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What changed in MALIBU BOATS, INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of MALIBU BOATS, INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+395 added−490 removedSource: 10-K (2023-08-29) vs 10-K (2022-08-25)

Top changes in MALIBU BOATS, INC.'s 2023 10-K

395 paragraphs added · 490 removed · 299 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

78 edited+12 added−68 removed104 unchanged
Biggest changeFor purposes of determining the taxable income of the LLC, such determination will be made by generally disregarding any adjustment to the taxable income of any member of the LLC that arises under the tax basis adjustment rules of the Internal Revenue Code of 1986, as amended, or the Code and is attributable to the acquisition by such member of an interest in the LLC in a sale or exchange transaction. 15 Table of Contents Exchanges and Other Transactions with Holders of LLC Units In connection with our IPO and the recapitalization we completed in connection with our IPO, we entered into an exchange agreement with the pre-IPO owners of the LLC under which (subject to the terms of the exchange agreement) each pre-IPO owner (or its permitted transferee) has the right to exchange its LLC Units for shares of our 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 our 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.
Biggest changeExchanges and Other Transactions with Holders of LLC Units In connection with our IPO and the recapitalization we completed in connection with our IPO, we entered into an exchange agreement with the pre-IPO owners of the LLC under which (subject to the terms of the exchange agreement) each pre-IPO owner (or its permitted transferee) has the right to exchange its LLC Units for shares of our Class A Common Stock on a one- 12 Table of Contents for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications, or, at our 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.
Future spills or accidents or the discovery of currently unknown conditions or non-compliance could, however, could give rise to investigation and remediation obligations or related liabilities. Air Quality In the United States, the federal Clean Air Act (“CAA”) and corresponding state and local laws and rules regulate emissions of air pollutants.
Future spills or accidents or the discovery of currently unknown conditions or non-compliance could, however, give rise to investigation and remediation obligations or related liabilities. Air Quality In the United States, the federal Clean Air Act (“CAA”) and corresponding state and local laws and rules regulate emissions of air pollutants.
Our employees bring a blend of diverse backgrounds to promote an inclusive workforce and the opportunity for career growth for all employees. We seek to hire the best qualified individuals and do not discriminate on the basis of race, creed, color, religion, national origin, citizenship status, age, disability, marital status, sexual orientation, gender, gender identity and similar classification.
Our employees bring a blend of diverse backgrounds, and we promote an inclusive workforce and the opportunity for career growth for all employees. We seek to hire the best-qualified individuals and do not discriminate on the basis of race, creed, color, religion, national origin, citizenship status, age, disability, marital status, sexual orientation, gender, gender identity and similar classification.
By employing precisely engineered and electronically controlled panels, Surf Gate alleviates this time-consuming and cumbersome process, allowing boaters to easily surf behind an evenly weighted boat without the need to wait for ballast changes. We have also developed our patented Surf Band technology that allows the rider to control the surf wave, shape, size and side.
By employing precisely engineered and electronically controlled panels, Surf Gate alleviates this time-consuming and cumbersome process, allowing boaters to easily surf behind an evenly weighted boat without the need to wait for ballast changes. We have also developed our patented Surf Band technology that allows the rider to remotely control the surf wave, shape, size and side.
This Annual Report on Form 10-K includes our trademarks, such as “ Monsoon,” “Surf Gate,” “Wakesetter,” “Surf Band,” and “Swim Step,” which are protected under applicable intellectual property laws and are the property of Malibu Boats. This Form 10-K also contains trademarks, service marks, trade names and copyrights of other companies, which are the property of their respective owners.
This Annual Report on Form 10-K includes our trademarks, such as “ Monsoon,” “Surf Gate,” “Wakesetter,” “Surf Band,” and “Swim Step,” which are protected under applicable intellectual property laws and are the property of Malibu Boats, Inc. This Form 10-K also contains trademarks, service marks, trade names and copyrights of other companies, which are the property of their respective owners.
Suppliers We purchase a wide variety of raw materials from our supplier base, including resins, fiberglass, hydrocarbon feedstocks and steel, as well as product parts and components, such as engines and electronic controls, through a sales order process. The most significant component used in manufacturing our boats, based on cost, are engines.
Suppliers We purchase a wide variety of raw materials from our supplier base, including resins, fiberglass, hydrocarbon feedstocks and steel, as well as product parts and components, such as engines and electronic controls, through a purchase order process. The most significant component used in manufacturing our boats, based on cost, are engines.
