share by expanding the Cobalt, Pursuit and Maverick Boat Group product offerings with different foot lengths, different boat types and different propulsion technologies.
−Removed: Our new product development efforts at Pursuit and Maverick Boat Group will take time and our ability to influence near-term model introductions is limited, but we have already begun to execute on this strategy.
−Removed: With respect to Cobalt, we introduced four new models during fiscal year 2022 and six new models of boats during fiscal year 2021.
−Removed: For the Pursuit brand, our focus has been on expanding the 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 S 378.
−Removed: Our newest acquisition, Maverick Boat Group, is in the very early stages of integration into the business and meaningful product and innovation changes will be developed for coming years.
−Removed: We believe enhancing new product development combined with diligent management of the Cobalt, Pursuit and Maverick Boat Group dealer networks will position us to meaningfully improve our share of the sterndrive and outboard markets over time.
+Added: For instance, elevated interest rates, which we are currently experiencing, could reduce retail consumer appetite for our product or reduce the appetite or availability for credit for our dealers and retail consumers.
Factors Affecting Our Results of Operations
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Consumer spending, especially purchases of discretionary items, tends to decline during recessionary periods and tends to increase during expansionary periods.
−Removed: The recreational powerboat industry has shown continued growth from 2010 through 2021 ba sed on retai l sales .
−Removed: While there is still some uncertainty surrounding the COVID-19 pandemic, on-going supply chain disruptions, and rising prices to our suppliers, in part due to inflationary pressures, we believe we are well positioned strategically in the recreational powerboat market with brands that are market leaders in their segments.
+Added: While there is still some uncertainty surrounding current macroeconomic conditions, and rising prices to our suppliers, in part due to inflationary pressures, we believe we are well positioned strategically in the recreational powerboat market with brands that are market leaders in their segments.
Inflation has impacted the prices of our materials and our labor costs, which has had a negative impact on our gross margin and our operations.
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To combat this, we implemented a surcharge across all brands effective December 1, 2021.
−Removed: These surcharges could have negatively impacted retail demand, but we do not believe they have impacted our wholesale shipments in fiscal 2022.
−Removed: Further, new boat
−Removed: buyers often finance their purchases.
+Added: These surcharges could have negatively impacted retail demand, but we do not believe they impacted our wholesale shipments in fiscal year 2022.
+Added: Further, new boat buyers often finance their purchases.
Efforts to stop or limit inflation are resulting in higher interest rates that translate into an increased cost of boat ownership.
−Removed: We have seen increased interest rates for our customers in the first half of calendar year 2022.
−Removed: We expect higher than recent years’ levels of inflation to persist for the foreseeable future.
+Added: We have seen increased interest rates for our customers throughout calendar year 2022 and the first half of calendar year 2023.
Should inflation and increased interest rates continue at elevated rates, we may experience less retail demand because prospective consumers may choose to forgo or delay their purchases or buy a less expensive or used boat.
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Any number of factors, including labor disruptions, weather events, the occurrence of a contagious disease or illness, contractual or other disputes, unfavorable economic or industry conditions, delivery delays or other performance problems or financial difficulties or solvency problems, could disrupt our suppliers’ operations and lead to uncertainty in our supply chain or cause supply disruptions for us, which could, in turn, disrupt our operations.
−Removed: We have experienced supply chain disruptions since fiscal year 2020 related to numerous factors, including COVID-19, severe weather events, labor shortages, ongoing domestic logistical constraints, West Coast port challenges and rising prices to suppliers, in part due to inflationary pressures.
−Removed: If we continue to experience supply disruptions or they intensify, we may not be able to develop alternate sourcing quickly or at all.
+Added: We have experienced supply chain disruptions since fiscal year 2020 related to numerous factors, including COVID-19, severe weather events, labor shortages, ongoing domestic logistical constraints, West Coast port challenges and rising prices for our suppliers, in part due to inflationary pressures.
+Added: If we were to further experience supply disruptions or they intensify, we may not be able to develop alternate sourcing quickly or at all.
Any material disruption of our production schedule caused by an unexpected shortage of components, raw materials or parts could cause us not to be able to meet customer demand, to alter production schedules or suspend production entirely, which could cause a loss of revenues, which could materially and adversely affect our results of operations.
−Removed: We completed the expansion of our facility in Florida for Maverick Boat Group in the last quarter of fiscal year 2022.
−Removed: We expect this expanded facility will allow us to continue improving the manufacturing process and increase volume at this location.
−Removed: We rely on our insights into the market gleaned from dealer inventory levels, industry reports about anticipated demand for our products in the upcoming sales cycle and our own estimates and assumptions in formulating our manufacturing
−Removed: plan for the following fiscal year.
−Removed: Throughout our consumer sales cycle, which reaches its peak from March through August of each year, we adjust our manufacturing activities in order to adapt to variability in demand.
+Added: We completed the build-out of our new Tooling Design Center at our Pursuit facility in Florida in March 2023.
+Added: The Tooling Design Center is a vertical integration initiative that will first focus on the tooling needs for our Pursuit boats, with the goal to build the majority of tooling across all of our brands at this site.
+Added: This vertical integration initiative is part of a multi-year plan to bring our product tooling in-house, which has the potential to help us better control capital expenditures, improve tooling quality, and increase volumes.
+Added: On July 25, 2023, we completed the purchase of a 260,000 square-foot facility in Lenoir City, Tennessee.
+Added: This new facility provides for the opportunity to expand production of boats and provides additional opportunities for vertical integration initiatives.
Dealer Network, Dealer Financing and Incentives
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We also use our dealer incentive programs to encourage dealers to order in the off-season by providing floor plan financing relief, which typically permits dealers to take delivery of current model year boats between July 1 and April 30 on an interest-free basis for a specified period.
−Removed: We also offer our dealers other incentives, including rebates, seasonal discounts, promotional co-op arrangements and other allowances.
+Added: We also offer our dealers other incentives, including rebates, seasonal discounts and other allowances.
We facilitate floor plan financing programs for many of our dealers by entering into repurchase agreements with certain third-party lenders, which enable our dealers, under certain circumstances, to establish lines of credit with the third-party lenders to purchase inventory.
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Vertical Integration
−Removed: We have vertically integrated a number of key components of our manufacturing process, including the manufacturing of boat trailers, towers and tower accessories, machined and billet parts, soft grip flooring, and most recently, wiring harnesses.
+Added: We have vertically integrated a number of key components of our manufacturing process, including the manufacturing of our Monsoon engines, boat trailers, towers and tower accessories, machined and billet parts, soft grip flooring, wiring harnesses and most recently, certain tooling for our Pursuit brand.
We began producing our own engines, branded as Malibu Monsoon engines, in our Malibu and Axis boats for model year 2019.
−Removed: We believe our vertical integration initiatives will reduce our reliance on third-party suppliers while reducing the risk that a change in cost or production from any third-party supplier could adversely affect our business.
+Added: Starting in fiscal year 2024, we plan to begin offering Monsoon sterndrive engines to our Cobalt dealers and customers.
+Added: As we move into the second half of fiscal year 2024, we plan to continue the roll out of our Monsoon engines into Cobalt’s surf boats.
+Added: We believe our vertical integration initiatives will reduce our reliance on third-party suppliers while reducing the risk that a change in cost or production from any third-party supplier
+Added: could adversely affect our business.
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.
+Added: In March 2023, we launched our new Tooling Design Center located on our Pursuit campus.
+Added: The Tooling Design Center has potential to help us better control capital expenditures, improve tooling quality, and increase volumes.
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.
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General and administrative expenses include, among other things, salaries, benefits and other personnel related expenses for employees engaged in product development, engineering, finance, information technology, human resources and executive management.
−Removed: Other costs include outside legal and accounting fees, investor relations, risk management (insurance) and other administrative costs.
+Added: Other costs include outside legal and accounting fees, investor relations, risk
+Added: management (insurance) and other administrative costs.
General and administrative expenses also include product development expenses associated with our vertical integration initiative and acquisition or integration related expenses.
