Boat Shipments Hold Firm at Malibu, Supporting Profits Despite Inflationary Pressures

We don’t plan to alter our $100 fair value estimate for narrow-moat Malibu Boats and view shares as undervalued, even after a mid-single-digit pop after its first-quarter print. Sales grew 19% to $302 million and adjusted EPS rose 31% to $1.79, ahead of our $290 million and $1.61 estimates. Both volume and price held up well, with the former up 10.5% and the latter higher by 8%. Average selling prices, or ASPs, were supported by a shift to premium products—longer length boats, often with more attachments. This shift should lead to ASPs that stay positive, while unit growth normalizes to a low-single-digit pace as retail sales slow (Malibu expects retail demand to decline at a high-single-digit clip in fiscal 2023). Dealer inventory is improving in certain areas (Cobalt) but remains depressed in the aggregate, with the saltwater segment struggling to refill the channel. In our opinion, this indicates that Malibu should have ample support for unit demand throughout its fiscal year, independent of whether retail demand takes a turn for the worse.