What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-08-29 compared with 2022-08-25 · 196 added, 245 removed, 1066 unchanged (29% of the section changed)

16 unchanged sentences

Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The Company's management, including its chief executive officer and chief financial officer, assessed the effectiveness of the Company's internal control over financial reporting as of June 30, 2022.

The Company's management, including its chief executive officer and interim chief financial officer, assessed the effectiveness of the Company's internal control over financial reporting as of June 30, 2023.

In making this assessment, the Company used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control-Integrated Framework (2013) .

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We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s warranty accrual process.

This included controls over the development of the assumptions used to estimate the warranty cost per boat for warranty year five, for

which little claims experience exists.

This included controls over the development of the assumptions used to estimate the warranty cost per boat for warranty year five, for which less claims experience exists.

We performed sensitivity analyses to assess the potential for possible changes to these assumptions on the product warranty liability.

55 unchanged sentences

Total current assets 326,334 298,499

Property and equipment, net 170,718 132,913

Property, plant and equipment, net 204,792 170,718

Goodwill 100,577 100,804

48 unchanged sentences

Issuance of equity for exercise of options 11 — — — 375 — — — 375

Repurchase and retirement of common stock ( 483 ) ( 5 ) — — ( 13,828 ) — — — ( 13,833 )

Cumulative-effect transition adjustment for ASC 842 — — — — — — ( 1,703 ) — ( 1,703 )

Increase in payable pursuant to the tax receivable agreement — — — — ( 2,142 ) — — — ( 2,142 )

1 unchanged sentence

Exchange of LLC Units for Class A Common Stock 130 1 — — 1,373 — — ( 1,373 ) 1

Cancellation of Class B Common Stock for Exchange of LLC Units — — ( 5 ) — — — — — —

Distributions to LLC Unit holders — — — — — — — ( 2,341 ) ( 2,341 )

5 unchanged sentences

Issuance of equity for exercise of options 113 1 — — 3,286 — — — 3,287

Increase in payable pursuant to the tax receivable agreement — — — — ( 2,142 ) — — — ( 2,142 )

Increase in deferred tax asset from step-up in tax basis — — — — 2,755 — — — 2,755

Exchange of LLC Units for Class A Common Stock 130 1 — — 1,373 — — ( 1,373 ) 1

Cancellation of Class B Common Stock for Exchange of LLC Units — — ( 5 ) — — — — — —

Repurchase and retirement of common stock ( 555 ) ( 6 ) — — ( 34,636 ) — — — ( 34,642 )

Distributions to LLC Unit holders — — — — — — — ( 3,076 ) ( 3,076 )

6 unchanged sentences

Repurchase and retirement of common stock ( 144 ) ( 1 ) — — ( 7,867 ) — — — ( 7,868 )

Increase in payable pursuant to the tax receivable agreement — — — — ( 1,710 ) — — — ( 1,710 )

Increase in deferred tax asset from step-up in tax basis — — — — 2,619 — — — 2,619

Exchange of LLC Units for Class A Common Stock 145 1 — — 2,765 — — ( 2,765 ) 1

Issuance of Class B Common Stock — — 2 — — — — — —

Distributions to LLC Unit holders — — — — — — ( 3,131 ) ( 3,131 )

23 unchanged sentences

Accounts payable ( 5,148 ) ( 287 ) 24,459

Accrued expenses 10,579 24,894 ( 239 )

Income taxes receivable and payable 6 ( 794 ) 3,539

Accrued expenses 99,326 10,579 24,894

Other liabilities ( 1,976 ) ( 4,140 ) ( 5,263 )

7 unchanged sentences

Financing activities:

Principal payments on long-term borrowings ( 76,250 ) ( 625 ) —

Proceeds from long-term borrowings — 25,000 —

Payment of deferred financing costs — ( 638 ) —

Proceeds from revolving credit facility 241,700 72,000 65,000

Proceeds from long-term borrowings — — 25,000

Payments on revolving credit facility ( 338,700 ) ( 20,000 ) ( 28,800 )

Repurchase and retirement of Class A Common Stock ( 34,642 ) — ( 13,833 )

Principal payments on long-term borrowings ( 23,125 ) ( 76,250 ) ( 625 )

Payment of deferred financing costs ( 1,362 ) — ( 638 )

Proceeds received from exercise of stock options 1,317 3,287 375

Cash paid for tax withholdings ( 3,135 ) ( 2,058 ) ( 1,208 )

Distributions to non-controlling LLC Unit holders ( 3,401 ) ( 2,717 ) ( 1,758 )

Proceeds received from exercise of stock options 3,287 375 377

Repurchase and retirement of Class A Common Stock ( 7,868 ) ( 34,642 ) —

Net cash (used in) provided by financing activities ( 134,574 ) ( 60,380 ) 57,346

19 unchanged sentences

Malibu Boats, Inc.

(together with its subsidiaries, the “Company” or "Malibu"), a Delaware corporation formed on November 1, 2013, is the sole managing member of Malibu Boats Holdings, LLC, a Delaware limited liability company (the "LLC").

(“MBI”, and together with its subsidiaries, the “Company” or "Malibu"), a Delaware corporation formed on November 1, 2013, is the sole managing member of Malibu Boats Holdings, LLC, a Delaware limited liability company (the "LLC").

The Company operates and controls all of the LLC's business and affairs and, therefore, pursuant to Financial Accounting Standards Board ("FASB") Accounting Standards Codification (“ASC”) Topic 810, Consolidation , consolidates the financial results of the LLC and its subsidiaries, and records a non-controlling interest for the economic interest in the Company held by the non-controlling holders of units in the LLC ("LLC Units").

Malibu Boats Holdings, LLC was formed in 2006.

The LLC was formed in 2006.

The LLC, through its wholly owned subsidiary, Malibu Boats, LLC, (“Boats LLC”), is engaged in the design, engineering, manufacturing and marketing of innovative, high-quality, recreational powerboats that are sold through a world-wide network of independent dealers.

On October 15, 2018, the Company's subsidiary Malibu Boats, LLC, purchased the assets of Pursuit Boats ("Pursuit") from S2 Yachts, Inc., expanding the Company's product offering into the fiberglass outboard fishing boat market.

On December 31, 2020, the Company acquired all of the outstanding stock of Maverick Boat Group, Inc.

(“Maverick Boat Group”).

As a result of the acquisition, the Company consolidates the financial results of the Maverick Boat Group.

Maverick Boat Group designs and manufactures center console, dual console, flats and bay boats under four brands -- Cobia, Pathfinder, Maverick and Hewes brands.

In addition to the Maverick Boat Group’s family of brands, the Company sells its boats under the Malibu, Axis, Cobalt and Pursuit brands.

In connection with the acquisition of Maverick Boat Group, the Company revised its segment reporting to report its results of operations under three reportable segments -- Malibu, Saltwater Fishing and Cobalt.

The Company sells its boats under eight brands -- Malibu, Axis, Pursuit, Maverick, Cobia, Pathfinder, Hewes and Cobalt brands.

T he Company reports its results of operations under three reportable segments -- Malibu, Saltwater Fishing and Cobalt.

Basis of Presentation

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As a result, the Company continues to have three reportable segments, Malibu, Saltwater Fishing and Cobalt.

All segment information in the accompanying consolidated financial statements has been revised to conform to the Company’s current reporting segments for comparison purposes.

Additional segment information is contained in Note 19.

14 unchanged sentences

represented approximately 17.2 % , 16.8 % and 16.3 % of the Company's consolidated net sales in the fiscal years ended June 30, 2023 , 2022 , and 2021 respectively.

Sales to the Company's dealers under common control of Tommy's Boats represented approximately 10.7 %, 9.4 % and 7.3 % of the Company's consolidated net sales in the fiscal years ended June 30, 2023 , 2022 , and 2021 respectively.

The Company considers all highly liquid investments purchased with an original maturity of 90 days or less to be cash equivalents.

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If the carrying value of the reporting unit’s goodwill exceeds its implied fair value, then the Company would record an impairment loss equal to the difference.

For fiscal years ended June 30, 2022 and 2021, the Company performed a qualitative assessment which indicated that the fair value of its reporting units more likely than not exceeded their respective carrying amounts.

For the fiscal year ended June 30, 2023, the Company performed a quantitative assessment on the Maverick Boat Group reporting unit which indicated that the fair value of its reporting unit more likely than not exceeded its carrying amount.

For the fiscal year ended June 30, 2023, the Company performed a qualitative assessment on the remaining reporting units which indicated that the fair value of its reporting units more likely than not exceeded their respective carrying amounts.

For the fiscal year ended June 30, 2022, the Company performed a qualitative assessment which indicated that the fair value of its reporting units more likely than not exceeded their respective carrying amounts.

The Company did no t recognize any goodwill impairment charges in the fiscal years ended June 30, 2023, 2022 and 2021.