Amortization expenses are associated with the amortization of intangibles.
−Removed: Other (Income) Expense, Net
−Removed: Other (income) expense, net consists of interest expense and other income or expense, net.
−Removed: Interest expense consists of interest charged under our outstanding debt, interest on our interest rate swap arrangement and change in the fair value of our interest rate swap we entered into on July 1, 2015, which matured on March 31, 2020, and amortization of deferred financing costs on our credit facilities.
+Added: Other Expense (Income), Net
+Added: Other expense (income), net consists of interest expense and other income or expense, net.
+Added: Interest expense consists of interest charged under our outstanding debt and amortization of deferred financing costs on our credit facilities.
Other income or expense includes ad justments to our tax receivable agreement liability and sublease income.
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Net Income Attributable to Non-controlling Interest
−Removed: As of June 30, 2022 and 2021, we had a 97.2% controlling economic interest and 100% voting interest in the LLC and, therefore, we consolidate the LLC's operating results for financial statement purposes.
+Added: As of each of June 30, 2023 and 2022, we had a 97.8% and 97.2%, respectively, controlling economic interest and 100% voting interest in the LLC and, therefore, we consolidate the LLC's operating results for financial statement purposes.
Net income attributable to non-controlling interest represents the portion of net income attributable to the non-controlling LLC members.
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Net sales for fiscal year 2023 increased $173.5 million, or 14.3%, to $1,388.4 million, compared to fiscal year 2022.
+Added: The increase in net sales was driven primarily by increased unit volumes in our Saltwater Fishing and Cobalt segments, a favorable model mix across all segments and inflation-driven year-over-year price increases across all segments, partially offset by lower unit volumes in the Malibu segment and increased dealer flooring program costs across all segments resulting from higher interest rates and increased inventory levels.
+Added: Unit volume for fiscal year 2023 increased 608 units, or 6.6%, to 9,863 units compared to fiscal year 2022.
+Added: Our unit volume increased primarily due to strong wholesale restocking demand across our Cobalt and Saltwater Fishing segments, partially offset by reduced wholesale restocking demand at our Malibu segment.
+Added: Net sales attributable to our Malibu segment increased $28.7 million, or 4.7%, to $636.2 million for fiscal year 2023 compared to fiscal year 2022.
+Added: Unit volumes attributable to our Malibu segment decreased 46 units for fiscal year 2023 compared to fiscal year 2022.
+Added: The increase in net sales was driven by inflation-driven year-over-year price increases and a favorable model mix, partially offset by lower unit volumes and increased dealer flooring program costs.
+Added: Net sales attributable to our Saltwater Fishing segment increased $107.2 million, or 31.4%, to $449.2 million for fiscal year 2023 compared to fiscal year 2022.
+Added: Unit volumes increased 550 units for fiscal year 2023 compared to fiscal year 2022.
+Added: The increase in net sales was driven by increased volume, inflation-driven year-over-year price increases and a favorable model mix, partially offset by increased dealer flooring program costs.
+Added: Net sales attributable to our Cobalt segment increased $37.6 million, or 14.2%, to $303.0 million for fiscal year 2023 compared to fiscal year 2022.
+Added: Unit volumes attributable to Cobalt increased 104 units for fiscal year 2023 compared to fiscal year 2022.
+Added: The increase in net sales was driven by increased volume, inflation-driven year-over-year price increases and a favorable model mix, partially offset by increased dealer flooring program costs.
+Added: Overall consolidated net sales per unit increased 7.2% to $140,765 per unit for fiscal year 2023 compared to fiscal year 2022.
+Added: Net sales per unit for our Malibu segment increased 5.7% to $124,097 per unit for fiscal year 2023 compared to fiscal year 2022, driven by inflation-driven year-over-year price increases and a favorable model mix, partially offset by increased dealer flooring program costs.
+Added: Net sales per unit for our Saltwater Fishing segment increased 3.4% to $173,755 per unit for fiscal year 2023 compared to fiscal year 2022, driven by inflation-driven year-over-year price increases, partially offset by increased dealer flooring program costs and a unfavorable model mix.
+Added: Net sales per unit for our Cobalt segment increased 8.6% to $140,847 per unit for fiscal year 2023 compared to fiscal year 2022, driven by inflation-driven year-over-year price increases and a favorable model mix, partially offset by increased dealer flooring program costs.
+Added: Cost of Sales
+Added: Cost of sales for fiscal year 2023 increased $132.2 million, or 14.6%, to $1,037.1 million compared to fiscal year 2022.
+Added: The increase in cost of sales was primarily driven by a 6.6% increase in volumes and increased prices due to inflationary pressures that have impacted prices on parts and components.
+Added: In the Malibu segment, higher per unit material and labor costs contributed $19.1 million to the increase in cost of sales and were driven by increased prices due to inflationary pressures.
+Added: In the Saltwater Fishing segment, higher per unit material and labor costs contributed $2.2 million to the increase in cost of sales and were driven by increased prices due to inflationary pressures and an increased mix of larger models that corresponded with higher net sales per unit.
+Added: In the Cobalt segment, higher per unit material and labor costs contributed $19.7 million to the increase in cost of sales and were driven by increased prices due to inflationary pressures and an increased mix of larger models that corresponded with higher net sales per unit.
+Added: Gross profit for fiscal year 2023 increased $41.2 million, or 13.3%, compared to fiscal year 2022.
+Added: The increase in gross profit was driven primarily by higher sales revenue partially offset by the increased cost of sales for the reasons noted above.
+Added: Gross margin for fiscal year 2023 decreased 0.2% from 25.5% to 25.3% driven primarily by an increased mix of the Saltwater Fishing segment and increased dealer flooring program costs and partially offset by better year-over-year performance in our Saltwater Fishing segment.
+Added: Operating Expenses
+Added: Selling and marketing expense for fiscal year 2023 increased $1.1 million, or 4.8% to $24.0 million compared to fiscal year 2022.
+Added: The increase was driven primarily by increased promotional events.
+Added: As a percentage of sales, selling and marketing expense decreased 0.2% to 1.7% for fiscal year 2023 compared to 1.9% for fiscal year 2022.
+Added: General and administrative expense for fiscal year 2023 increased $109.3 million, or 164.7%, to $175.7 million compared to fiscal year 2022.
+Added: The increase in general and administrative expenses was driven primarily by the settlement of product liability cases for $100.0 million in June 2023.
+Added: See Note 17 of our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for more information.
+Added: The remaining increase in general and administrative expenses was driven by an increase in compensation and personnel-related expenses, an increase in legal and professional fees and an increase in travel related expenses.
+Added: As a percentage of sales, general and administrative expenses increased 7.3% to 12.7% for fiscal year 2023 compared to 5.4% for fiscal year 2022.
+Added: Amortization expense for fiscal year 2023 decreased $0.1 million, or 2.1%, to $6.8 million compared to fiscal year 2022 due to a decrease of amortization expense related to fully amortized intangibles.
+Added: Other Expense (Income), Net
+Added: Other expense, net for fiscal year 2023 decreased by $0.6 million, or 14.6% to $3.3 million as compared to fiscal year 2022.
+Added: In fiscal year 2023, we increased our tax receivable agreement liability by $0.2 million that resulted in a corresponding amount being recognized as other expense during the same period, compared to fiscal year 2022 when we increased our tax receivable agreement liability by $1.0 million.
+Added: Our interest expense increased by $0.1 million during fiscal year 2023 compared to fiscal year 2022 due to higher average interest rates on outstanding debt, offset by lower average outstanding debt.
+Added: Provision for Income Taxes
+Added: Our provision for income taxes for fiscal year 2023 decreased $13.0 million, or 27.8% to $33.6 million compared to fiscal year 2022.
+Added: This decrease was primarily driven by lower pre-tax earnings.
+Added: For fiscal year 2023, our effective tax rate of 23.7% differed from the statutory federal income tax rate of 21% primarily due to the impact of U.S.
+Added: This increase in the effective tax rate was partially offset by the benefit of the research and development tax credit as well as the impact of non-controlling interests in the LLC.