Business Unless otherwise expressly indicated or the context otherwise requires, in this Annual Report on Form 10-K: • we use the terms “Malibu Boats,” the “Company,” “we,” “us,” “our” or similar references to refer (1) prior to the consummation of our initial public offering, or "IPO" on February 5, 2014, to Malibu Boats Holdings, LLC, or the LLC, and its consolidated subsidiaries and (2) after our IPO, to Malibu Boats, Inc. and its consolidated subsidiaries; • we refer to the owners of membership interests in the LLC immediately prior to the consummation of the IPO, collectively, as our “pre-IPO owners”; • we refer to owners of membership interests in the LLC (the "LLC Units"), collectively, as our “LLC members”; • references to “fiscal year” refer to the fiscal year of Malibu Boats, which ends on June 30 of each year; • we refer to our Malibu branded boats as "Malibu", our Axis Wake Research branded boats as "Axis", our Pursuit branded boats as "Pursuit", our Maverick Boat Group branded boats as "Maverick Boat Group", and our Cobalt branded boats as "Cobalt"; • we use the term “recreational powerboat industry” to refer to our industry group, which includes performance sport boats, sterndrive and outboard boats; • we use the term “performance sport boat category” to refer to the industry category, consisting primarily of fiberglass boats equipped with inboard propulsion and ranging from 19 feet to 26 feet in length, which we believe most closely corresponds to (1) the inboard ski/wakeboard category, as defined and tracked by the National Marine Manufacturers Association, or NMMA, and (2) the inboard ski boat category, as defined and tracked by Statistical Surveys, Inc., or SSI; • we use the terms “sterndrive” and “outboard” to refer to the industry category, consisting primarily of sterndrive and outboard boats ranging from 20 feet to 40 feet, which most closely corresponds to the sterndrive and outboard categories, as defined and tracked by NMMA, and the sterndrive and outboard propulsion categories, as defined and tracked by SSI; in some instances, we provide market information based on specific boat lengths or boat types within the sterndrive or outboard categories to reflect our performance in those specific markets in which we offer products; and • references to certain market and industry data presented in this Form 10-K are determined as follows: (1) U.S. boat sales and unit volume for the overall powerboat industry and any powerboat category during any calendar year are based on retail boat market data from the NMMA; (2) U.S. market share and unit volume for the overall powerboat industry and any powerboat category during any fiscal year ended June 30 or any calendar year ended December 31 are based on comparable same-state retail boat registration data from SSI, as reported by the 50 states for which data was available as of the date of this Form 10-K; and (3) market share among U.S. manufacturers of exports to international markets of boats in any powerboat category for any period is based on data from the Port Import Export Reporting Service, available through March 31, 2022, and excludes such data for Australia and New Zealand.
Business Unless otherwise expressly indicated or the context otherwise requires, in this Annual Report on Form 10-K: • we use the terms “Malibu Boats,” the “Company,” “we,” “us,” “our” or similar references to refer (1) prior to the consummation of our initial public offering, or "IPO" on February 5, 2014, to Malibu Boats Holdings, LLC, or the LLC, and its consolidated subsidiaries and (2) after our IPO, to Malibu Boats, Inc. and its consolidated subsidiaries; • we refer to the owners of membership interests in the LLC immediately prior to the consummation of the IPO, collectively, as our “pre-IPO owners”; • we refer to owners of membership interests in the LLC (the "LLC Units"), collectively, as our “LLC members”; • references to “fiscal year” refer to the fiscal year of Malibu Boats, which ends on June 30 of each year; • we refer to our Malibu branded boats as "Malibu", our Axis Wake Research branded boats as "Axis", our Pursuit branded boats as "Pursuit", our Maverick, Cobia, Pathfinder and Hewes branded boats as "Maverick Boat Group", and our Cobalt branded boats as "Cobalt"; • we use the term “recreational powerboat industry” to refer to our industry group, which includes performance sport boats, sterndrive and outboard boats; • we use the term “performance sport boat category” to refer to the industry category, consisting primarily of fiberglass boats equipped with inboard propulsion and ranging from 19 feet to 26 feet in length, which we believe most closely corresponds to (1) the inboard ski/wakeboard category, as defined and tracked by the National Marine Manufacturers Association, or NMMA, and (2) the inboard ski boat category, as defined and tracked by Statistical Surveys, Inc., or SSI; • we use the terms “sterndrive” and “outboard” to refer to the industry category, consisting primarily of sterndrive and outboard boats ranging from 20 feet to 40 feet, which most closely corresponds to the sterndrive and outboard categories, as defined and tracked by NMMA, and the sterndrive and outboard propulsion categories, as defined and tracked by SSI; in some instances, we provide market information based on specific boat lengths or boat types within the sterndrive or outboard categories to reflect our performance in those specific markets in which we offer products; and • references to certain market and industry data presented in this Form 10-K are determined as follows: (1) U.S. boat sales and unit volume for the overall powerboat industry and any powerboat category during any calendar year are based on retail boat market data from the NMMA; (2) U.S. market share and unit volume for the overall powerboat industry and any powerboat category during any fiscal year ended June 30 or any calendar year ended December 31 are based on comparable same-state retail boat registration data from SSI, as reported by the 50 states for which data was available as of the date of this Form 10-K; and (3) market share among U.S. manufacturers of exports to international markets of boats in any powerboat category for any period is based on data from the Port Import Export Reporting Service, available through March 31, 2023, and excludes such data for Australia and New Zealand.