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The Company provides for various structured dealer rebate and sales promotions incentives, which are recognized as a component of sales in measuring the amount of consideration the Company expects to receive in exchange for transferring goods, at the time of sale to the dealer.

Examples of such programs include rebates, seasonal discounts, promotional co-op arrangements and other allowances.

Examples of such programs include rebates, seasonal discounts and other allowances.

Dealer rebates and sales promotion expenses are estimated based on current programs and historical achievement and/or usage rates.

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Fair Value Measurements

The Company applies the provisions of ASC Topic 820, Fair Value Measurement , for fair value measurements of financial assets and financial liabilities, and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements on a recurring basis.

ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

5 unchanged sentences

The Company expenses employee share-based awards under ASC Topic 718, Compensation—Stock Compensation , which requires compensation cost for the grant-date fair value of share-based awards to be recognized over the requisite service period.

The Company estimated the grant date fair value of the share-based awards issued in the form of profit interests granted prior to November 1, 2013 using the Black-Scholes option pricing model and those granted on November 1, 2013 under the Probability-Weighted Expected Return method.

Stock options granted to executives on June 29, 2017, November 6, 2017, August 22, 2018 and January 14, 2019 were valued using the Black-Scholes option pricing model.

Stock options granted to executives January 14, 2019 were valued using the Black-Scholes option pricing model.

Stock awards granted on November 3, 2022, November 3, 2021 and November 3, 2020 based on total shareholder return were valued using a Monte Carlo simulation.

3 unchanged sentences

The functional currency for the Company's consolidated foreign subsidiary is the applicable local currency.

The assets and liabilities are translated at the foreign exchange rate in effect at the applicable reporting date, and the consolidated statements of operations and comprehensive income and cash flows are translated at the average exchange rate in effect during the applicable period.

Exchange rate fluctuations on translating the foreign currency financial statements into U.S.

3 unchanged sentences

Components of comprehensive income include net income and foreign currency translation adjustments.

The Company has chosen to disclose comprehensive income in a single continuous statement of operations and comprehensive income.

COVID-19 Pandemic

The COVID-19 pandemic has impacted the Company’s operations and financial results since the third quarter of fiscal year 2020 and continues to impact the Company.

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

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

In addition, the COVID-19 pandemic has impacted and may continue to impact the operations of the Company’s dealers and suppliers.

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

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

The increase in retail sales during fiscal year 2021 combined with the Company's 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 the Company’s dealers throughout fiscal year 2021 and continued into fiscal year 2022.

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

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

Saltwater Fishing segment dealers remain low on inventory.

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.

Additionally, the Company experienced supply chain disruptions throughout fiscal year 2022 that it believes were driven by numerous factors, including labor shortages, ongoing domestic logistical constraints, West Coast port challenges and rising prices to the Company’s suppliers, in part due to inflationary pressures.

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

The future impact of COVID-19 and ongoing supply chain disruptions on the Company’s 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 the Company may not be able to forecast at this time.

The Company has chosen to disclose comprehensive income in a single continuous consolidated statement of operations and comprehensive income.

Recent Accounting Pronouncements

On July 1, 2019, the Company adopted the new accounting standard, ASC Topic 842, Leases , which superseded the requirements in ASC Topic 840, Leases .

ASC Topic 842 requires lessees to recognize on the balance sheet a right-of-use asset, representing its right to use the underlying asset for the lease term, and a lease liability for all leases with terms greater than 12 months.

The guidance also requires qualitative and quantitative disclosures designed to assess the amount, timing, and uncertainty of cash flows arising from leases.

The Company applied the modified retrospective transition method which allowed for the election of the application of practical expedients, which among other things, allowed the Company to carry forward the historical lease classification.

Under this new transition method, at the adoption date the Company recognized a cumulative-effect adjustment to the opening balance of retained earnings.

The adoption of ASC Topic 842 did not have a material impact on the Company’s consolidated results of operations, equity or cash flows as of the adoption date.

optional transition approach, comparative information was not restated, but will continue to be reported under the standards in effect for those periods.

See Note 11 for further information regarding the Company’s leases.

In June 2016, the FASB issued Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326):

8 unchanged sentences

The expedients and exceptions provided by this guidance apply only to contracts, hedging relationships, and other transactions that reference the London interbank offered rate (“LIBOR”) or another reference rate expected to be discontinued as a result of reference rate reform.

This guidance is not applicable to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022.

Per ASU 2022-06, Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848 , this guidance is not applicable to contract modifications made and hedging relationships entered into or evaluated after December 31, 2024.

The guidance can be applied immediately through December 31, 2024.

8 unchanged sentences

Part and other sales 18,246 1,569 3,934 23,749

Total revenue $ 607,543 $ 341,930 $ 265,404 $ 1,214,877

Net sales $ 636,247 $ 449,156 $ 302,962 $ 1,388,365

Revenue by geography:

1 unchanged sentence

International 54,155 8,707 10,627 73,489

Total revenue $ 607,543 $ 341,930 $ 265,404 $ 1,214,877

Net sales $ 636,247 $ 449,156 $ 302,962 $ 1,388,365

Fiscal Year Ended June 30, 2022

3 unchanged sentences

Part and other sales 17,484 1,205 2,725 21,414

Total revenue $ 483,525 $ 242,914 $ 200,076 $ 926,515

Net sales $ 607,543 $ 341,930 $ 265,404 $ 1,214,877

Revenue by geography:

1 unchanged sentence

International 58,717 5,114 11,592 75,423

Total revenue $ 483,525 $ 242,914 $ 200,076 $ 926,515

Net sales $ 607,543 $ 341,930 $ 265,404 $ 1,214,877

Fiscal Year Ended June 30, 2021

3 unchanged sentences

Part and other sales 18,787 1,164 3,422 23,373

Total revenue $ 354,769 $ 123,626 $ 174,768 $ 653,163

Net sales $ 483,525 $ 242,914 $ 200,076 $ 926,515

Revenue by geography:

1 unchanged sentence

International 48,865 8,234 8,599 65,698

Total revenue $ 354,769 $ 123,626 $ 174,768 $ 653,163

Net sales $ 483,525 $ 242,914 $ 200,076 $ 926,515

Boat and Trailer Sales

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Non-controlling Interest

The non-controlling interest on the consolidated statements of operations and comprehensive income represents the portion of earnings or loss attributable to the economic interest in the Company's subsidiary, Malibu Boats Holdings, LLC, held by the non-controlling LLC Unit holders.

The non-controlling interest on the consolidated statements of operations and comprehensive income represents the portion of earnings or loss attributable to the economic interest in the Company's subsidiary, the LLC, held by the non-controlling LLC Unit holders.

Non-controlling interest on the consolidated balance sheets represents the portion of net assets of the Company attributable to the non-controlling LLC Unit holders, based on the portion of the LLC Units owned by such Unit holders.

The ownership of Malibu Boats Holdings, LLC is summarized as follows:

The ownership of the LLC is summarized as follows:

As of June 30, 2023 As of June 30, 2022

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During the fiscal year ended June 30, 2023, the Company caused the LLC to issue a total of 346,370 LLC Units to the Company in connection with (i) the Company's issuance of Class A Common Stock to a non-employee director for her services, (ii) the issuance of Class A Common Stock for the vesting of awards granted under the Malibu Boats, Inc.

Long-Term Incentive Plan (the "Incentive Plan"), (iii) the issuance of restricted Class A Common Stock granted under the Incentive Plan and (iv) the issuance of Class A Common Stock for the exercise of options granted under the Incentive Plan.

During fiscal year 2022, 16,932 LLC Units were canceled in connection with the vesting of share-based equity awards to satisfy employee tax withholding requirements and the retirement of 16,932 treasury shares in accordance with the LLC Agreement.

Long-Term Incentive Plan (the "Incentive Plan") and (iii) the issuance of restricted Class A Common Stock granted under the Incentive Plan, (iv) the issuance of Class A Common Stock to LLC Unit holders in exchange of their LLC Units and (v) the issuance of Class A Common Stock for the exercise of options granted under the Incentive Plan.

During fiscal year 2023, 38,598 LLC Units were canceled in connection with the vesting of share-based equity awards to satisfy employee tax withholding requirements, 3,406 LLC Units were canceled in connection with the vesting of stock awards with a market condition that were deemed to not be achieved and 57,866 LLC Units were canceled in connection with the forfeiture of stock awards.

In connection with the cancellation of LLC units described above, an equivalent 99,870 treasury shares were retired in accordance with the LLC Agreement.

Also during fiscal year 2023, 143,759 LLC Units were redeemed and canceled by the LLC in connection with the purchase and retirement of 143,759 treasury shares under the Company's stock repurchase program.

1 unchanged sentence

Distributions for Taxes

As a limited liability company (treated as a partnership for income tax purposes), Malibu Boats Holdings, LLC does not incur significant federal, state or local income taxes, as these taxes are primarily the obligations of its members.