+Added: For fiscal year 2022, our effective tax rate of 22.2% differed from the statutory federal income tax rate of 21% primarily due to the impact of U.S.
+Added: This increase in the effective tax rate was partially offset by a windfall benefit generated by certain stock-based compensation, as well as the benefits of the research and development tax credit, and the impact of non-controlling interests in the LLC.
+Added: Non-controlling interest
+Added: Non-controlling interest represents the ownership interests of the members of the LLC other than us and the amount recorded as non-controlling interest in our consolidated statements of operations and comprehensive income is computed by multiplying pre-tax income for the applicable fiscal year by the percentage ownership in the LLC not directly attributable to us.
+Added: For fiscal years 2023 and 2022, the weighted average non-controlling interest attributable to ownership interests in the LLC not directly attributable to us was 2.6% and 2.8%, respectively.
+Added: Comparison of the Fiscal Year Ended June 30, 2022 to the Fiscal Year Ended June 30, 2021
+Added: Net sales for fiscal year 2022 increased $288.4 million, or 31.1%, to $1,214.9 million, compared to fiscal year 2021.
The increase in net sales was driven primarily by increased unit volumes across all three segments, year-over-year price increases and a favorable model mix.
6 unchanged sentences
Unit volumes increased 607 units for fiscal year 2022 compared to fiscal year 2021.
−Removed: The increase in net sales was driven primarily by the acquisition of Maverick Boat Group on December 31, 2020, year-over-year price
−Removed: increases and a favorable model mix.
+Added: The increase in net sales was driven primarily by the acquisition of Maverick Boat Group on December 31, 2020, year-over-year price increases and a favorable model mix.
The increase in unit volumes resulted primarily from our addition of the Maverick Boat Group.
11 unchanged sentences
In the Malibu segment, higher per unit material and labor costs contributed $66.7 million to the increase in cost of sales and were driven by an increased mix of larger products that corresponded with higher net sales per unit.
−Removed: Within our Saltwater Fishing segment, higher per unit material and labor costs contributed $87.3 million to the increase in cost of sales and were driven by the acquisition of Maverick Boat Group on December 31, 2020 and an increased mix of larger products that corresponded with higher net sales per unit.
+Added: Within our Saltwater Fishing segment, higher per unit material and labor costs contributed $87.3 million to the increase in cost of sales and were driven by the acquisition of Maverick Boat Group on December 31, 2020 and an increased mix of larger products that corresponded with higher net sales
In the Cobalt segment, higher per unit material and labor costs contributed $44.8 million to the increase in cost of sales and were driven by an increased mix of larger products that corresponded with higher net sales per unit.
18 unchanged sentences
For fiscal year 2022, our effective tax rate of 22.2% differed from the statutory federal income tax rate of 21% primarily due to the impact of U.S.
−Removed: This increase in tax rate was partially offset by a windfall benefit generated by certain stock-based compensation, as well as the benefits of the research and development tax credit, and the impact of non-controlling interests in the LLC.
−Removed: For fiscal year 2021, our effective tax rate of 22.9% differed from the statutory federal income tax rate of 21% primarily due to the impact of U.S.
−Removed: state taxes, and partially offset by the impact of non-controlling interests in the LLC.
−Removed: Non-controlling interest
−Removed: Non-controlling interest represents the ownership interests of the members of the LLC other than us and the amount recorded as non-controlling interest in our consolidated statements of operations and comprehensive income is computed by multiplying pre-tax income for the applicable fiscal year by the percentage ownership in the LLC not directly attributable to us.
−Removed: For fiscal years 2022 and 2021, the weighted average non-controlling interest attributable to ownership interests in the LLC not directly attributable to us was 2.8% and 3.1%, respectively.
−Removed: Comparison of the Fiscal Year Ended June 30, 2021 to the Fiscal Year Ended June 30, 2020
−Removed: Net sales for fiscal year 2021 increased $273.4 million, or 41.9%, to $926.5 million, compared to fiscal year 2020.
−Removed: Unit volume for fiscal year 2021 increased 1,741 units, or 27.0%, to 8,185 units compared to fiscal year 2020.
−Removed: The increase in net sales was driven primarily by a favorable model mix in our Malibu and Cobalt segment and increased unit volume in our Malibu and Saltwater fishing segments.
−Removed: The increase in unit volume for our Saltwater Fishing segment was due mostly to our acquisition of Maverick Boat Group on December 31, 2020.
−Removed: Net sales attributable to our Malibu segment increased $128.8 million, or 36.3%, to $483.5 million for fiscal year 2021 compared to fiscal year 2020.
−Removed: Unit volumes attributable to our Malibu segment increased 861 units for fiscal year 2021 compared to fiscal year 2020.
−Removed: The increase in net sales and unit volumes was driven primarily by strong demand for our new, larger models and optional features.
−Removed: Net sales from our Saltwater Fishing segment increased $119.3 million, or 96.5%, to $242.9 million for fiscal year 2021 compared to fiscal year 2020.
−Removed: Unit volumes increased 920 units for fiscal year 2021 compared to fiscal year 2020.
−Removed: The increase in net sales was driven primarily by the increased volumes at Pursuit and due to the acquisition of Maverick Boat Group on December 31, 2020.
−Removed: Net sales from our Cobalt segment increased $25.3 million, or 14.5%, to $200.1 million for fiscal year 2021 compared to fiscal year 2020.
−Removed: Unit volumes attributable to Cobalt decreased 40 units for fiscal year 2021 compared to fiscal year 2020.
−Removed: The increase in net sales was driven by a favorable product mix of our Cobalt models impacting net sales per unit, offset by lower volume.
−Removed: Our unit volumes for our Cobalt segment decreased during fiscal year 2021 because of lower production levels related to our investment in the Cobalt facilities to optimize efficiency and expand capacity, the introduction of six new Cobalt models during fiscal year 2021 and challenges around labor and supply as a result of the pandemic and severe winter weather.
−Removed: Our overall net sales per unit increased 11.7% to $113,197 per unit for fiscal year 2021 compared to fiscal year 2020.
−Removed: Net sales per unit for our Malibu segment increased 12.1% to $99,881 per unit for fiscal year 2021 compared to fiscal year 2020, primarily driven by higher sales of new, more expensive models and optional features.
−Removed: Net sales per unit for our Saltwater Fishing segment decreased 30.1% to $170,108 per unit for fiscal year 2021 compared to fiscal year 2020, primarily driven by mix of models due to the acquisition of Maverick Boat Group on December 31, 2020.
−Removed: Net sales per unit for our Cobalt segment increased 16.9% to $104,424 per unit for fiscal year 2021 compared to fiscal year 2020, driven by higher sales of larger, more expensive models and optional features.
−Removed: Cost of Sales
−Removed: Cost of sales for fiscal year 2021 increased $186.1 million, or 36.9%, to $690.0 million compared to fiscal year 2020.
−Removed: The increase in cost of sales was driven by higher costs related to higher net sales in our Malibu and Saltwater Fishing segments.
−Removed: In the Malibu segment, higher material and labor costs contributed $70.4 million to the increase in cost of sales and were driven by an increased mix of larger product that corresponded with higher net sales per unit.
−Removed: Within our Saltwater Fishing segment, higher volumes, primarily related to the acquisition of Maverick Boat Group, drove $83.7 million of increase in cost of sales which was also modestly impacted by higher per unit costs.
−Removed: In the Cobalt segment, higher material and labor costs contributed
−Removed: $14.7 million to the increase in cost of sales and were driven by an increased mix of larger product that corresponded with higher net sales per unit.
−Removed: Gross profit for fiscal year 2021 increased $87.2 million, or 58.4%, compared to fiscal year 2020.
−Removed: The increase in gross profit was driven primarily by higher sales revenue with a more favorable product mix and the contribution of Maverick Boat Group partially offset by the increased cost of sales for the reasons noted above.
−Removed: Gross margin increased 270 basis points from 22.8% in fiscal 2020 to 25.5% in fiscal year 2021.