We believe our engine marinization initiative will reduce our reliance on our previous engine suppliers for our Malibu and Axis brands while reducing the risk that a change in cost or production from any engine supplier for such brands could adversely affect our business.
We believe our engine marinization initiative will reduce our reliance on our previous engine suppliers for our Malibu, Axis and Cobalt brands while reducing the risk that a change in cost or production from any engine supplier for such brands could adversely affect our business.
Activating the 8 Table of Contents marketing strategy involves creating custom content to be utilized in outbound marketing campaigns and social media to engage owners and prospects. In addition to retail websites developed for each of those brands and their unique consumers, the brands also manage all other aspects of marketing including traditional print advertising and trade shows.
Activating the marketing strategy involves creating custom content to be utilized in outbound marketing campaigns and social media to engage 5 Table of Contents owners and prospects. In addition to retail websites developed for each of those brands and their unique consumers, the brands also manage all other aspects of marketing including traditional print advertising and trade shows.
We continually are evaluating our internal processes and programs to further build on our diverse, equitable and inclusive culture. We value our team and are committed to treating all employees with dignity and respect. Community Involvement We continually strive to make an impact on our local communities and serve them with gratitude.
We continually evaluate our internal processes and programs to further build on our diverse, equitable and inclusive culture. We value our team and are committed to treating all employees with dignity and respect. Community Involvement We continually strive to make an impact on our local communities and serve them with gratitude.
We believe in internal promotion where possible and are committed to developing our current team members to become the next generation of leaders throughout the organization. Approximately 70% of our production leaders are internal promotions. We provide tuition assistance programs and take advantage of leadership development where possible.
We believe in internal promotion where possible and are committed to developing our current team members to become the next generation of leaders throughout the organization. Approximately 84% of our production leaders are internal promotions. We provide tuition assistance programs and take advantage of leadership development where possible.
Competition The recreational powerboat industry, including the performance sport boat, sterndrive and outboard categories, is highly competitive for consumers and dealers. Competition affects our ability to succeed in the markets we currently serve and new markets that we may enter in the future.
Market and Competitive Position The recreational powerboat industry, including the performance sport boat, sterndrive and outboard categories, is highly competitive for consumers and dealers. Competition affects our ability to succeed in the markets we currently serve and new markets that we may enter in the future.
In addition, the SEC maintains a web site at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us. 16 Table of Contents
In addition, the SEC maintains a web site at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us. 13 Table of Contents
Our 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, 10 Table of Contents 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.
Our 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.
If Malibu Boats, Inc. authorizes a distribution, such distribution will be made to the members of the LLC (including Malibu Boats, Inc.) pro rata in accordance with the percentages of their respective LLC Units. 14 Table of Contents The diagram below depicts our current organizational structure, as of June 30, 2022: Our organizational structure allows the LLC members to retain their equity ownership in the LLC, an entity that is classified as a partnership for U.S. federal income tax purposes, in the form of LLC Units.
If Malibu Boats, Inc. authorizes a distribution, such distribution will be made to the members of the LLC (including Malibu Boats, Inc.) pro rata in accordance with the percentages of their respective LLC Units. 11 Table of Contents The diagram below depicts our current organizational structure, as of June 30, 2023: Our organizational structure allows the LLC members to retain their equity ownership in the LLC, an entity that is classified as a partnership for U.S. federal income tax purposes, in the form of LLC Units.
Through our vertical integration initiative to marinize our own engines, we entered into an engine supply agreement with General Motors LLC (“General Motors”) in November 2016 for the supply of engine blocks to use in our Malibu and Axis brand boats which began in our model year 2019 and will continue through model year 2023.
Through our vertical integration initiative to marinize our own engines, we entered into an engine supply agreement with General Motors LLC (“General Motors”) in November 2016 for the supply of engine blocks to use in our Malibu and Axis brand boats which began in our model year 2019 and continued through model year 2023.
