Malibu Displays Healthy Outdoor Product Demand Heading Into Summer; Shares Attractive

Narrow-moat Malibu’s operational prowess was on full display in its third quarter (ending March), printing robust performance despite supply chain issues, cost inflation, and economic uncertainty. The company delivered 26% sales growth, to $344 million, thanks to 21% average selling price growth (mix, with the acquisition of Maverick taking place in the third quarter 2021) and a 4.4% volume hike. Impressively, the gross margin expanded 180 basis points, as price and mix aided performance, leading to a record adjusted EBITDA margin of 23.2%. Commentary surrounding demand was promising, with new boat buyers pruning back only modestly in 2021 (to around 56,000 consumers, from 63,000 in 2020), well above the 44,000 first-time buyers the industry averaged over the prior decade. First-time boat buyers for new and used units was also strong, at more than 415,000 units, a figure seen only once before in the last 15 years. In our opinion, this implies interest in the outdoor lifestyle has held firm despite a broad reopening of other experience parts of the economy.