−Removed: Operating Expenses
−Removed: Selling and marketing expense for fiscal year 2021 decreased $0.4 million, or 2.1% to $17.5 million compared to fiscal year 2020.
−Removed: The decrease was driven primarily by decreased travel and promotional events due mostly to restrictions imposed by COVID-19 offset by incremental selling and marketing expenses with the acquisition of Maverick Boat Group.
−Removed: As a percentage of sales, selling and marketing expense decreased 90 basis points from 2.8% for fiscal year 2020 to 1.9% for fiscal year 2021.
−Removed: General and administrative expense for fiscal year 2021 increased $22.0 million, or 55.1%, to $61.9 million compared to fiscal year 2020.
−Removed: The increase in general and administrative expenses was driven primarily by acquisition and integration related costs, compensation, higher legal expenses related to intellectual property litigation and incremental general and administrative expenses due to the acquisition of Maverick Boat Group.
−Removed: As a percentage of sales, general and administrative expenses increased 50 basis points to 6.6% for fiscal year 2021 compared to 6.1% for fiscal year 2020.
−Removed: Amortization expense for fiscal year 2021 increased $1.1 million, or 18.3%, to $7.3 million compared to fiscal year 2020, due to additional amortization from intangible assets acquired as a result of the acquisition of Maverick Boat Group on December 31, 2020.
−Removed: Other (Income) Expense, Net
−Removed: Other expense, net for fiscal year 2021 decreased by $0.1 million, or 4.1% to $1.5 million as compared to fiscal year 2020.
−Removed: In fiscal year 2021, we reduced our tax receivable agreement liability by $0.1 million that resulted in a corresponding amount being recognized as other income during the same period, compared to fiscal year 2020, when we reduced our tax receivable agreement liability by $1.7 million that resulted in a corresponding amount being recognized as other income during fiscal year 2020.
−Removed: Our interest expense decreased by $1.3 million during fiscal year 2021 compared to fiscal year 2020 due to lower interest rates on outstanding debt.
−Removed: Provision for Income Taxes
−Removed: Our provision for income taxes for fiscal year 2021 increased $14.9 million, or 78.1% to $34.0 million compared to fiscal year 2020.
−Removed: This increase was primarily driven by higher pre-tax earnings and increased U.S.
−Removed: For fiscal year 2021, our effective tax rate of 22.9% differed from the statutory federal income tax rate of 21% primarily due to the impact of U.S.
−Removed: state taxes, and partially offset by the impact of non-controlling interests in the LLC.
+Added: This increase in the effective tax rate was partially offset by a windfall benefit generated by certain stock-based compensation, as well as the benefits of the research and development tax credit, and the impact of non-controlling interests in the LLC.
For fiscal year 2021, our effective tax rate of 22.9% differed from the statutory federal income tax rate of 21% primarily due to the impact of U.S.
6 unchanged sentences
Adjusted EBITDA and adjusted EBITDA margin are non-GAAP financial measures that are used by management as well as by investors, commercial bankers, industry analysts and other users of our financial statements.
−Removed: We define adjusted EBITDA as net income before interest expense, income taxes, depreciation, amortization and non-cash, non-recurring or non-operating expenses, including certain professional fees, acquisition and integration-related expenses, non- cash compensation expense, expenses related to interruption to our engine supply during the labor strike by United Auto Workers ("UAW") against General Motors and adjustments to our tax receivable agreement liability.
+Added: We define adjusted EBITDA as net income before interest expense, income taxes, depreciation, amortization and non-cash, non-recurring or non-operating expenses, including settlement of litigation claims, certain professional fees, acquisition and integration-related expenses, non- cash compensation expense and adjustments to our tax receivable agreement liability.
We define adjusted EBITDA margin as adjusted EBITDA divided by net sales.
15 unchanged sentences
Amortization 6,808 6,957 7,255
+Added: Litigation settlement 1
Professional fees 2
3 unchanged sentences
5,894 6,342 5,581
−Removed: UAW strike impact 4
Adjustment to tax receivable agreement liability 5
6 unchanged sentences
20.5 % 20.3 % 20.5 %
−Removed: (1) For fiscal years 2021 and 2020, represents legal and advisory fees related to our litigation with Skier's Choice, Inc.
+Added: (1) Represents settlement of product liability cases in June 2023 for $100.0 million.
For more information, refer to Note 17 of our consolidated financial statements included elsewhere in this Annual Report.
−Removed: (2) For fiscal year ended June 30, 2021, represents legal and advisory fees incurred in connection with our acquisition of Maverick Boat Group on December 31, 2020.
+Added: (2) For fiscal year 2023, represents legal and advisory fees related to product liability cases that were settled for $100.0 million in June 2023.
+Added: For fiscal year 2021, represents legal and advisory fees related to our litigation with Skier's Choice, Inc.
+Added: For more information, refer to Note 17 of our consolidated financial statements included elsewhere in this Annual Report.
+Added: (3) For fiscal year ended 2021, represents legal and advisory fees incurred in connection with our acquisition of Maverick Boat Group on December 31, 2020.
Integration related expenses for fiscal year 2021 include post-acquisition adjustments to cost of goods sold of $0.9 million for the fair value step up of inventory acquired from Maverick Boat Group, which was sold during the third quarter of fiscal year 2021.
2 unchanged sentences
For more information, refer to Note 15 of our consolidated financial statements included elsewhere in this Annual Report.
−Removed: (4) For fiscal year ended June 30, 2020, represents costs incurred in connection with interruption to our engine supply during the UAW strike against General Motors.
−Removed: We purchase engines from General Motors LLC that we then prepare for marine use for our Malibu and Axis boats.
−Removed: During the UAW strike, General Motors suspended delivery of engine blocks to us and we incurred costs by entering into purchase agreements with two suppliers for additional engines to supplement our inventory of engine blocks for Malibu and Axis boats.
+Added: (5) For fiscal year 2023, we recognized other expense from an adjustment in our tax receivable agreement liability mainly derived by future benefits from Tennessee net operating losses at Malibu Boats, Inc.
For fiscal year 2022, we recognized other expense from an adjustment in our tax receivable agreement liability due to an increase in the state tax rate used in computing our future tax obligations and in turn, an increase in the future benefit we expect to pay under our tax receivable agreement with pre-IPO owners.
−Removed: For fiscal years 2021 and 2020, respectively, we recognized other income from an adjustment in our tax receivable agreement liability as a result of a decrease in the estimated tax rate used in computing our future tax obligations and in turn, a decrease in the future tax benefit we expect to pay under our tax receivable agreement with pre-IPO owners.
−Removed: Refer to Note 12 of our consolidated financial statements included elsewhere in this Annual Report.
+Added: For fiscal year 2021, we recognized other income from an adjustment in our tax receivable agreement liability as a result of a decrease in the estimated tax rate used in computing our future tax obligations and in turn, a decrease in the future tax benefit we expect to pay under our tax receivable agreement with pre-IPO owners.
+Added: For more information, refer to Note 12 of our consolidated financial statements included elsewhere in this Annual Report.
(6) We calculate net income margin as net income divided by net sales and we define adjusted EBITDA margin as adjusted EBITDA divided by net sales.
13 unchanged sentences
Provision for income taxes 33,581 46,535 33,979
+Added: Litigation settlement 1
Professional fees 2
2 unchanged sentences
6,654 6,653 10,558
−Removed: Fair value adjustment for interest rate swap 3
Stock-based compensation expense 4
5,894 6,342 5,581
−Removed: UAW strike impact 5
Adjustment to tax receivable agreement liability 5
24 unchanged sentences
Provision for income taxes 1.64 2.24 1.64
+Added: Litigation settlement 1
Professional fees 2
1 unchanged sentence
0.32 0.32 0.51
−Removed: Fair value adjustment for interest rate swap 3
Stock-based compensation expense 4
0.29 0.31 0.27
−Removed: UAW strike impact 5
Adjustment to tax receivable agreement liability 5
−Removed: 0.05 — (0.08)
Net income attributable to non-controlling interest 6
6 unchanged sentences
Adjusted Fully Distributed Net Income per Share of Class A Common Stock $ 9.19 $ 7.91 $ 6.01
−Removed: (1) For fiscal years 2021 and 2020, represents legal and advisory fees related to our litigation with Skier's Choice, Inc.