The regulatory programs to which we are subject include the following: Hazardous Materials and Waste Certain materials used in our manufacturing, including the resins used in production of our boats, are toxic, flammable, corrosive, or reactive and are classified as hazardous materials by the national, state and local governments in those 11 Table of Contents jurisdictions where we manufacture our products.
The regulatory programs to which we are subject include the following: Hazardous Materials and Waste Certain materials used in our manufacturing, including the resins used in production of our boats, are toxic, flammable, corrosive, or reactive and are classified as hazardous materials by the national, state and local governments in those jurisdictions where we manufacture our products.
We believe that all of our boats meet these standards. In addition, safety of recreational boats in the United States is subject to federal regulation under the Boat 12 Table of Contents Safety Act of 1971, which requires boat manufacturers to recall products for replacement of parts or components that have demonstrated defects affecting safety.
We believe that all of our boats meet these standards. In addition, safety of recreational boats in the United States is subject to federal regulation under the Boat Safety Act of 1971, which requires boat manufacturers to recall products for replacement of parts or components that have demonstrated defects affecting safety.
Our Products and Brands We design, manufacture and sell recreational powerboats, including performance sport boats, sterndrive and outboard boats across eight world-renowned brands: Malibu, Axis, Pursuit, Maverick, Cobia, Pathfinder, Hewes, and Cobalt.
Our Products and Brands We design, manufacture and sell recreational powerboats, including performance sport boats, sterndrive and outboard boats across eight brands: Malibu, Axis, Pursuit, Maverick, Cobia, Pathfinder, Hewes, and Cobalt.
The handling, storage, release, treatment and recycling or disposal of these substances and wastes from our operations are regulated in Australia by the Australian Department of Climate Change, Energy, the Environment and Water, the New South Wales Environmental Protection Authority and other state and local authorities.
The handling, storage, release, treatment and recycling or disposal of these substances and wastes from our operations are regulated in Australia by the Australian Department of Climate Change, Energy, the Environment and Water, the New South Wales Environmental Protection Authority and other state and 8 Table of Contents local authorities.
Of the recreational powerboat categories defined and tracked by the NMMA, we serve the top three categories of outboard, sterndrive and performance sport boat representing an addressable market of nearly $13.1 billion in retail sales through our Malibu, Axis, Pursuit, Maverick Boat Group and Cobalt brands.
Of the recreational powerboat categories defined and tracked by the NMMA, we serve three of the top four categories consisting of outboard, sterndrive and performance sport boat representing an addressable market of nearly $13.2 billion in retail sales through our Malibu, Axis, Pursuit, Maverick Boat Group brands and Cobalt brands.
Workplace safety is a fundamental organizational-wide value, and we are committed to running an efficient program. We remain focused on building a safer workplace for our employees and will continue to work toward an injury free workplace through the implementation of training and other industry-leading safety initiatives.
Workplace safety is a fundamental organization-wide value, and we are committed to running an efficient program. We remain focused on building a safer workplace for our employees and will continue to work toward an injury-free workplace through the implementation of training and other safety initiatives.
Immediately after the completion of our IPO and the recapitalization we completed in connection with our IPO, Malibu Boats, Inc. held approximately 49.3% of the economic interest in the LLC, which has since increased to approximately 97.2% of the economic interest in the LLC as of June 30, 2022.
Immediately after the completion of our IPO and the recapitalization we completed in connection with our IPO, Malibu Boats, Inc. held approximately 49.3% of the economic interest in the LLC, which has since increased to approximately 97.8% of the economic interest in the LLC as of June 30, 2023.
We produce performance sport boats through our Malibu and Axis brands at our Tennessee and Australia manufacturing facilities; we produce sterndrive and outboard boats through our Cobalt brand at our Kansas manufacturing facility; and we produce saltwater outboard boats under our Pursuit and Maverick Boat Group brands in Fort Pierce, Florida.
We produce performance sport boats through our Malibu and Axis brands at our Tennessee and Australia manufacturing facilities; we produce sterndrive and outboard boats through our Cobalt brand at our Kansas manufacturing facility; and we produce saltwater outboard boats under our Pursuit and Maverick Boat Group brands, as well as tooling parts, in Fort Pierce, Florida.
We are the only performance sport boat company that manufacturers towers in-house. In fiscal year 2022, we acquired a facility to begin manufacturing our own wiring harnesses. As a result of this acquisition, we reduced the risk of production delays due to delays in receipt of wiring harnesses from third-party suppliers.