As a limited liability company (treated as a partnership for income tax purposes), the LLC does not incur significant federal, state or local income taxes, as these taxes are primarily the obligations of its members.

As authorized by the LLC Agreement, the LLC is required to distribute cash, to the extent that the LLC has cash available, on a pro rata basis, to its members to the extent necessary to cover the members’ tax liabilities, if any, with respect to their share of LLC earnings.

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Property, plant, and equipment acquired outside of acquisition are stated at cost.

When property, plant, and equipment is retired or otherwise disposed of, the related cost and accumulated depreciation is removed from the accounts and any resulting gain or loss is accounted for in the statement of operations and comprehensive income.

Major additions are capitalized;

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In accordance with ASC Topic 360, long-lived assets to be held are reviewed for events or changes in circumstances that indicate that their carrying value may not be recoverable.

The Company periodically reviews for indicators and, if indicators are present, tests the carrying value of long-lived assets, assessing their net realizable values based on estimated undiscounted cash flows over their remaining estimated useful lives.

The Company periodically reviews for

indicators and, if indicators are present, tests the carrying value of long-lived assets, assessing their net realizable values based on estimated undiscounted cash flows over their remaining estimated useful lives.

If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is measured as the amount by which the carrying amount of the asset exceeds the fair value of the asset, based on discounted cash flows.

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Depreciation expense was $ 21,912 , $ 19,365 and $ 15,636 for the fiscal years ended June 30, 2023, 2022 and 2021, respectively, substantially all of which was recorded in cost of sales.

During fiscal year 2022, the Company disposed of various assets with a net book value of $ 3 and recorded a gain of $ 6 related to these disposals.

During fiscal year 2021, the Company disposed of various assets with a net book value of $ 383 and recorded a loss of $ 374 related to these disposals.

Goodwill and Other Intangible Assets, net

2 unchanged sentences

Goodwill as of June 30, 2021

Addition related to the acquisition of Maverick Boat Group — 49,189 — 49,189

$ 12,528 $ 68,714 $ 19,791 $ 101,033

Addition related to the acquisition of Malibu Electronics 329 — — 329

Effect of foreign currency changes on goodwill

( 558 ) — — ( 558 )

Goodwill as of June 30, 2022

Addition related to the acquisition of Malibu Electronics 329 — — 329

12,299 68,714 19,791 100,804

Effect of foreign currency changes on goodwill

1 unchanged sentence

Goodwill as of June 30, 2023

$ 12,072 $ 68,714 $ 19,791 $ 100,577

The components of other intangible assets were as follows:

As of June 30, Estimated Useful Life (in years) Weighted Average Remaining Useful Life (in years)

Definite-lived intangibles:

Dealer relationships $ 131,725 $ 131,806 15 - 20

19 unchanged sentences

Current operating lease liabilities 2,324 2,121

Litigation settlement 100,000 —

Accrued legal and professional fees 1,899 1,939

2 unchanged sentences

Total accrued expenses $ 187,078 $ 87,742

Litigation settlement 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.

Product Warranties

The Company's Malibu and Axis brand boats have a limited warranty for a period up to five years .

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

hull and deck structural components), including canvas and upholstery.

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

5 unchanged sentences

The Company’s standard warranties require it or its dealers to repair or replace defective products during the warranty period at no cost to the consumer.

The Company estimates warranty costs it expects to incur and record a liability for such costs at the time the product revenue is recognized.

The Company estimates warranty costs it expects to incur and records a liability for such costs at the time the product revenue is recognized.

The Company utilizes historical claims trends and analytical tools to develop the estimate of its warranty obligation on a per boat basis, by brand and warranty year.

Factors that affect the Company’s warranty liability include the number of units sold, historical and anticipated rates of warranty claims and cost per claim.

The Company assesses the adequacy of its recorded warranty liabilities and adjust the amounts as necessary.

The Company assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary.

Beginning in model year 2016, the Company increased the term of its limited warranty for Malibu brand boats from three years to five years and for Axis brand boats from two years to five years .

Beginning in model year 2018, the Company increased the term of its bow-to-stern warranty for Cobalt brand boats from three years to five years .

As a result of these changes, all of the Company’s 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 .

Accordingly, the Company has little historical claims experience for warranty years four and five , and as such, these estimates give rise to a higher level of estimation uncertainty.

Accordingly, the Company has less historical claims experience for warranty years four and five , and as such, these estimates give rise to a higher level of estimation uncertainty.

Future warranty claims may differ from the Company's estimate of the warranty liability, which could lead to changes in the Company’s warranty liability in future periods.

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Long-Term Debt

As of June 30, 2022, the Company had a revolving credit facility with borrowing capacity of up to $ 170,000 and term loans with an aggregate principal amount outstanding of $ 23,125 .

As of June 30, 2022, the Company had $ 97,000 outstanding under its revolving credit facility and $ 1,379 in outstanding letters of credit with $ 71,621 available for borrowing.

The revolving

credit facility matures on July 1, 2024 and a term loan made on December 30, 2020 in a principal amount of $ 25,000 , of which $ 23,125 was outstanding as of June 30, 2022, (the “Incremental Term Loan”) matures on July 1, 2024.

The Company had additional term loans in a principal amount of $ 75,000 , of which $ 72,000 was due on July 1, 2022 (the “Existing Term Loans,” and together with the Incremental Term Loans, the “Term Loans”).

In June 2022, the Company used proceeds from drawing on the revolving credit facility to repay the Existing Term Loans in full.

The Incremental Term Loan remained outstanding as of June 30, 2022.

On December 30, 2020, Boats LLC entered into the Third Amendment (the “Third Amendment”) to its Second Amended and Restated Credit Agreement dated as of June 28, 2017, by and among Boats LLC, the LLC and certain subsidiaries of Boats LLC parties thereto, as guarantors, the lenders parties thereto and Truist Bank (successor by merger to SunTrust Bank), as administrative agent, swingline lender and issuing bank (as amended, the “Credit Agreement”).

The Third Amendment added a $ 25,000 Incremental Term Loan facility with a maturity date of July 1, 2024 and increased the borrowing capacity of the revolving credit facility by $ 50,000 from $ 120,000 to $ 170,000 .

The Incremental Term Loan is subject to quarterly amortization at a rate of 5.0 % per annum through December 31, 2022 and at a rate of 7.5 % per annum through June 30, 2024 and accrues interest at the same interest rate applicable to other loans under the Credit Agreement as described below.

As of June 30, 2023, the Company had a revolving credit facility with borrowing capacity of up to $ 350,000 .

June 30, 2023, the Company had $ 0 outstanding under its revolving credit facility and $ 1,578 in outstanding letters of credit with $ 348,422 available for borrowing.

The revolving credit facility matures on July 8, 2027.

As of June 30, 2023, the Company reclassified unamortized debt issuance costs into Other assets.

On July 8, 2022, Boats LLC entered into a Third Amended and Restated Credit Agreement (the “Credit Agreement”) that amended and restated its second amended and restated credit agreement dated as of June 28, 2017.

The Credit Agreement increased the borrowing capacity of the revolving credit facility from $ 170,000 to $ 350,000 .

Boats LLC has the option to request that lenders increase the amount available under the revolving credit facility by, or obtain incremental term loans of, up to $ 200,000 , subject to the terms of the Credit Agreement and only if existing or new lenders choose to provide additional term or revolving commitments.

The obligations of Boats LLC under the Credit Agreement are guaranteed by the LLC, and, subject to certain exceptions, the present and future domestic subsidiaries of Boats LLC, and all such obligations are secured by substantially all of the assets of the LLC, Boats LLC and such subsidiary guarantors.

1 unchanged sentence

is not a party to the Credit Agreement.

Borrowings under the Credit Agreement bear interest at a rate equal to either, at the Company's option, (i) the highest of the prime rate, the Federal Funds Rate plus 0.5 %, or one-month London Inter-bank Offered Rate ("LIBOR") plus 1 % (the “base rate”) or (ii) LIBOR, in each case plus an applicable margin ranging from 1.25 % to 2.25 % with respect to LIBOR borrowings and 0.25 % to 1.25 % with respect to base rate borrowings.

The applicable margin will be based upon the consolidated leverage ratio of the LLC and its subsidiaries calculated on a consolidated basis.

As of June 30, 2022, the interest rate on the Company’s term loans and revolving credit facility wa s 3.04 % .

Borrowings under the Credit Agreement bear interest at a rate equal to either, at the Company's option, (i) the highest of the prime rate, the Federal Funds Rate (as defined in the Credit Agreement) plus 0.5 %, or one-month Term SOFR (as defined in the Credit Agreement) plus 1 % (the “Base Rate”) or (ii) SOFR (as defined in the Credit Agreement), 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.

As of June 30, 2023, the interest rate on the Company’s term loans and revolving credit facility was 6.56 % .

The Company is required to pay a commitment fee for any 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.

The Credit Agreement permits prepayment of the term loan without any penalties.

