Malibu Boats

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Nairobi Institute of Technology - Westlands *

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MISC

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Management

Date

Nov 24, 2024

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docx

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Uploaded by DeBrow

1 Financial Analysis of Malibu Boats Inc: A Five-Year Review Name Institution Course Date

2 Introduction Since 2010, Jack Springer, CEO of Malibu Boats, has been looking out for Louden, Tennessee's primary production plant. During his ten years at the helm, he transformed the Tennessee boat company from a market leader in high-performance tow boats to a diverse corporation that included high-performance fishing boats. Malibu's $130 million purchase of Cobalt Boats in 2017 and $100 million purchase of Pursuit Boats in 2018 were significant aspects of this transformation. The impact of the COVID-19 epidemic on the global economy and the boating industry was unknown at the time of purchase. During the COVID-19 pandemic, customers began using boats as an outdoor, socially isolating recreation during the pandemic. Domestic retail demand for recreational powerboats surged to the highest levels seen by the industry in decades. But in the second half of 2021, retail registration activity in the recreational powerboat market started to decline significantly due to a lack of inventory due to the vigorous sales activity during the pandemic and supply chain disruptions that started to affect production levels. Retail registration activity decreased steadily year over year during the first six months of the calendar year 2022, and supply chain issues prolonged output levels. The recreational powerboat sector saw double-digit reductions in retail registration activity during the first half of the year (Malibu Boats Inc., n.d.). But in the second half of the calendar year 2021, retail registration activity in the recreational powerboat market started to decline significantly due to a lack of inventory due to the vigorous sales activity during the pandemic and supply chain disruptions that started to affect production levels. Retail registration activity decreased steadily year over year during the first six months of the calendar year 2022, and supply chain issues prolonged output levels. The higher retail demand in the first half of 2021 contributed to the double-digit reductions in retail

3 registration activity in the recreational powerboat market during the first half of 2022, creating an abnormally high comparative period. Due to higher retail sales in the fiscal year 2021, limited production in the first half of the fiscal year 2021, and lower wholesale shipment levels in the second half of the fiscal year 2020, dealer inventories were lower than historical levels throughout fiscal years 2021 and 2022. Despite low inventories, the fiscal year 2022 retail demand remained strong, albeit at lower levels than the record fiscal year 2021 levels. Inventory levels at our Malibu and Cobalt sector dealers towards the conclusion of the fiscal year increased significantly due to year-over- year increases in wholesale production. They decreased retail demand levels compared to the fiscal year 2021. Dealer inventories remain considerably below historical levels. A total return to historical levels will depend on our supply chain's ability to deliver materials on schedule and the degree of retail demand in the coming year. Year-Over-Year Changes In Ratios For Malibu Boats Inc (NMS: MBUU) Over The Past Five Years, Along With A Comparison To Industry Competitors: 1. Profitability Ratios: Gross Profit Margin: The gross profit margin for Malibu Boats Inc has remained relatively stable over the past five years, with an improvement from 2018 from 6.23% to 13.45 % in 2022. This is above its industry competitors, Brunswick Corp. and Marine Products Corp., over the same period. 2. Asset Utilization Ratios: Total Asset Turnover: The total asset turnover for Malibu Boats Inc has remained relatively stable over the past five years, averaging around 1.4. This is similar to its industry competitor, Brunswick Corp., which has an average total asset turnover of 1.1

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