We are the only performance sport boat company that manufactures towers in-house. In fiscal year 2022, we acquired a facility to begin manufacturing our own wiring harnesses. As a result of this 6 Table of Contents acquisition, we reduced the risk of production delays due to delays in receipt of wiring harnesses from third-party suppliers.
We are proud of our partnerships 13 Table of Contents with these outstanding organizations, and of the funds raised by our employees for children and families in the communities within which we operate.
We are proud of our partnerships with these outstanding organizations, and of the funds raised by our employees for children and families in the communities within which we operate.
Historically, we have been able to resell repurchased boats at an amount that exceeds our cost. In addition, the historical margin loss on the resale of repurchased units has often been below 10% of the repurchased amount. For fiscal year 2022, we did not repurchase any boats under our repurchase agreements.
Historically, we have been able to resell repurchased boats at an amount that exceeds our cost. In addition, the historical margin loss on the resale of repurchased units has often been below 10% of the repurchased amount. For fiscal years 2023, 2022 and 2021, we did not repurchase any boats under our repurchase agreements.
According to SSI, in 2021 we held the number one market share position in the United States for performance sport boats with our Malibu and Axis brands, the number one market share position in the United States for the 24’—29’ segment of the sterndrive boat category through our Cobalt brand, and the number two market share position in the outboard fiberglass fishing market that our Pursuit and Maverick Boat Group brands serve, in each case based on unit volume.
According to SSI, in 2022 we held the number one market share position in the United States for performance sport boats with our Malibu and Axis brands, the number one market share position in the United States for the 24’—29’ segment of the sterndrive boat category through our Cobalt brand, and we are among the leading market share positions in the outboard fiberglass fishing market that our Pursuit and Maverick Boat Group brands serve, in each case based on unit volume.
We believe we deliver superior performance for general recreational purposes with a significant focus on water sports, including 5 Table of Contents wakeboarding, water skiing and wake surfing as well as general recreational boating and fishing. In addition, we also offer various accessories and aftermarket parts.
We believe that we deliver superior performance for general recreational purposes with a significant focus on water sports, including wakeboarding, water skiing and wake surfing as well as general recreational boating and fishing. In addition, we also offer various accessories and aftermarket parts.
Some of our other notable innovations include Power Wedge III, G5 and the power actuated GX Tower, Electronic Dashboard Controls, Flip Down Swim Step, Tower Mister, Splash and Stow and TrueWave. Pursuit also has introduced the industry first Electric Sliding Entertainment Center and sliding second row center console seating.
Some of our other notable innovations include Power Wedge III, G5 and the power actuated G10+ Tower, Electronic Dashboard Controls, Flip Down Swim Step, Tower Mister, Splash and Stow and Cobalt's TruWave Technology. Pursuit also has introduced the industry first Electric Sliding Entertainment Center and sliding second row center console seating.
Our Pursuit brand has gained share within its market since our acquisition of Pursuit and we are positioned to gain a broader share of the overall outboard fiberglass fishing market with our Maverick Boat Group brands. Industry-leading Product Design and Innovation.
Our Pursuit brand has gained share within its market since our acquisition of Pursuit and we are positioned to gain a broader share of the overall outboard fiberglass fishing market with our Maverick Boat Group brands.
Pursuant to our dealer agreements, the dealers typically agree to, among other things: • represent our products at specified boat shows; • market our products only to retail end users in a specific geographic territory; • promote and demonstrate our products to consumers; • place a specified minimum number of orders of our products during the term of the agreement in exchange for rebate or discount eligibility that varies according to the level of volume they commit to purchase; • provide us with regular updates regarding the number and type of our products in their inventory; • maintain a service department to service our products, and perform all appropriate warranty service and repairs; and • indemnify us for certain claims. 7 Table of Contents Our dealer network, including all additions, renewals, non-renewals or terminations, is managed by our sales personnel.
Pursuant to our dealer agreements, the dealers typically agree to, among other things: • represent our products at specified boat shows; • market our products only to retail end users in a specific geographic territory; • promote and demonstrate our products to consumers; • place a specified minimum number of orders of our products during the term of the agreement in exchange for rebate or discount eligibility that varies according to the level of volume they commit to purchase; • provide us with regular updates regarding the number and type of our products in their inventory; 4 Table of Contents • maintain a service department to service our products, and perform all appropriate warranty service and repairs; and • indemnify us for certain claims.
Employee Well Being We recognize employees are the heart of our organization and support them by offering a range of competitive pay, recognition and benefit programs. We provide market-competitive pay and benefits to encourage performance that creates sustainable and long-term employment.
Talent Retention and Development We recognize employees are the heart of our organization and support them by offering a range of competitive pay, recognition and benefit programs. We provide market-competitive pay and benefits to encourage performance that creates sustainable and long-term employment.