The Existing Term Loans required an amortization payment of approximately $ 3,000 on March 31, 2022 and the remaining balance of the Existing Term Loans is due on the scheduled maturity date of July 1, 2022, each reflected as current maturities of long-term obligations.

The Incremental Term Loan of $ 25,000 is subject to quarterly amortization at a rate of 5.0 % per year through December 31, 2022 and 7.5 % per year through June 30, 2024, resulting in $ 1,563 being reflected as current maturities of long-term obligations with the balance of the Incremental Term Loan due on the scheduled maturity date of July 1, 2024.

The Credit Agreement also requires prepayments from the net cash proceeds received by Boats LLC or any guarantors from certain asset sales and recovery events, subject to certain reinvestment rights, and from excess cash flow, subject to the terms and conditions of the Credit Agreement.

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.

The Credit Agreement also requires compliance with certain customary financial covenants, including a minimum ratio of EBITDA to fixed charges and a maximum ratio of total debt to EBITDA.

The Credit Agreement contains certain restrictive covenants, which, among other things, place limits on certain activities of the loan parties under the Credit Agreement, such as the incurrence of additional indebtedness and additional liens on property and limit the future payment of dividends or distributions.

The 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.

The Credit Agreement contains certain customary 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.

For example, the Credit Agreement generally prohibits the LLC, Boats LLC and the subsidiary guarantors from paying dividends or making distributions, including to the Company.

The credit facility permits, however, (i) distributions based on a member’s allocated taxable income, (ii) distributions to fund payments that are required under the LLC’s tax receivable agreement, (iii) purchase of stock or stock options of the LLC from former officers, directors or employees of loan parties or payments pursuant to stock option and other benefit plans up to $ 3,000 in any fiscal year, and (iv) share repurchase payments up to $ 35,000 in any fiscal year subject to one-year carry forward and compliance with other financial covenants.

In addition, the LLC may make dividends and distributions of up to $ 10,000 in any fiscal year, subject to compliance with other financial covenants.

In connection with entering into the Credit Agreement in fiscal year 2017, the Company capitalized $ 2,074 in deferred financing costs during fiscal 2017.

In connection with Third Amendment entered into in December 2020, the Company capitalized $ 638 in deferred financing costs during fiscal year 2021.

These costs, in addition to the unamortized balance related to costs associated with the Company's previous credit facility of $ 671 , are being amortized over the term of the Credit Agreement into interest expense using the effective interest method and presented as a direct offset to the total debt outstanding on the consolidated balance sheet.

On July 8, 2022, the Company entered into a Third Amended and Restated Credit Agreement that amended and restated the Credit Agreement.

Refer to Note 21 related to Subsequent Events.

The credit facility permits, however, (i) distributions based on a member’s allocated taxable income, (ii) distributions to fund payments that are required under the LLC’s tax receivable agreement, (iii) purchase of stock or stock options of the LLC from former officers, directors or employees of loan parties or payments pursuant to stock option and other benefit plans up to $ 5,000 in any fiscal year, and (iv) repurchases of the Company's outstanding stock and LLC Units.

In addition, the LLC may make unlimited dividends and distributions if its consolidated leverage ratio is 2.75 or less and certain other conditions are met, subject to compliance with certain financial covenants.

The Credit Agreement also contains customary events of default.

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.

Additionally, the lenders are not obligated to fund any new borrowing under the Credit Agreement while an event of default is continuing.

Covenant Compliance

As of June 30, 2023 and 2022, the Company was in compliance with the financial covenants contained in the Credit Agreement.

Interest Rate Swap

On July 1, 2015, the Company entered into a five year floating to fixed interest rate swap with an effective start date of July 1, 2015.

The swap is based on a one-month LIBOR rate versus a 1.52 % fixed rate on a notional value of $ 39,250 , which under terms of the previously existing credit agreement is equal to 50 % of the outstanding balance of the term loan at the time of the swap arrangement.

Under ASC Topic 815, Derivatives and Hedging, all derivative instruments are recorded on the consolidated balance sheets at fair value as either short term or long term assets or liabilities based on their anticipated settlement date.

The Company has elected not to designate its interest rate swap as a hedge;

therefore, changes in the fair value of the derivative instrument are being recognized in earnings in the Company's consolidated statements of operations and comprehensive income.

The swap matured on March 31, 2020.

For the fiscal year ended June 30, 2020, the Company record a loss of $ 68 for the change in fair value of the interest rate swap, which is included in interest expense in the consolidated statements of operations and comprehensive income.

The Company leases certain manufacturing facilities, warehouses, office space, land, and equipment.

The Company determines if a contract is a lease or contains an embedded lease at the inception of the agreement.

The Company recorded right-of-use assets, included in other assets on the consolidated balance sheet, totaling $ 16,142 as of July 1, 2019.

Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet.

Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets.

The Company does not separate non-lease components from the lease components to which they relate, and instead accounts for each separate lease and non-lease component associated with that lease component as a single lease component for all underlying asset classes.

The Company's lease liabilities do not include future lease payments related to options to extend or terminate lease agreements as it is not reasonably certain those options will be exercised.

Other information concerning the Company's operating leases accounted for under ASC Topic 842 is as follows:

Other information concerning the Company's operating leases accounted for under ASC Topic 842, Leases is as follows:

As of June 30,

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The weighted average remaining lease term for the fiscal year ended June 30, 2023 and 2022 was 4.60 years and 5.53 years, respectively.

As of June 30, 2022 and 2021, the weighted average discount rate determined based on the Company's incremental borrowing rate is 3.63 %, respectively.

As of June 30, 2023 and 2022, the weighted average discount rate determined based on the Company's incremental borrowing rate is 3.67 % and 3.63 %, respectively.

Future annual minimum lease payments for the following fiscal years as of June 30, 2023 are as follows:

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The Company has a Tax Receivable Agreement with the pre-IPO owners of the LLC that provides for the payment by the Company to the pre-IPO owners (or their permitted assignees) of 85 % of the amount of the benefits, if any, that the Company is deemed to realize as a result of (i) increases in tax basis and (ii) certain other tax benefits related to the Company entering into the Tax Receivable Agreement, including those attributable to payments under the Tax Receivable Agreement.

These contractual payment obligations are obligations of the Company and not of the LLC.

contractual payment obligations are obligations of the Company and not of the LLC.

The Company's Tax Receivable Agreement liability was determined on an undiscounted basis in accordance with ASC 450, Contingencies , since the contractual payment obligations were deemed to be probable and reasonably estimable.

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Exchange of LLC Units for Class A Common Stock 1,710 —

Adjustment for change in estimated tax rate 1,025 ( 88 )

Adjustment for change in estimated state tax rate or benefits 188 1,025

Payment under tax receivable agreement ( 3,974 ) ( 3,698 )

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The Tax Receivable Agreement further provides that, upon certain mergers, asset sales or other forms of business combinations or other changes of control, the Company (or its successor) would owe to the pre-IPO owners of the LLC a lump-sum payment equal to the present value of all forecasted future payments that would have otherwise been made under the Tax Receivable Agreement that would be based on certain assumptions, including a deemed exchange of LLC Units and that the Company would have sufficient taxable income to fully utilize the deductions arising from the increased tax basis and other tax benefits related to entering into the Tax Receivable Agreement.

The Company also is entitled to terminate the Tax Receivable Agreement, which, if terminated, would obligate the Company to make early termination payments to the pre-IPO owners of

The Company also is entitled to terminate the Tax Receivable Agreement, which, if terminated, would obligate the Company to make early termination payments to the pre-IPO owners of the LLC.

In addition, a pre-IPO owner may elect to unilaterally terminate the Tax Receivable Agreement with respect to such pre-IPO owner, which would obligate the Company to pay to such existing owner certain payments for tax benefits received through the taxable year of the election.

When estimating the expected tax rate to use in order to determine the tax benefit expected to be recognized from the Company’s increased tax basis as a result of exchanges of LLC Units by the pre-IPO owners of the LLC, the Company continuously monitors changes in its overall tax posture, including changes resulting from new legislation and changes as a result of new jurisdictions in which the Company is subject to tax.

As an example, the Company increased the state tax rate used in computing its future tax obligations as a result of its acquisition of assets for its wire harnessing facility in Alabama, which added Alabama as a new jurisdiction.

As of June 30, 2022 and 2021, the Company recorded deferred tax assets of $ 115,952 and $ 114,242 , respectively, associated with basis differences in assets upon acquiring an interest in Malibu Boats Holdings, LLC and pursuant to making an election under Section 754 of the Internal Revenue Code of 1986 (the "Internal Revenue Code"), as amended.

As of June 30, 2023 and 2022, the Company recorded deferred tax assets of $ 118,148 and $ 115,952 , respectively, associated with basis differences in assets upon acquiring an interest in the LLC and pursuant to making an election under Section 754 of the Internal Revenue Code of 1986 (the "Internal Revenue Code"), as amended.

These basis differences are included in the overall partnership basis differences disclosed in Note 13.