+Added: (1) Represents settlement of product liability cases in June 2023 for $100.0 million.
For more information, refer to Note 17 of our consolidated financial statements included elsewhere in this Annual Report.
−Removed: (2) For fiscal year 2022, represents amortization of intangibles acquired in connection with the acquisition of Maverick Boat Group, Pursuit and Cobalt.
+Added: (2) For fiscal year 2023, represents legal and advisory fees related to our product liability cases that were settled in June 2023 for $100.0 million.
+Added: For fiscal year 2021, represents legal and advisory fees related to our litigation with Skier's Choice, Inc.
+Added: For more information, refer to Note 17 of our consolidated financial statements included elsewhere in this Annual Report.
+Added: (3) For fiscal years 2023 and 2022, represents amortization of intangibles acquired in connection with the acquisition of Maverick Boat Group, Pursuit and Cobalt.
For fiscal year 2021, represents legal and advisory fees incurred in connection with the acquisition of Maverick Boat Group and amortization of intangibles acquired in connection with the acquisition of Maverick Boat Group, Pursuit and Cobalt.
Integration related expenses for fiscal year 2021 include post-acquisition adjustments to cost of goods sold of $0.9 million for the fair value step up of inventory acquired from Maverick Boat Group, which was sold during the third quarter of fiscal 2021.
−Removed: For fiscal year 2020, represents amortization of intangibles acquired in connection with the acquisition of Pursuit and Cobalt.
−Removed: (3) Represents the change in the fair value of our interest rate swap entered into on July 1, 2015.
−Removed: The swap matured on March 31, 2020.
(4) Represents equity-based incentives awarded to certain of our employees under the Malibu Boats, Inc.
1 unchanged sentence
For more information, refer to Note 15 of our consolidated financial statements included elsewhere in this Annual Report.
−Removed: (5) For fiscal year ended June 30, 2020, represents costs incurred in connection with interruption to our engine supply during the UAW strike against General Motors.
−Removed: We purchase engines from General Motors LLC that we then prepare for marine use for our Malibu and Axis boats.
−Removed: During the UAW strike, General Motors suspended delivery of engine blocks to us and we incurred costs by entering into purchase agreements with two suppliers for additional engines to supplement our inventory of engine blocks for Malibu and Axis boats.
+Added: (5) For fiscal year 2023, we recognized other expense from an adjustment in our tax receivable agreement liability mainly derived by future benefits from Tennessee net operating losses at Malibu Boats, Inc..
For fiscal year 2022, we recognized other expense from an adjustment in our tax receivable agreement liability due to an increase in the state tax rate used in computing our future tax obligations and in turn, an increase in the future benefit we expect to pay under our tax receivable agreement with pre-IPO owners.
−Removed: For fiscal years 2021 and 2020, respectively, we recognized other income from an adjustment in our tax receivable agreement liability as a result of a decrease in the estimated tax rate used in computing our future tax obligations and in turn, a decrease in the future tax benefit we expect to pay under our tax receivable agreement with pre-IPO owners.
−Removed: Refer to Note 12 of our consolidated financial statements included elsewhere in this Annual Report.
+Added: For fiscal year 2021, we recognized other income from an adjustment in our tax receivable agreement liability as a result of a decrease in the estimated tax rate used in computing our future tax obligations and in turn, a decrease in the future tax benefit we expect to pay under our tax receivable agreement with pre-IPO owners.
+Added: For more information, refer to Note 12 of our consolidated financial statements included elsewhere in this Annual Report.
(6) Reflects the elimination of the non-controlling interest in the LLC as if all LLC members had fully exchanged their LLC Units for shares of Class A Common Stock.
−Removed: (8) Reflects income tax expense at an estimated normalized annual effective income tax rate of 23.8% of income before taxes for fiscal year 2022, 23.6% for fiscal year 2021, and 23.5% of income before taxes for fiscal year 2020, in each case assuming the conversion of all LLC Units into shares of Class A Common Stock.
+Added: (7) Reflects income tax expense at an estimated normalized annual effective income tax rate of 24.3% of income before taxes for fiscal year 2023, 23.8% of income before taxes for fiscal year 2022 and 23.6% of income before taxes for fiscal year 2021, in each case assuming the conversion of all LLC Units into shares of Class A Common Stock.
The estimated normalized annual effective income tax rate for fiscal years 2023, 2022 and 2021 is based on the federal statutory rate plus a blended state rate adjusted for the research and development tax credit, the foreign derived intangible income deduction, and foreign income taxes attributable to our Australian subsidiary.
9 unchanged sentences
Capital Expenditures.
−Removed: For fiscal year 2022, we incurred approximately $55.1 million in capital expenditures related to the expansion of our Florida facility used for Maverick Boats Group as well as new models, capacity enhancements and vertical integration initiatives.
−Removed: We expect capital expenditures between $65.0 million and $70.0 million for fiscal year 2023 primarily for investments in new models, capacity enhancements and vertical integration initiatives.
+Added: For fiscal year 2023, we incurred approximately $54.8 million in capital expenditures related to the completion of our Tooling Design Center as well as new models, capacity enhancements and vertical integration initiatives.
+Added: We expect capital expenditures between $70.0 million and $80.0 million for fiscal year 2024 primarily for the outfitting of our Roane County property and investments in new models, capacity enhancements and vertical integration initiatives.
Other investment opportunities, such as potential strategic acquisitions, may require additional funding.
+Added: Roane County Property Purchase and Related Improvements .
+Added: On March 28, 2023, we entered into a Purchase and Sale Agreement (the “Purchase Agreement”) to purchase certain real property, improvements and other assets from the seller for a cash purchase price of approximately $33.3 million.
+Added: As of June 30, 2023, we had deposited approximately $7.8 million in escrow pursuant to the Purchase Agreement.
+Added: On July 25, 2023, the transaction closed and we paid the $25.5 million balance of the purchase price.
+Added: We expect to incur additional capital expenditures of approximately $15.0 million to make changes to the facility to meet our operational needs.
+Added: Settlement of Batchelder Matters.
+Added: On June 30, 2023, Malibu Boats, Inc.
+Added: and Boats LLC entered into a Confidential General Release and Settlement Agreement (the “Settlement Agreement”) with the Batchelder I Plaintiffs and the Batchelder II Plaintiffs in settlement of each of the Batchelder Matters.
+Added: Pursuant to the Settlement Agreement, among other things, Malibu Boats, Inc.
+Added: or Boats LLC, as the case may be, paid (or caused to be paid) to the Batchelder Plaintiffs and their agents a total of $100.0 million, of which (a) $40.0 million was paid to the Batchelder Plaintiffs and their agents promptly following the execution of the Settlement Agreement and (b) $60.0 million was placed in an escrow account and held by the Escrow Agent pursuant to the terms of an Escrow Agreement.
+Added: All conditions for releasing the $60.0 million placed in the escrow account have now been satisfied.
+Added: We expect that all amounts paid under the Settlement Agreement should be tax deductible for federal and state income tax purposes.
+Added: We maintain liability insurance applicable to the Batchelder Matters with coverage up to $26.0 million.
+Added: As of August 24, 2023, we had received approximately $21.0 million in insurance coverage proceeds, subject in certain cases to reservation of rights by the insurance carriers.
+Added: We contend that the insurance carriers are responsible for the entirety of the $100.0 million settlement amount and related expenses, and therefore the insurers’ payments to date are well below what they should have tendered to Boats LLC.
+Added: Accordingly, on July 3, 2023, Boats LLC filed a complaint against Federal Insurance Company and Starr Indemnity & Liability Company alleging that the insurers unreasonably failed to comply with their obligations by refusing, negligently and in bad faith, to settle covered claims within their available policy limits prior to trial.