We experienced supply chain disruptions during fiscal year 2022 that we believe were driven by numerous factors, including labor shortages, ongoing domestic logistical constraints, West Coast port challenges and rising prices to our suppliers, in part due to inflationary pressures.
We experienced supply chain disruptions during fiscal year 2022 that we believe were driven by numerous factors, including labor shortages, ongoing domestic logistical constraints, West Coast port challenges and rising prices for our suppliers, in part due to inflationary pressures that continued into fiscal year 2023 and that we expect to continue into fiscal year 2024.
Some of our well-known trademarks include: (i) for our Malibu segment, Malibu, Axis, Monsoon, Power Wedge, Surf Band, Surf Gate, and Wakesetter; (ii) for our Saltwater Fishing Segment, Pursuit, Cobia, Maverick, and Redfisher; and (iii) for our Cobalt segment, Cobalt and Splash & Stow.
Some of our well-known trademarks include: (i) for our Malibu segment, Malibu, Axis, Monsoon, Power Wedge, Surf Band, Surf Gate, and Wakesetter; (ii) for our Saltwater Fishing Segment, Pursuit, Cobia, Maverick, and Redfisher; and (iii) for our Cobalt segment, Cobalt and Splash & Stow. Seasonality Our dealers experience seasonality in their business.
Axis 6 20’-25’ $70-$130 Launched in 2009, Axis was formed to target a younger demographic by providing a more affordably priced, high quality, entry-level boat with high performance, functional simplicity and the option to upgrade key features such as Surf Gate.
Axis 6 20’-25’ $80-$175 Axis was formed to target a younger demographic by providing a more affordably priced, high quality, entry-level boat with high performance, functional simplicity and the option to upgrade key features such as Surf Gate.
We partner with the local Family Resources center each year to assist local students with cold-weather clothing fund and participates in additional local school initiatives to promote manufacturing trade jobs. In Kansas, we support our community though recreational leagues as well as donations to local libraries, events and school fundraisers, among other initiatives.
We partner with the local 10 Table of Contents Family Resources center each year to assist local students with cold-weather clothing fund and participate in additional local school initiatives to promote manufacturing trade jobs. In Kansas, we support our community through recreational leagues as well as donations to local libraries, events and school fundraisers, among other initiatives.
During fiscal year 2022, approximatel y 7 5 % of our North American shipments were made pursuant to floor plan financing programs through which our dealers participate. These programs allow dealers across our brands to establish lines of credit with third-party lenders to purchase inventory.
During fiscal year 2023, approximatel y 75% of our North American shipments were made pursuant to floor plan financing programs which our dealers participate in. These programs allow dealers across our brands to establish lines of credit with third-party lenders to purchase inventory.
We hire students from across the country in our Engineering Internship Program and many come to work for us after attaining their degree. Safety is a core value of our organization and we are committed to fostering a culture where safety is a number one priority.
We partner with several colleges and universities to hire students from across the country in our Engineering Internship Program and many come to work for us after attaining their degree. Employee Well-Being Safety is a core value of our organization and we are committed to fostering a culture where safety is a number one priority.
Cobalt Cobalt 18 22’-36’ $65-$525 Founded in 1967, Cobalt is a premium luxury sterndrive and outboard boat manufacturer available in five product lines. Our products tailor sterndrive from entry level to premium with options to expand some models with the patented SurfGate, as well as our outboard series for increased saltwater use.
Cobalt Cobalt 18 22’-36’ $75-$625 Cobalt is a premium luxury sterndrive and outboard boat manufacturer available in five product lines. Our products tailor sterndrive from entry level to premium with options to expand some models with the patented Surf Gate, as well as our outboard series for increased saltwater use.
International We have an extensive international distribution network for our Malibu, Axis, Pursuit, Maverick Boat Group and Cobalt brands. As of July 1, 2022, our dealer network consisted of over 100 dealer locations throughout Europe, Asia, Middle East, South America, South Africa, and Australia/New Zealand. Dealer Management Our relationship with our dealers is governed by dealer agreements.
International We have an extensive international distribution network for our Malibu, Axis, Pursuit, Maverick Boat Group and Cobalt brands. As of June 30, 2023, our dealer network consisted of over 100 dealer locations throughout Europe, Asia, Middle East, South America, South Africa, and Australia/New Zealand. Dealer Management Our relationships with our dealers are governed by dealer agreements.