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The Company has deferred tax assets and liabilities and maintains valuation allowances where it is more likely than not that all or a portion of deferred tax assets will not be realized.

To the extent the Company determines that it will not realize the benefit of some or all of its deferred tax assets, such deferred tax assets will be adjusted through the Company’s provision for income taxes in the period in which this determination is made.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law.

The CARES Act contains significant business tax provisions, including modifications to the rules limiting the deductibility of net operating losses (NOLs), expensing of qualified improvement property (QIP) and business interest in Internal Revenue Code Sections 172(a) and 163(j), respectively.

The effects of the new legislation are recognized upon enactment.

The Company did not recognize any significant impact to income tax expense for fiscal year 2020 relating to the CARES Act.

To the extent the Company determines that it will not realize

the benefit of some or all of its deferred tax assets, such deferred tax assets will be adjusted through the Company’s provision for income taxes in the period in which this determination is made.

On August 16, 2022, the Inflation Reduction Act of 2022 (the “Inflation Reduction Act”) was signed into law.

The Inflation Reduction Act contains significant business tax provisions, including an excise tax on stock buybacks (1% for transactions beginning January 1, 2023), increased funding for IRS tax enforcement, expanded energy incentives promoting clean energy investment, and a 15% corporate minimum tax on certain large corporations.

The effects of the new legislation were recognized upon enactment.

The Company did not recognize any significant impact to income tax expense for the fiscal year ended June 30, 2023 relating to the Inflation Reduction Act.

The components of provision for income taxes are as follows:

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Non-controlling interest ( 0.5 ) ( 0.6 ) ( 0.7 )

Other, net 0.2 — —

Total income tax expense on continuing operations 23.7 % 22.2 % 22.9 %

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Unrecognized tax benefits are discussed in the Company's accounting policy for income taxes (Refer to Note 1 on Income Taxes for more information).

The Company has filed federal and state income tax returns that remain open to examination for fiscal years 2019 through 2021, while its subsidiaries, Malibu Boats Holdings, LLC and Malibu Boats Pty Ltd., remain open to examination for fiscal years 2018 through 2021.

A reconciliation of changes in the amount of unrecognized tax benefits for the fiscal years ended June 30, 2022, 2021, 2020 is as follows:

The Company has filed federal and state income tax returns that remain open to examination for fiscal years 2020 through 2022, while its subsidiaries, the LLC and Malibu Boats Pty Ltd., remain open to examination for fiscal years 2019 through 2022.

A reconciliation of changes in the amount of unrecognized tax benefits for the fiscal years ended June 30, 2023, 2022 and 2021 is as follows:

Fiscal Year Ended June 30,

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Reductions due to statute settlements ( 156 ) ( 286 ) ( 50 )

(Reductions) additions for tax positions of prior years ( 8 ) 3 ( 113 )

Additions (reductions) for tax positions of prior years 39 ( 8 ) 3

Balance as of June 30 $ 1,718 $ 1,472 $ 1,452

In fiscal year 2022, the Company reduced its uncertain tax positions $ 286 as a result of statute settlements, and recorded $ 314 in connection with its current year state filing positions.

In fiscal year 2023, the Company reduced its uncertain tax positions by $ 156 as a result of statute settlements, and recorded $ 363 in connection with its current year state filing positions.

As of June 30, 2023, it is reasonably possible that $ 130 of the total unrecognized tax benefits recorded will reverse within the next twelve months.

Of the total unrecognized tax benefits recorded on the consolidated balance sheet, $ 1,226 would impact the effective tax rate once settled.

Of the total unrecognized tax benefits recorded on the consolidated balance sheets, $ 1,423 would impact the effective tax rate once settled.

As discussed in Note 1 to the Consolidated Financial Statements, the Company's policy is to accrue interest related to potential underpayment of income taxes within the provision for income taxes.

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The Company is authorized to issue 150,000,000 shares of capital stock, consisting of 100,000,000 shares of Class A Common Stock, 25,000,000 shares of Class B Common Stock, and 25,000,000 shares of Preferred Stock, par value $ 0.01 per share.

Exchange of LLC Units for Class A Common Stock

During fiscal year 2020, four non-controlling LLC Unit holders exchanged LLC Units for the issuance of Class A Common Stock.

In connection with the exchange, no shares of Class B Common Stock was automatically transferred to the Company and retired.

As of June 30, 2020, the Company had a total of 15 shares of its Class B Common Stock issued and outstanding.

Exchange of LLC Units for Class A Common Stock and Issuance of Class B Common Stock

During fiscal year 2021, nine non-controlling LLC Unit holders exchanged LLC Units for the issuance of Class A Common Stock.

In connection with the exchange, five shares of Class B Common Stock was automatically transferred to the Company and retired.

In connection with the exchange, five shares of Class B Common Stock were automatically transferred to the Company and retired.

As of June 30, 2021, the Company had a total of 10 shares of its Class B Common Stock issued and outstanding.

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As of June 30, 2022, the Company had a total of 10 shares of its Class B Common Stock issued and outstanding.

During fiscal year 2023, two non-controlling LLC Unit holders exchanged LLC Units for the issuance of Class A Common Stock.

In connection with the exchange, no shares of Class B Common Stock were automatically transferred to the Company and retired.

In addition, during fiscal year 2023 one non-controlling LLC Unit holder transferred LLC Units to two new entities (the “New LLC Members”) for no consideration, and the Company issued a total of two shares of Class B Common Stock to the New LLC Members for nominal consideration.

As of June 30, 2023, the Company had a total of 12 shares of its Class B Common Stock issued and outstanding.

Stock Repurchase Program

On June 18, 2019, the board of directors of the Company authorized a stock repurchase program to allow for repurchase of up to $ 35,000 of the Company’s Class A Common Stock and the LLC's LLC units for the period from July 1, 2019 to July 1, 2020 (the “Fiscal 2020 Repurchase Program”).

During the fiscal year ended June 30, 2020, the Company repurchased 483,679 shares of Class A Common Stock for $ 13.8 million in cash including related fees and expenses.

The Fiscal 2020 Repurchase Program expired on July 1, 2020.

On August 27, 2020, the board of directors of the Company authorized a stock repurchase program for the repurchase of up to $ 50,000 of Class A Common Stock and the LLC Units for the period from September 2, 2020 to July 1, 2021 (the “Fiscal 2021 Repurchase Program”).

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On November 3, 2021, the board of directors of the Company authorized a stock repurchase program for the repurchase of up to $ 70,000 of Class A Common Stock and the LLC Units for the period from November 8, 2021 to November 8, 2022 (the “Fiscal 2022 Repurchase Program”).

During the fiscal year ended June 30, 2022, the Company repurchased 554,995 shares of Class A Common Stock for $ 34.6 million in cash including related fees and expenses.

As of June 30, 2022, an additional $ 35.4 million was available to repurchase shares of Class A Common Stock and LLC Units under the Fiscal 2022 Repurchase Program.

During fiscal year 2023, under the Fiscal 2022 Repurchase Program, the Company repurchased 143,759 shares of Class A Common Stock for $ 7,868 in cash including related fees and expenses.

The Fiscal 2022 Repurchase Program expired on November 8, 2022.

On November 3, 2022, the board of directors of the Company authorized a stock repurchase program for the repurchase of up to $ 100,000 of Class A Common Stock and the LLC Units for the period from November 8, 2022 to November 8, 2023 (the “Fiscal 2023 Repurchase Program”).

As of June 30, 2023, $ 100,000 was available to repurchase shares of Class A Common Stock and LLC Units under the Fiscal 2023 Repurchase Program.

The Fiscal 2023 Repurchase Program expires on November 8, 2023.

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Subject to any rights that may be applicable to any then outstanding preferred stock, the Company's Class A and Class B Common Stock vote as a single class on all matters presented to the Company's stockholders for their vote or approval, except as otherwise provided in the Company's certificate of incorporation or bylaws or required by applicable law.

Holders of the Company's Class A and Class B Common Stock do not have cumulative voting rights.

the Company's Class A and Class B Common Stock do not have cumulative voting rights.

Except in respect of matters relating to the election and removal of directors on the Company's board of directors and as otherwise provided in the Company's certificate of incorporation, the Company's bylaws, or as required by law, all matters to be voted on by the Company's stockholders must be approved by a majority of the shares present in person or by proxy at the meeting and entitled to vote on the subject matter.

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The Company's board of directors may also designate the rights, preferences and privileges of the holders of each such series of preferred stock, any or all of which may be greater than or senior to those granted to the holders of common stock.

Though the actual effect of any such issuance on the rights of the holders of common stock will not be known until the

Company's board of directors determines the specific rights of the holders of preferred stock, the potential effects of such an issuance include:

Though the actual effect of any such issuance on the rights of the holders of common stock will not be known until the Company's board of directors determines the specific rights of the holders of preferred stock, the potential effects of such an issuance include:

• diluting the voting power of the holders of common stock;

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Holders of LLC Units do not have voting rights under the LLC Agreement.