+Added: We intend to vigorously pursue our claims against our insurers to recover the full $100.0 million settlement amount and expenses (less any monies already tendered without reservation by the carriers).
+Added: However, we cannot predict the outcome of such litigation.
Principal and Interest Payments.
−Removed: In June 2022, we fully repaid the $72.0 million of outstanding term loans that matured on July 1, 2022 by drawing on our existing revolving credit facility.
−Removed: As of June 30, 2022, we maintained a revolving credit facility with a borrowing capacity of $170.0 million, of which, $97.0 million was outstanding.
−Removed: On July 8, 2022, we entered into a Third Amended and Restated Credit Agreement (the “Amended Credit Agreement”) that amended and restated our second amended and restated credit agreement dated as of June 28, 2017 (the “Prior Credit Agreement”).
−Removed: The Amended Credit Agreement provides us a revolving credit facility in an aggregate principal amount of up to $350.0 million (of which $121.7 million was drawn on July 8, 2022 to refinance the loans under our Prior Credit Agreement as well as to pay certain fees and expenses related to entering into the Amended Credit Agreement) with a maturity date of July 8, 2027.
−Removed: Assuming no additional repayments or borrowings on our revolving credit facility after July 8, 2022, our interest payments would be approximately $3.3 million for fiscal year 2023 based on the interest rate at July 8, 2022 of 2.75%.
+Added: On July 8, 2022, we entered into a Third Amended and Restated Credit Agreement (the “Credit Agreement”).
+Added: The Credit Agreement provides us with a revolving credit facility in an aggregate principal amount of up to $350.0 million.
+Added: As of June 30, 2023, we had no outstanding balance under our revolving credit facility and $1.6 million in outstanding letters of credit, with $348.4 million available for borrowing.
+Added: On July 7, 2023, in connection with the settlement of the Batchelder Matters, we borrowed $75.0 million under the revolving credit facility, with $273.4 million remaining available for borrowing.
+Added: The revolving credit facility matures on July 8, 2027.
+Added: Assuming no additional repayments or borrowings on our revolving credit facility with an outstanding balance of $65.0 million after August 24, 2023, our interest payments would be approximately $4.4 million within the next 12 months based on the interest rate at August 24, 2023 of 6.70%.
See below under “Revolving Credit Facility” for additional information regarding our revolving credit facility, including the interest rate applicable to any borrowing under such facility.
2 unchanged sentences
Under the tax receivables agreement, we pay the pre-IPO owners (or any permitted assignees) 85% of the amount of cash savings, if any, in U.S.
−Removed: federal, state and local income tax or franchise tax that we actually realize, or in some circumstances are deemed to realize, as a result of an expected increase in our share of tax basis in LLC’s tangible and intangible assets, including increases attributable to payments made under the tax receivable agreement.
+Added: federal, state and local income tax or franchise tax that we actually realize, or in some
+Added: circumstances are deemed to realize, as a result of an expected increase in our share of tax basis in LLC’s tangible and intangible assets, including increases attributable to payments made under the tax receivable agreement.
These obligations will not be paid if we do not realize cash tax savings.
12 unchanged sentences
Stock Repurchase Program .
+Added: During the fiscal year ended June 30, 2023, we repurchased 143,759 shares of Class A Common Stock for $7.9 million in cash including related fees and expenses under our prior repurchase program which expired on November 8, 2022.
On November 3, 2022, our Board of Directors authorized a stock repurchase program to allow for the repurchase of up to $100.0 million of our Class A Common Stock and the LLC's LLC Units (the “2022 Repurchase Program”) for the period from November 8, 2022 to November 8, 2023.
−Removed: During the fiscal year ended June 30, 2022, we repurchased 554,995 shares of Class A Common Stock for $34.6 million in cash including related fees and expenses.
As of June 30, 2023, $100.0 million was available to repurchase shares of Class A Common Stock and LLC Units under the 2022 Repurchase Program.
−Removed: We may repurchase shares of our common stock at any time or from time to time, without prior notice, subject to market conditions
−Removed: and other considerations.
+Added: We may repurchase shares of our common stock at any time or from time to time, without prior notice, subject to market conditions and other considerations.
We have no obligation to repurchase any shares of our common stock under the share repurchase program.
−Removed: Our future capital requirements beyond the next 12 months will depend on many factors, including the general economic environment in which we operate and our ability to generate cash flow from operations, which are more uncertain as a result of inflation, increasing interest rates, increasing fuel prices, ongoing supply chain disruptions and the continuing impact of COVID-19.
+Added: We intend to fund repurchases under the 2022 Repurchase Program from cash on hand.
+Added: Our future capital requirements beyond the next 12 months will depend on many factors, including the general economic environment in which we operate and our ability to generate cash flow from operations, which are more uncertain as a result of inflation, increasing interest rates and fluctuating fuel prices.
Our liquidity needs during this uncertain time will depend on multiple factors, including our ability to continue operations and production of boats, the performance of our dealers and suppliers, the impact of the general economy on our dealers, suppliers and retail customers, the availability of sufficient amounts of financing, and our operating performance.
−Removed: In addition, as noted elsewhere, a jury recently found that our subsidiary, Malibu Boats, LLC, and another entity that was the manufacturer of the boat at question, Malibu Boats West, Inc., negligently failed to warn of a hazard posed by the relevant boat and that such failure was a proximate cause of the death of a passenger in the boat.
−Removed: Based on the jury’s finding of successor liability, the trial court entered judgment for the full amount of the verdict against Malibu Boats, LLC, with a potential maximum liability to Malibu Boats, LLC of $140 million, plus post-judgment interest at a rate of 6.25% per annum.
−Removed: Malibu Boats, LLC may also be required to pay an award of reasonable attorney’s fees to the plaintiffs, which the plaintiffs claim should be approximately $56 million.
−Removed: The trial court has postponed any ruling on the plaintiffs' contested motion for attorney’s fees pending the resolution of our post-trial motions and related appeals.
−Removed: On July 17, 2022, the trial court denied the post-trial motions of Malibu Boats, LLC, and we have since filed a notice of appeal.
−Removed: Pending resolution of the appeals process, the payment of any damages in this matter is expected to be stayed.
−Removed: While we maintain product liability insurance applicable to this case, such insurance coverage may be limited to $26 million.
−Removed: Further, while we have other claims that we may decide to pursue with respect to this matter, we cannot provide any assurance that we will pursue those claims or be successful if we do.
−Removed: If the outcome of the case is ultimately unfavorable to us after appeal, we would need to pay for any final judgment in excess of the amount paid by our insurance providers.
The following table summarizes the cash flows from operating, investing and financing activities (dollars in thousands):
6 unchanged sentences
Impact of currency exchange rates on cash balances (328) (580) 127
−Removed: Increase in cash $ 42,265 $ 7,692 $ 6,395
−Removed: Comparison of the Fiscal Year Ended June 30, 2022 to the Fiscal Year Ended June 30, 2021
−Removed: Operating Activities
+Added: (Decrease) increase in cash $ (4,807) $ 42,265 $ 7,692
+Added: Cash Flows From Operating Activities
Net cash provided by operating activities was $184.7 million for fiscal year 2023, compared to $164.8 million for the same period in 2022, an increase of $19.9 million.
−Removed: The increase in cash provided by operating activities primarily resulted from an increase of $51.7 million in net income (after consideration of non-cash items included in net income, primarily related to depreciation, amortization, deferred tax assets and non-cash compensation) and a net decrease in operating assets and liabilities of $18.2 million related to the timing of collections of accounts receivables, payments for accruals and payables, and purchases of inventory.
−Removed: Investing Activities
+Added: The increase in cash provided by operating activities primarily resulted from a net increase in operating assets and liabilities of $94.8 million related to the timing of collections of accounts receivables, payments for accruals and payables, and purchases of inventory, and partially offset by a decrease of $74.9 million in net income (after consideration of non-cash items included in net income, primarily related to depreciation, amortization, deferred tax assets and non-cash compensation).