The following table provides an overview of our product offerings by brand: Reportable Segment Brand Number of Models Lengths Retail Price Range (In thousands) Description Malibu Malibu 11 20'-26' $70-$225 Founded in 1982, Malibu targets consumers seeking a premium boating experience with our latest innovations in performance, comfort and convenience.
The following table provides an overview of our product offerings by brand as of June 30, 2023: Reportable Segment Brand Number of Models Lengths Retail Price Range (In thousands) Description Malibu Malibu 11 20'-26' $80-$300 Malibu targets consumers seeking a premium boating experience with our latest innovations in performance, comfort and convenience.
Saltwater Fishing Pursuit 16 24'-44' $110-$1,300 Launched in 1977, Pursuit is a premium brand of saltwater outboard fishing boats available in three product lines including our sports center consoles, dual consoles and our offshore series to provide customers with options for ideal fishing as well as casual cruising and luxury entertainment.
Saltwater Fishing Pursuit 18 24'-46' $130-$1,400 Pursuit is a premium brand of saltwater outboard fishing boats available in three product lines including our sports center consoles, dual consoles and our offshore series to provide customers with options for ideal fishing as well as casual cruising and luxury entertainment.
Our sales teams operate using a semi-annual dealer review process involving our senior management team. Each individual dealer is reviewed semi-annually with a broad assessment across multiple key elements, including the dealer’s geographic region, market share and customer service ratings, to identify underperforming dealers for remediation and to manage the transition process when non-renewal or termination is a necessary step.
Each individual dealer is reviewed semi-annually with a broad assessment across multiple key elements, including the dealer’s geographic region, market share and customer service ratings, to identify underperforming dealers for remediation and to manage the transition process when non-renewal or termination is a necessary step.
We have grown our U.S. market share in the performance sports boat category from 24.5% in 2010 to 30.5% in 2021 and we have expanded our market share in the 24’-29’ segment of the sterndrive boat category from 14.2% in 2010 to 35.2% in 2021.
We have grown our U.S. market share in the performance sports boat category from 24.5% in 2010 to 28.8% in 2022 and we have 2 Table of Contents expanded our market share in the 24’-29’ segment of the sterndrive boat category from 14.2% in 2010 to 35.9% in 2022.
Product Development and Engineering We are strategically and financially committed to innovation, as reflected in our dedicated product development and engineering teams located in Tennessee, Kansas, California, and Florida and evidenced by our track record of new product introduction.
Product Development and Engineering We are strategically and financially committed to innovation, as reflected in our dedicated product development and engineering teams located in Tennessee, Kansas, California, and Florida and evidenced by our track record of new product introduction. As of June 30, 2023, our product development and engineering team consisted of nearly 60 professionals.
Sales to our dealers under common control of OneWater Marine, Inc. represented approximately 16.8% , 16.3% and 15.2% of consolidated net sales in fiscal years 2022, 2021, and 2020 respectively including approximately 18.4%, 30.2% and 20.2% of consolidated sales in fiscal year 2022 for Malibu, Saltwater Fishing and Cobalt, respectively.
Sales to our dealers under common control of OneWater Marine, Inc. represented approximately 17.2% , 16.8% and 16.3% of consolidated net sales in fiscal years 2023, 2022 and 2021, respectively, including approximately 6.5%, 29.5% and 20.7% of consolidated sales in fiscal year 2023 for Malibu, Saltwater Fishing and Cobalt, respectively.
Each boat is produced on an established cycle depending on model that includes the fabrication of the hull and deck through gelcoat application and fiberglass lamination, grinding and hole cutting, installation of components, rigging, finishing, detailing and on-the-water testing.
Our boats are built through a continuous flow manufacturing process that encompasses fabrication, assembly, quality management and testing. Each boat is produced on an established cycle depending on model that includes the fabrication of the hull and deck through gelcoat application and fiberglass lamination, grinding and hole cutting, installation of components, rigging, finishing, detailing and on-the-water testing.
We have vertically integrated key components of our manufacturing process, including the manufacturing of our own engines, boat trailers, towers and tower accessories, machined and billet parts, soft grip flooring, and most recently, wiring harnesses. We began including our engines, branded as Malibu Monsoon engines, in our Malibu and Axis boats for model year 2019.
We have vertically integrated key components of our manufacturing process, including the manufacturing of our own engines, boat trailers, towers and tower accessories, machined and billet parts, soft grip flooring, and most recently, wiring harnesses.
The primary objectives of our acquisitions are to expand our presence in new or adjacent categories, to expand into other product lines that may benefit from our operating strengths, and to increase the size of our addressable market.