Further, the LLC and the pre-IPO owners entered into the Exchange Agreement under which (subject to the terms of the Exchange Agreement) they have the right to exchange their LLC Units for shares of the Company's Class A Common Stock on a one -for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications, or at the Company's option, except in the event of a change in control, for a cash payment equal to the market value of the Class A Common Stock.

Common Stock.

As of June 30, 2023, the Company held 20,603,822 LLC Units, representing a 97.8 % economic interest in the LLC, while non-controlling LLC Unit holders held 455,919 LLC Units, representing a 2.2 % interest in the LLC.

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Class A Common Stock for the Company’s employees, consultants, members of its board of directors and other independent contractors at the discretion of the compensation committee.

Incentive stock awards authorized under the Incentive Plan including unrestricted shares of Class A Common Stock, stock options, SARs, restricted stock, restricted stock units, dividend equivalent awards and performance awards.

Incentive stock awards authorized under the Incentive Plan include unrestricted shares of Class A Common Stock, stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent awards and performance awards.

As of June 30, 2023, there were 400,825 shares available for future issuance under the Incentive Plan.

On April 14, 2023, Wayne Wilson notified the Company of his resignation from his position as Chief Financial Officer and Secretary of the Company and from all other positions held with the Company and each of its subsidiaries.

Wilson’s resignation as Chief Financial Officer and Secretary was effective April 19, 2023, and Mr.

Wilson served in an advisory role through May 12, 2023.

In connection with Mr.

Wilson’s resignation, he forfeited 57,866 shares of the Company’s Class A Common Stock underlying unvested restricted stock awards and performance awards previously granted to Mr.

On November 3, 2020, under the Incentive Plan, the Company granted approximately 33,000 restricted service based stock units and 25,000 restricted service based stock awards to key employees under the Incentive Plan.

The grant date fair value of these awards was $ 3,145 based on a stock price of $ 54.47 per share on the date of grant.

Under the terms of the agreements, approximately 60 % of the awards will vest ratably over three years and approximately 40 % of the awards will vest ratably over four years .

Approximately 58 % of the awards vest ratably over three years and approximately 42 % of the awards vest ratably over four years .

Stock-based compensation expense attributable to the service based units and awards is amortized on a straight-line basis over the requisite service period.

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The number of shares that will ultimately be issued, if any, is based on the attainment of a specified amount of earnings during the fiscal year ending June 30, 2023.

The maximum number of shares that can be issued if an elevated earnings target is met is approximately 32,000 .

The grant date fair value of the awards were estimated to be $ 810 , based on a stock price of $ 38.05 .

The maximum number of shares that can be issued if an elevated earnings target is met, adjusted to reflect the forfeiture of shares in connection with the resignation of the Company’s former Chief Financial Officer, is approximately 21,000 .

The original grant date fair value of the awards was estimated to be $ 1,002 , based on a stock price of $ 54.47 .

Compensation costs associated with the performance awards are recognized over the requisite service period based on probability of achievement in accordance with ASC Topic 718, Compensation—Stock Compensation.

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The number of shares that will ultimately be issued, if any, is based on a total shareholder return ("TSR") computation that involves comparing the movement in the Company's stock price to movement in a market index from the grant date through November 3, 2023.

The maximum number of shares that can be issued if an elevated TSR target is met is approximately 42,000 .

The grant date fair value of the awards were estimated to be $ 1,039 , which is estimated using a Monte Carlo simulation.

The maximum number of shares that can be issued if an elevated TSR target is met, adjusted to reflect the forfeiture of shares in connection with the resignation of the Company’s former Chief Financial Officer, is approximately 28,000 .

The original grant date fair value of the awards was estimated to be $ 1,293 , which was estimated using a Monte Carlo simulation.

The Monte Carlo simulation model utilizes multiple input variables that determine the probability of satisfying the market condition stipulated in the award grant and calculates the fair market value for the stock award.

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The number of shares that will ultimately be issued, if any, is based on the attainment of a specified amount of earnings during the fiscal year ending June 30, 2024.

The maximum number of shares that can be issued if an elevated earnings target is met is approximately 28,000 .

The grant date fair value of the awards were estimated to be $ 1,002 , based on a stock price of $ 54.47 .

The original grant date fair value of the awards was estimated to be $ 1,305 , based on a stock price of $ 74.25 .

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The maximum number of shares that can be issued if an elevated TSR target is met is approximately 37,000 .

The grant date fair value of the awards were estimated to be $ 1,293 , which is estimated using a Monte Carlo simulation.

The original grant date fair value of the awards was estimated to be $ 1,688 , which was estimated using a Monte Carlo simulation.

Compensation costs are recognized over the requisite service period based on probability of achievement in accordance with ASC Topic 718, Compensation—Stock Compensation .

On May 6, 2022, under the Incentive Plan, the Company granted approximately 27,000 restricted service-based stock units to key employees under the Incentive Plan.

The grant date fair value of these awards was $ 1,376 based on a stock price of $ 51.89 per share on the date of grant.

The grant vests ratably over three years on a bi-annual basis.

Stock-based compensation expense attributable to the service-based units and awards is amortized on a straight-line basis over the requisite service period.

On November 3, 2022, under the Incentive Plan, the Company granted approximately 61,000 restricted service based stock units and 35,000 restricted service based stock awards to key employees under the Incentive Plan.

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The number of shares that will ultimately be issued, if any, is based on the attainment of a specified amount of earnings during the fiscal year ending June 30, 2025.

The maximum number of shares that can be issued if an elevated earnings target is met is approximately 26,000 .

The grant date fair value of the awards was estimated to be $ 1,305 , based on a stock price of $ 74.25 .

The original grant date fair value of the awards was estimated to be $ 1,380 , based on a stock price of $ 52.25 .

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The maximum number of shares that can be issued if an elevated TSR target is met is approximately 35,000 .

The grant date fair value of the awards were estimated to be $ 1,688 , which is estimated using a Monte Carlo simulation.

The original grant date fair value of the awards was estimated to be $ 1,808 , which was estimated using a Monte Carlo simulation.

Compensation costs are recognized over the requisite service period based on probability of achievement in accordance with ASC Topic 718, Compensation—Stock Compensation .

On May 6, 2022, under the Incentive Plan, the Company granted approximately 27,000 restricted service-based stock units to key employees under the Incentive Plan.

The grant date fair value of these awards was $ 1,376 based on a stock price of $ 51.89 per share on the date of grant.

The grant vests ratably over three years on a bi-annual basis.

Stock-based compensation expense attributable to the service-based units and awards is amortized on a straight-line basis over the requisite service period.

The following table presents the number, grant date stock price per share, and weighted-average exercise price per share of the Company’s employee option awards:

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Exercisable at end of year 17,973 $ 37.55 31,730 $ 40.26 111,737 $ 30.32

The Company expects all outstanding options to vest.

The weighted average remaining contractual life of options outstanding and options outstanding and exercisable as of June 30, 2022 was 2.29 years and 2.31 years, respectively.

The weighted average remaining contractual life of options outstanding and options outstanding and exercisable as of June 30, 2023 was 1.54 years, respectively.

The total intrinsic value of options exercised during the years ended June 30, 2023, 2022 and 2021 was $ 557 , $ 3,751 and $ 322 , respectively.

The total intrinsic value of options outstanding and options outstanding and exercisable at June 30, 2022 was $ 603 and $ 395 , respectively.

The total intrinsic value of options outstanding and options outstanding and exercisable at June 30, 2023 was $ 379 , respectively.

The total intrinsic values are based on the Company’s closing stock price on the last trading day of the applicable year for in-the-money options.

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The net difference between the repurchase price and the resale price is recorded against the loss reserve and presented in cost of sales in the accompanying consolidated statements of operations and comprehensive income.

For fiscal year 2022, the Company did no t repurchase any units under its repurchase agreements.

For fiscal year 2021 , the Company did not repurchase any units under its repurchase agreements.

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

For fiscal year 2023, 2022 and 2021 , the Company did no t repurchase any units under its repurchase agreements.

Accordingly, the Company did not carry a reserve for repurchases as of June 30, 2023 and 2022, respectively.

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Under terms of these arrangements, the Company transfers the right to collect a trade receivable to the financing provider in exchange for cash but agrees to repurchase the receivable if the dealer defaults.

Since the transfer of the receivable to the financing provider does not meet the conditions for a sale under ASC Topic 860, Transfers and Servicing , the Company continues to report the transferred trade receivable in other current assets with an offsetting balance recorded as a secured obligation in accrued expenses in the Company's consolidated balance sheets.

As of June 30, 2022 and 2021 , the Company had financing receivables of $ 0 and $ 95 , respectively, recorded in other current assets and accrued expenses related to these arrangements.