+Added: Net cash provided by operating activities was $164.8 million for fiscal year 2022, compared to $131.3 million for the same period in 2021, an increase of $33.5 million.
+Added: The increase in cash provided by operating activities primarily resulted from an increase of $51.7 million in net income (after consideration of non-cash items included in net income, primarily related to depreciation, amortization, deferred tax assets and non-cash compensation) and a net decrease in
+Added: operating assets and liabilities of $18.2 million related to the timing of collections of accounts receivables, payments for accruals and payables, and purchases of inventory.
+Added: Cash Flows From Investing Activities
Net cash used in investing activities was $54.6 million for fiscal year 2023 compared to $61.6 million for the same period in 2022, a decrease of cash used in investing activities of $7.0 million.
+Added: The decrease in cash used in investing activities was primarily related to the acquisition of certain assets of AmTech, LLC and BTR, LLC in fiscal year 2022 for $6.6 million.
+Added: Net cash used in investing activities was $61.6 million for fiscal year 2022 compared to $181.1 million for the same period in 2021, a decrease of cash used in investing activities of $119.5 million.
The decrease in cash used in investing activities was primarily related to the acquisition of Maverick Boat Group on December 31, 2020, partially offset by an increase in capital expenditures and capital outlays related to our expansion activities at our Maverick facility in fiscal year 2022 compared to the capital expenditures in fiscal year 2021.
−Removed: Financing Activities
+Added: Cash Flows From Financing Activities
+Added: Net cash used in financing activities was $134.6 million for fiscal year 2023 compared to net cash used in financing activities of $60.4 million for fiscal year 2022, a change of $74.2 million.
+Added: During fiscal year, 2023, we repaid $23.1 million on our term loans, repaid $97.0 million, net of borrowings under our revolving credit facility and repurchased $7.9 million of our Class A Common Stock under our prior stock repurchase program.
+Added: We also paid $3.1 million on taxes for shares withheld upon the vesting of restricted stock awards, paid $3.4 million in distributions to LLC Unit holders and paid $1.4 million in deferred financing costs.
+Added: During fiscal year 2023, we received proceeds of $1.3 million from the exercise of stock options.
Net cash used in financing activities was $60.4 million for fiscal year 2022 compared to net cash provided by financing activities of $57.3 million for fiscal year 2021, a change of $117.7 million.
−Removed: During fiscal year, 2022, we received proceeds of $72.0 million from additional borrowings under our revolving credit facility to fully repay the $72.0 million of outstanding term
−Removed: loans that matured on July 1, 2022.
+Added: During fiscal year, 2022, we received proceeds of $72.0 million from additional borrowings under our revolving credit facility to fully repay the $72.0 million of outstanding term loans that matured on July 1, 2022.
Also during fiscal year 2022, we repaid $20.0 million of borrowings under our revolving credit facility, we repaid a total of $76.3 million on our term loans, repurchased $34.6 million of our Class A Common Stock under our previously announced stock repurchase program, paid $2.1 million on taxes for shares withheld upon the vesting of restricted stock awards, paid $2.7 million in distributions to LLC unit holders and received $3.3 million in proceeds from the exercise of stock options.
1 unchanged sentence
During fiscal year 2021, we also repaid $28.8 million of borrowings under our revolving credit facility, we repaid $0.6 million on our term loan, paid $1.2 million on taxes for shares withheld upon the vesting of restricted stock awards, paid $0.6 million in deferred financing costs, paid $1.8 million in distributions to LLC unit holders and received $0.3 million in proceeds from the exercise of stock options.
−Removed: Comparison of the Fiscal Year Ended June 30, 2021 to the Fiscal Year Ended June 30, 2020
−Removed: Operating Activities
−Removed: Net cash from operating activities was $131.3 million for fiscal year 2021, compared to $94.1 million for the same period in 2020, an increase of $37.2 million.
−Removed: The increase in cash provided by operating activities primarily resulted from an increase of $56.4 million in net income (after consideration of non-cash items included in net income, primarily related to depreciation, amortization, deferred tax assets and non-cash compensation) and a net decrease in operating assets and liabilities of $19.2 million related to the timing of collections of accounts receivables, payments for accruals and payables, and purchases of inventory.
−Removed: Investing Activities
−Removed: Net cash used for investing activities was $181.1 million for fiscal year 2021 compared to $40.4 million for the same period in 2020, an increase of $140.7 million.
−Removed: The increase in cash used for investing activities was primarily related to the acquisition of Maverick Boat Group on December 31, 2020, partially offset by a reduction in capital expenditures compared to the capital outlays for our expansion activities at our Pursuit and Cobalt plants in fiscal year 2020.
−Removed: Financing Activities
−Removed: Net cash provided by financing activities was $57.3 million for fiscal year 2021 compared to net cash used by financing activities of $47.3 million for fiscal year 2020, a change of $104.6 million.
−Removed: During fiscal year, 2021, we received proceeds of $25.0 million from a new incremental term loan and $65.0 million from additional borrowings under our revolving credit facility to fund the acquisition of Maverick Boat Group.
−Removed: During fiscal year 2021, we also repaid $28.8 million of borrowings under our revolving credit facility, we repaid $0.6 million on our term loan, paid $1.2 million on taxes for shares withheld upon the vesting of restricted stock awards, paid $0.6 million in deferred financing costs, paid $1.8 million in distributions to LLC unit holders and received $0.3 million in proceeds from the exercise of stock options.
−Removed: During fiscal year 2020, we received $103.8 million in proceeds from our credit facility primarily to provide financial flexibility in light of the uncertainty resulting from the COVID-19 pandemic.
−Removed: During fiscal year 2020, we repaid $135 million of borrowings under our revolving credit facility, repurchased $13.8 million of our Class A Common Stock under our previously announced stock repurchase program, paid $0.8 million on taxes for shares withheld on restricted stock vestings, paid $1.8 million in distributions to LLC unit holders and we received $0.4 million in proceeds from the exercise of stock options.
Revolving Credit Facility
−Removed: On July 8, 2022, we entered into our Amended Credit Agreement with Truist Bank, as the administrative agent, swingline lender and issuing bank, that amended and restated our Prior Credit Agreement.
−Removed: The Amended Credit Agreement provides us a revolving credit facility in an aggregate principal amount of up to $350.0 million (of which $121.7 million was drawn on July 8, 2022 to refinance the loans under the Prior Credit Agreement as well as to pay certain fees and expenses related to entering into the Amended Credit Agreement) with a maturity date of July 8, 2027.
−Removed: Prior to entering into the Amended Credit Agreement, we repaid $72.0 million of outstanding term loans under the Prior Credit Agreement in June 2022 by drawing on our revolving credit facility under the Prior Credit Agreement.
−Removed: Our indirect subsidiary, Malibu Boats, LLC is the borrower under the Amended Credit Agreement and its obligations are guaranteed by the LLC and, subject to certain exceptions, the present and future domestic subsidiaries of Malibu Boats, LLC, and all such obligations are secured by substantially all of the assets of the LLC, Malibu Boats, LLC and such subsidiary guarantors.
+Added: We have a revolving credit facility in an aggregate principal amount of up to $350.0 million with a maturity date of July 8, 2027.
+Added: As of June 30, 2023, we had no outstanding balance under our revolving credit facility and $1.6 million in outstanding letters of credit, with $348.4 million available for borrowing.
+Added: On July 7, 2023, we borrowed $75.0 million under the revolving credit facility, with $273.4 million remaining available for borrowing.
+Added: We have the option to request that lenders increase the amount available under the revolving credit facility by, or obtain incremental term loans of, up to $200.0 million, subject to the terms of the Credit Agreement and only if existing or new lenders choose to provide additional term or revolving commitments.
+Added: Our indirect subsidiary, Malibu Boats, LLC is the borrower under the Credit Agreement and its obligations are guaranteed by the LLC and, subject to certain exceptions, the present and future domestic subsidiaries of Malibu Boats, LLC, and all such obligations are secured by substantially all of the assets of the LLC, Malibu Boats, LLC and such subsidiary guarantors.
Malibu Boats, Inc.