Since the transfer of the

receivable to the financing provider does not meet the conditions for a sale under ASC Topic 860, Transfers and Servicing , the Company continues to report the transferred trade receivable in other current assets with an offsetting balance recorded as a secured obligation in accrued expenses in the Company's consolidated balance sheets.

As of June 30, 2023 and 2022 , the Company had no financing receivables recorded in other current assets and accrued expenses related to these arrangements.

Roane County Property Purchase

On March 28, 2023, the Company 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 $ 33,300 .

As of June 30, 2023, the Company had deposited approximately $ 7,800 in escrow pursuant to the Purchase Agreement.

On July 25, 2023, the transaction closed and the Company paid the remaining $ 25,500 balance of the purchase price.

The Company expects to incur additional capital expenditures of approximately $ 15,000 to make changes to the facility to meet its operational needs.

Contingencies

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Adverse determination of material product liability and warranty claims made against the Company could have a material adverse effect on its financial condition and harm its reputation.

In addition, if any of the Company products are, or are alleged to be, defective, the Company may be required to participate in a recall of that product if the defect or alleged defect relates to safety.

In addition, if any of the Company's products are, or are alleged to be, defective, the Company may be required to participate in a recall of that product if the defect or alleged defect relates to safety.

These and other claims that the Company faces could be costly to the Company and require substantial management attention.

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Batchelder Matters

The Company and its indirect subsidiary Boats LLC are defendants in the product liability case Batchelder et al.

MBI and its indirect subsidiary Boats LLC were defendants in the product liability case Batchelder et al.

Malibu Boats, LLC, f/k/a Malibu Boats, Inc.;

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2016-CV-0114-C (the "Batchelder I Matter"), brought by, among others, Stephan Paul Batchelder and Margaret Mary Batchelder as Administrators of the Estate of Ryan Paul Batchelder, deceased (“Batchelder I Plaintiffs”).

The Batchelder I Plaintiffs also sued the manufacturer of the boat at issue in the case, Malibu Boats West, Inc.

West is not, and has never been, a subsidiary of the Company but was a separate legal entity whose assets were purchased by Boats LLC in 2006.

The case involves a personal injury accident in 2014 involving a 2000 model year boat that was manufactured by West.

On August 28, 2021, the jury rejected the Batchelder I Plaintiffs’ design defect claims and found that the driver of the boat was

75 % at fault for the accident.

Notwithstanding those findings, the jury found that Boats LLC and West negligently failed to warn of a hazard posed by the relevant boat and that such failure was a proximate cause of the death of the decedent.

The Batchelder I

Plaintiffs also sued the manufacturer of the boat at issue in the case, Malibu Boats West, Inc.

West is not, and has never been, a subsidiary of MBI or Boats LLC but was a separate legal entity whose assets were purchased by Boats LLC in 2006.

The case involved a personal injury accident in 2014 involving a 2000 model year boat that was manufactured by West.

On August 28, 2021, the jury rejected the Batchelder I Plaintiffs’ design defect claims and found that the driver of the boat was 75 % at fault for the accident.

Notwithstanding those findings, the jury found that Boats LLC and West negligently failed to warn of a hazard posed by the boat and that such failure was a proximate cause of the death of the decedent.

The jury also found that Boats LLC is a legal successor of, and responsible for the liabilities of, West.

The jury awarded compensatory damages of $ 80 million and apportioned 15 % of such damages to Boats LLC and 10 % of such damages to West.

In addition, the jury awarded $ 80 million of punitive damages against Boats LLC and $ 40 million of punitive damages against West.

Based on the jury’s finding of successor liability, the trial court entered judgment for the full amount of the verdict against Boats LLC, with a potential maximum liability to Boats LLC of $ 140 million, plus post-judgment interest at a rate of 6.25 % per annum.

The jury awarded compensatory damages of $ 80,000 and apportioned 15 % of such damages to Boats LLC and 10 % of such damages to West.

In addition, the jury awarded $ 80,000 of punitive damages against Boats LLC and $ 40,000 of punitive damages against West.

Based on the jury’s finding of successor liability, the trial court entered judgment for the full amount of the verdict against Boats LLC, with a potential maximum liability to Boats LLC of $ 140,000 , plus post-judgment interest at a rate of 6.25 % per annum.

The Batchelder I Plaintiffs also filed motions, after the judgment, seeking orders requiring Boats LLC to pay pre-judgment interest and a portion of their attorney fees.

They claimed they are owed attorney fees of approximately $ 56 million.

The Company opposed both motions, arguing that the Batchelder I Plaintiffs have no right either to pre-judgment interest or to reimbursement of their attorneys’ fees, and in the alternative that the amount of attorneys’ fees sought was unreasonable.

The trial court denied the Batchelder I Plaintiffs’ motion for prejudgment interest and held that ruling on the Batchelder I Plaintiffs’ motion for attorneys’ fees would be premature, indicating that it would decide whether the Batchelder I Plaintiffs have the right to attorneys’ fees, and if so what amount is reasonable, if still necessary upon the resolution of the Company’s post-trial motions and any related appeals.

On July 17, 2022, the trial court denied Boats LLC’s post-trial motions.

Boats LLC has since filed a notice of appeal.

Pending resolution of the appeals process, the payment of any damages in this matter is expected to be stayed.

Based on the current status of the process, the Company believes a loss is reasonably possible and that the potential range of loss could be from $ 0 to $ 140 million, plus post-judgment interest at 6.25 % per annum.

The Company may also be required to pay an award of reasonable attorney’s fees to the Batchelder I Plaintiffs, which the Batchelder I Plaintiffs claim should be approximately $ 56 million.

As noted above, the trial court has postponed any ruling on the Batchelder I Plaintiffs' contested motion for attorney's fees pending the resolution of the Company's post-trial motions and any related appeals.

While the Company and Boats LLC maintain product liability insurance applicable to this case, such insurance coverage may be limited to $ 26 million.

Further, while Boats LLC has other claims that it may decide to pursue with respect to this matter, the Company cannot provide any assurance that it will pursue those claims or be successful if it does.

The Company did not carry a reserve for loss as of June 30, 2022.

The Company is also a defendant in a related product liability case, Stephan Paul Batchelder and Margaret Mary Batchelder, as Natural Guardians of Josh Patrick Batchelder, a minor;

The Batchelder I Plaintiffs claimed they are owed attorneys' fees of approximately $ 56,000 .

The Company opposed both motions.

The trial court denied the Batchelder I Plaintiffs’ motion for prejudgment interest and held that ruling on the Batchelder I Plaintiffs’ motion for attorneys’ fees would be premature, indicating that it would decide whether the Batchelder I Plaintiffs have the right to attorneys’ fees, and if so what amount is reasonable, if still necessary upon the resolution of Boats LLC’s post-trial motions and any related appeals.

The Batchelder I Plaintiffs appealed the trial court’s order denying their motion for prejudgment interest.

On July 17, 2022, the trial court denied Boats LLC’s post-trial motions, and Boats LLC filed a notice of appeal.

Pending resolution of the appeals process, the payment of any damages was stayed.

Boats LLC was also a defendant in a related product liability case, Stephan Paul Batchelder and Margaret Mary Batchelder, as Natural Guardians of Josh Patrick Batchelder, a minor;

Darin Batchelder, individually, and as Natural Guardian of Zach Batchelder, a minor;

and Kayla Batchelder (the “Batchelder II Plaintiffs”) v.

and Kayla Batchelder (the “Batchelder II Plaintiffs” and, together with the Batchelder I Plaintiffs, the “Batchelder Plaintiffs”) v.

Malibu Boats, LLC v.

Dennis Michael Ficarra;

State Court of Rabun County, Civil Action File No.

2022-CV-0034.

Superior Court of Rabun County, Civil Action File No.

2022-CV-0034 (the “Batchelder II Matter” and, together with the Batchelder I Matter, the “Batchelder Matters”).

The complaint was filed on February 9, 2022 as a purported renewal of earlier claims by the Batchelder II Plaintiffs that were dismissed without prejudice.

The case involves claims by the Batchelder II Plaintiffs of their own alleged bodily injury and emotional distress stemming from the same accident involving the alleged swamping of the boat manufactured and sold by West that is the subject of the Batchelder I Matter.

As noted above, West is not, and has never been, a subsidiary of the Company but was a separate legal entity whose assets were purchased by the Company in 2006.

Four Batchelder II Plaintiffs (including three children) seek damages for personal injury and punitive damages, alleging that the accident was caused by a design defect and a failure to warn.

The Batchelder II Plaintiffs were all dismissed without prejudice from the Batchelder I Matter shortly before the trial for the Batchelder I Matter, however, and thus the new complaint is a renewal action of the original complaint.

The Company believes that the allegations in this case are unfounded and denies that there was a design defect or a duty to warn, that the Batchelder II Plaintiffs suffered the alleged injuries, or that any defect in the boat or failure to warn was a legal cause of the alleged injuries.

The Company also contends that the incident was caused by the negligence of the driver of the boat and has filed a Third-Party Complaint against the driver, Dennis Ficarra, based on his negligence.

The Company is unable to provide any reasonable evaluation of the likelihood that a loss will be incurred or any reasonable estimate of the range of possible loss.

The case involved claims by the Batchelder II Plaintiffs of their own alleged bodily injury and emotional distress stemming from the same accident involving the alleged swamping of the boat manufactured and sold by West that is the subject of the Batchelder I Matter.

As noted above, West is not, and has never been, a subsidiary of MBI or Boats LLC but was a separate legal entity whose assets were purchased by Boats LLC in 2006.

Four Batchelder II Plaintiffs sought damages for personal injury and punitive damages, alleging that the accident was caused by a design defect and a failure to warn.

The Batchelder II Plaintiffs' claims were dismissed without prejudice from the Batchelder I Matter shortly before the trial for the Batchelder I Matter, however, and thus the new complaint was a renewal action of the original complaint.

On June 30, 2023, Malibu Boats, Inc.

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.

Pursuant to the Settlement Agreement, among other things, Malibu Boats, Inc., or Boats LLC, as the case may be, paid (or caused to be paid) to the Batchelder Plaintiffs and their agents a total of $ 100,000 , of which (a) $ 40,000 was paid to the Batchelder Plaintiffs and their agents promptly following the execution of the Settlement Agreement and (b) $ 60,000 was placed in an escrow account and held by the Escrow Agent pursuant to the terms of an Escrow Agreement.

All conditions for releasing the $ 60,000 placed in the escrow account have been satisfied.

Related Party Transactions

5 unchanged sentences

The Malibu segment participates in the manufacturing, distribution, marketing and sale of Malibu and Axis performance sports boats throughout the world.

The Saltwater Fishing segment participates in the manufacturing, distribution, marketing and sale throughout the world of Pursuit

boats and the Maverick Boat Group brand boats (Maverick, Cobia, Pathfinder and Hewes).

The Saltwater Fishing segment participates in the manufacturing, distribution, marketing and sale throughout the world of Pursuit boats and the Maverick Boat Group brand boats (Maverick, Cobia, Pathfinder and Hewes).

The Cobalt segment participates in the manufacturing, distribution, marketing and sale of Cobalt boats throughout the world.

1 unchanged sentence

Net sales are attributed to countries based on the location of the dealer.

The following table presents financial information for the Company’s reportable segments for fiscal years ended June 30, 2022, 2021, and 2020.

The following table presents financial information for the Company’s reportable segments for the fiscal years ended June 30, 2023, 2022, and 2021.

Fiscal Year Ended June 30, 2023

7 unchanged sentences

Fiscal Year Ended June 30, 2022

Malibu Saltwater Fishing 1

Malibu Saltwater Fishing Cobalt Total

Net sales $ 607,543 $ 341,930 $ 265,404 $ 1,214,877

5 unchanged sentences

Fiscal Year Ended June 30, 2021

Malibu Saltwater Fishing Cobalt Total

Malibu Saltwater Fishing 1

Net sales $ 483,525 $ 242,914 $ 200,076 $ 926,515

11 unchanged sentences

Gross profit 102,462 98,574 75,654 74,605 351,295

Operating income 65,411 71,537 40,187 36,688 213,823

Net income 49,685 54,833 30,979 27,933 163,430

Net income attributable to non-controlling interest 1,766 1,955 1,088 989 5,798

Net income attributable to Malibu Boats, Inc.

Operating (loss) income ( 22,646 ) 70,263 48,684 48,483 144,784

Net (loss) income ( 18,043 ) 53,452 36,396 36,105 107,910

Net (loss) income attributable to non-controlling interest ( 623 ) 1,564 1,234 1,222 3,397

Net (loss) income attributable to Malibu Boats, Inc.

$ ( 17,420 ) $ 51,888 $ 35,162 $ 34,883 $ 104,513

Basic net income per share $ 2.34 $ 2.54 $ 1.43 $ 1.29 $ 7.60

Diluted net income per share $ 2.31 $ 2.51 $ 1.41 $ 1.28 $ 7.51

Basic net (loss) income per share $ ( 0.86 ) $ 2.53 $ 1.73 $ 1.70 $ 5.10

Diluted net (loss) income per share $ ( 0.86 ) $ 2.51 $ 1.72 $ 1.69 $ 5.06

Quarter Ended Fiscal Year Ended

11 unchanged sentences

Subsequent Event

Third Amended and Restated Credit Agreement

On July 8, 2022, Malibu Boats, LLC as the borrower (the “Borrower”), a wholly owned indirect subsidiary of the Malibu Boats, Inc., a Delaware corporation (the “Company”), entered into a Third Amended and Restated Credit Agreement (the “Amended Credit Agreement”) that amended and restated its second amended and restated credit agreement dated as of June 28, 2017 (the “Prior Credit Agreement”), by and among the Borrower, Malibu Boats Holdings, LLC, parent of the Borrower and a wholly owned subsidiary of the Company (the “LLC”), and certain subsidiaries of the Borrower parties thereto, as guarantors (together with the Borrower and the LLC, collectively, the “Loan Parties”), the lenders parties thereto, and Truist Bank, as administrative agent (the “Administrative Agent”), swingline lender and issuing bank.

The Amended Credit Agreement provides the Borrower 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.

The Borrower has 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 Amended Credit Agreement and only if existing or new lenders choose to provide additional term or revolving commitments.

Borrowings under the Amended Credit Agreement bear interest at a rate equal to either, at the Borrower’s 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.

The Borrower will also be 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.

The Company was not a party to the Prior Credit Agreement and is not a party to the Amended Credit Agreement.

As with the Prior Credit Agreement, the obligations of the Borrower under the Amended Credit Agreement are guaranteed by its parent, the LLC, and, subject to certain exceptions, the present and future domestic subsidiaries of the Borrower, and all such obligations are secured by substantially all of the assets of the LLC, the Borrower and such subsidiary guarantors pursuant to the Third Amended and Restated Security Agreement, by and among the Borrower, the LLC, the subsidiary guarantors, and Truist Bank, as administrative agent, dated as of July 8, 2022, and other collateral documents.

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.

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.

The Amended Credit Agreement contains certain customary 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.

The Amended Credit Agreement also contains customary events of default.

Events of default under the Amended Credit Agreement include (subject to grace periods in certain instances):

(i) the failure by any Loan Party to timely make payments due under the Amended Credit Agreement;

(ii) material misrepresentations or misstatements in any representation or warranty by any Loan Party when made;

(iii) failure by any Loan Party to comply with the covenants under the Amended Credit Agreement and other related agreements;

(iv) certain defaults under a specified amount of other indebtedness of Loan Parties;

(v) insolvency or bankruptcy-related events with respect to the Loan Parties;

(vi) certain undischarged, non-appealable judgments against Loan Parties;

(vii) certain ERISA- related events reasonably expected to result in liability above a specified threshold to Loan Parties taken as a whole;

(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;

(ix) any obligations under the loan documents ceasing to constitute senior indebtedness;

and (x) the occurrence of a change of control.

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.

Additionally, the lenders are not obligated to fund any new borrowing under the Amended Credit Agreement while an event of default is continuing.

Batchelder Payments

As discussed above, in connection with the settlement of the Batchelder Matters, in July 2023, Malibu Boats, Inc., or Boats LLC, as the case may be, paid (or caused to be paid) to the Batchelder Plaintiffs and their agents a total of $ 100,000 , of which (a) $ 40,000 was paid to the Batchelder Plaintiffs and their agents promptly following the execution of the Settlement Agreement and (b) $ 60,000 was placed in an escrow account and held by the Escrow Agent pursuant to the terms of an Escrow Agreement.

All conditions for releasing the $ 60,000 placed in the escrow account have been satisfied.

Insurance Litigation

Malibu Boats, Inc.

and its subsidiaries, including Boats LLC, maintain liability insurance applicable to the Batchelder Matters described above with coverage up to $ 26,000 .

As of August 24, 2023, the Company had received approximately $ 21,000 in insurance coverage proceeds, subject in certain cases to reservations of rights by the insurance carriers.

The Company contends that the insurance carriers are responsible for the entirety of the $ 100,000 settlement amount and related expenses, and therefore, the insurers’ payments to date are well below what they should have tendered to Boats LLC.

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.

The Company intends to vigorously pursue its claims against its insurers to recover the full $ 100,000 settlement amount and expenses (less any monies already tendered without reservation by the carriers).

However, the Company cannot predict the outcome of such litigation.

Borrowing under Revolving Credit Facility

On July 7, 2023, the Company borrowed $ 75,000 under the revolving credit facility, with $ 273,422 remaining available for borrowing.

The Company utilized certain of the funds borrowed under the revolving credit facility to make payments relating to the Batchelder Matters, as described herein.

As of August 24, 2023, the Company had $ 65,000 outstanding under its revolving credit facility.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data