−Removed: was not a party to the Prior Credit Agreement and is not a party to the Amended Credit Agreement.
−Removed: All borrowings under the Amended Credit Agreement bear interest at a rate equal to either, at our option, (i) the highest of the prime rate, the Federal Funds Rate plus 0.5%, or one-month Term SOFR plus 1% (the “Base Rate”) or (ii) SOFR, in each case plus an applicable margin ranging from 1.25% to 2.00% with respect to SOFR borrowings and 0.25% to 1.00% with respect to Base Rate borrowings.
+Added: is not a party to the Credit Agreement.
+Added: All borrowings under the Credit Agreement bear interest at a rate equal to either, at our option, (i) the highest of the prime rate, the Federal Funds Rate plus 0.5%, or one-month Term SOFR plus 1% (the “Base Rate”) or (ii) SOFR, in each case plus an applicable margin ranging from 1.25% to 2.00% with respect to SOFR borrowings and 0.25% to 1.00% with respect to Base Rate borrowings.
The applicable margin will be based upon the consolidated leverage ratio of the LLC and its subsidiaries.
We are required to pay a commitment fee for the unused portion of the revolving credit facility, which will range from 0.15% to 0.30% per annum, depending on the LLC’s and its subsidiaries’ consolidated leverage ratio.
−Removed: The Amended Credit Agreement contains certain customary representations and warranties, and notice requirements for the occurrence of specific events such as the occurrence of any event of default or pending or threatened litigation.
−Removed: The Amended Credit Agreement also requires compliance with certain customary financial covenants consisting of a minimum ratio of EBITDA to interest expense and a maximum ratio of total debt to EBITDA.
−Removed: The Amended Credit Agreement contains restrictive covenants regarding indebtedness, liens, fundamental changes, investments, restricted payments, disposition of assets, transactions with affiliates, negative pledges, hedging transactions, certain prepayments of indebtedness, accounting changes and governmental regulation.
−Removed: The Amended Credit Agreement also contains customary events of default.
−Removed: Events of default under the Amended Credit Agreement include (subject to grace periods in certain instances):
−Removed: (i) the failure by any Loan Party to timely make payments due under the Amended Credit Agreement;
−Removed: (ii) material misrepresentations or misstatements in any representation or warranty by any Loan Party when made;
−Removed: (iii) failure by any Loan Party to comply with the covenants under the Amended Credit Agreement and other related agreements;
−Removed: (iv) certain defaults under a specified amount of other indebtedness of Loan Parties;
−Removed: (v) insolvency or bankruptcy-related events with respect to the Loan Parties;
−Removed: (vi) certain undischarged, non-appealable judgments against Loan Parties;
−Removed: (vii) certain ERISA- related events reasonably expected to result in liability above a specified threshold to Loan Parties taken as a whole;
−Removed: (viii) any loan documents or a material part of the liens under the loan documents ceasing to be, or being asserted by any Loan Party not to be, in full force and effect;
−Removed: (ix) any obligations under the loan documents ceasing to constitute senior indebtedness;
−Removed: and (x) the occurrence of a change of control.
−Removed: If an event of default has occurred and continues beyond any applicable cure period, the Administrative Agent may (i) accelerate all outstanding obligations under the Amended Credit Agreement or (ii) terminate the commitments, amongst other remedies.
−Removed: Additionally, the lenders are not obligated to fund any new borrowing under the Amended Credit Agreement while an event of default is continuing.
+Added: The Credit Agreement contains certain customary representations and warranties, and notice requirements for the occurrence of specific events such as the occurrence of any event of default or pending or threatened litigation.
+Added: The Credit Agreement also requires compliance with certain customary financial covenants consisting of a minimum ratio of EBITDA to
+Added: interest expense and a maximum ratio of total debt to EBITDA.
+Added: The Credit Agreement contains restrictive covenants regarding indebtedness, liens, fundamental changes, investments, share repurchases, dividends and distributions, disposition of assets, transactions with affiliates, negative pledges, hedging transactions, certain prepayments of indebtedness, accounting changes and governmental regulation.
+Added: The Credit Agreement also contains customary events of default.
+Added: If an event of default has occurred and continues beyond any applicable cure period, the administrative agent may (i) accelerate all outstanding obligations under the Credit Agreement or (ii) terminate the commitments, amongst other remedies.
+Added: Additionally, the lenders are not obligated to fund any new borrowing under the Credit Agreement while an event of default is continuing.
Repurchase Commitments
4 unchanged sentences
Our financial exposure under these agreements is limited to the difference between the amounts unpaid by the dealer with respect to the repossessed product plus costs of repossession and the amount received on the resale of the repossessed product.
−Removed: For fiscal year 2022, we did not repurchase any boats under our repurchase agreements.
−Removed: For fiscal year 2021, we did not repurchase any boats under our repurchase agreements.
−Removed: 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.
+Added: For fiscal years 2023, 2022 and 2021, we did not repurchase any boats under our repurchase agreements, respectively.
An adverse change in retail sales could require us to repurchase repossessed units upon an event of default by any of our dealers, subject to the annual limitation.
Refer to Note 17 to the audited consolidated financial statements included elsewhere in this Annual Report for further information on repurchase commitments.
−Removed: Potential Impact of LIBOR Transition
−Removed: Malibu Boats, Inc.
−Removed: is required to make a good faith effort to ensure that it has sufficient cash available to make any required payments under the tax receivable agreement.
−Removed: The limited liability company agreement of the LLC requires the LLC to make “tax distributions” which, in the ordinary course, will be sufficient to pay the actual tax liability of Malibu Boats, Inc.
−Removed: and to fund required payments under the tax receivable agreement.
−Removed: If for any reason the LLC is not able to make a tax distribution in an amount that is sufficient to make any required payment under the tax receivable agreement or we otherwise lack sufficient funds, interest would accrue on any unpaid amounts at LIBOR, plus 500 basis points until they are paid.
−Removed: Recent actions taken by the Chief Executive of the U.K.
−Removed: Financial Conduct Authority (the “FCA”), which regulates LIBOR, indicate that the continuation of U.S.
−Removed: LIBOR on the current basis cannot and will not be guaranteed after June 30, 2023.
−Removed: Moreover, it is possible that U.S.
−Removed: LIBOR will be discontinued or modified prior to June 30, 2023.
−Removed: Our tax receivable agreement, however, does not provide for an alternative reference rate to LIBOR and, while we do not currently anticipate failing to pay any amounts owed
−Removed: under our tax receivable agreement, it is unclear how we would determine interest on any such amounts should we fail to pay as required under our tax receivable agreement.
Critical Accounting Policies and Critical Accounting Estimates
36 unchanged sentences
Revenue associated with sales to the independent representative responsible for international sales is recognized in accordance with free on board shipping point terms, the point at which the risks of ownership and loss pass to the representative.
−Removed: A fixed percentage discount is earned by the independent representative at the time of shipment to the representative as a reduction in the price of the boat and is recorded in
−Removed: our consolidated statement of operations as a reduction in sales.
+Added: A fixed percentage discount is earned by the independent representative at the time of shipment to the representative as a reduction in the price of the boat and is recorded in our consolidated statements of operations and comprehensive income as a reduction in sales.
We earn royalties on boats shipped with our proprietary wake surfing technology under licensing agreements with various marine manufacturers.
9 unchanged sentences
Beginning in model year 2018, we increased the term of our bow-to-stern warranty for Cobalt brand boats from three years to five years.
−Removed: As a result of these changes, all of our Malibu, Axis and Cobalt brand boats with historical claims experience that are no longer covered under warranty had warranty terms shorter than the current warranty term of five years.
−Removed: Accordingly, we have little historical claims experience for warranty years four and five, and as such, these estimates give rise to a higher level of estimation uncertainty.
+Added: Accordingly, we have less historical claims experience for warranty year five, and as such, these estimates give rise to a higher level of estimation uncertainty.
Future warranty claims may differ from our estimate of the warranty liability, which could lead to changes in the Company’s warranty liability in future periods.
5 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.