We acquired Maverick Boat Group in December 2020, Pursuit in October 2018 and Cobalt in July 2017. The primary objectives of our acquisitions are to expand our presence in new or adjacent categories, to expand into other product lines that may benefit from our operating strengths, and to increase the size of our addressable market.
We have instituted recalls for defective component parts produced by certain of our third-party suppliers, including a recall on fuel pumps supplied by a third party during fiscal year 2019. None of our recalls have had a material adverse impact on us.
We have instituted recalls for defective component parts produced by certain of our third-party suppliers, including recalls on third party supplied steering columns during fiscal year 2023 and fuel pumps during fiscal year 2019.
Maverick and Hewes 6 16'-21' $45-$115 Maverick, since 1984 and Hewes for 60 years have been designed to tailor to shallow inshore flats anglers. These boats, with vacuum infused (VARIS) construction and enhanced performance, provide a legacy of dependability, unmatched ride, and exceptional craftsmanship.
The product of bay boats provides for dedicated anglers to fish and do so with comfort, safety and proven technology. Maverick and Hewes 6 16'-21' $45-$125 Maverick and Hewes have been designed to tailor to shallow inshore flats anglers. These boats, with vacuum infused (VARIS) construction and enhanced performance, provide a legacy of dependability, unmatched ride, and exceptional craftsmanship.
We adopted this strategy to more directly control product path (design, innovation, calibration and integration) of our largest dollar procured part, to differentiate our product from our competitors, and to increase our ability to respond to ongoing changes in the marketplace.
In April 2023, we signed a new supply agreement with General Motors that will continue through model year 2026. We adopted this strategy to more directly control product path (design, innovation, calibration and integration) of our largest dollar procured part, to differentiate our product from our competitors, and to increase our ability to respond to ongoing changes in the marketplace.
Our Dealer Network We rely on independent dealers to sell our products. We establish performance criteria that our dealers must meet as part of their dealer agreements to ensure our dealer network remains the strongest in the industry.
Our Dealer Network We rely on independent dealers to sell our products. We establish performance criteria that our dealers must meet as part of their dealer agreements to ensure our dealer network remains the strongest in the industry. As a member of our network, dealers may qualify for floor plan financing programs, rebates, seasonal discounts and other allowances.
We intend to continue releasing new products and features multiple times during the year, which we believe enhances our reputation as a leading innovator in boat manufacturing and provides us with a competitive advantage.
Second, we seek to develop and integrate innovative new or enhanced optional feature offerings into our boats. We intend to release new products and features multiple times during a year, which we believe enhances our reputation as a leading innovator in boat manufacturing and provides us with a competitive advantage.
Manufacturing Malibu has seven manufacturing facilities located in five U.S. states and Australia.
Manufacturing We have eight manufacturing facilities located in five U.S. states and Australia.
Competition in our industry is based primarily on brand name, price and product performance. Seasonality Our dealers experience seasonality in their business. Retail demand for boats is seasonal, with a significant majority of sales occurring during peak boating season, which coincides with our first and fourth fiscal quarters.
Retail demand for boats is seasonal, with a significant majority of sales occurring during peak boating season, which coincides with our first and fourth fiscal quarters.
We use a formalized phase gate process, overseen by a dedicated project manager, to develop, evaluate and implement new product ideas for both boat models and innovative features. Application of the phase gate process requires management to establish an overall timeline that is sub-divided into milestones, or “gates,” for product development.
We take a disciplined approach to the management of our product development strategy. We use a formalized phase gate process, overseen by a dedicated project manager, to develop, evaluate and implement new product ideas for both boat models and innovative features.
Malibu Trailers took the coveted NMMA Innovation Award at the Miami International Boat Show in 2022. The Malibu Wakesetter 23 LSV has won Wakeworld “Readers Choice” Wakeboard and Wakesurf Boat of the Year for 2020 and 2021.
The Malibu Wakesetter 23 LSV has won Wakeworld “Readers Choice” Wakeboard and Wakesurf Boat of the Year three years running in 2022, 2021 and 2020.
Human Capital Management Employee Profile As of July 31, 2022, 2021 and 2020, we had approximately 3,015, 2,645 and 1,795 employees worldwide, respectively. None of our team members are party to a collective bargaining agreement. We believe in working diligently to establish ourselves as an employer of choice.
None of our recalls have had a material adverse impact on us. 9 Table of Contents Human Capital Management Employee Profile As of June 30, 2023, we had approximately 3,095 employees worldwide. None of our team members are party to a collective bargaining agreement. We believe in working diligently to establish ourselves as an employer of choice.
We continually review our manufacturing process to identify opportunities for additional vertical integration investments across our portfolio of premium brands.
We continually review our manufacturing process to identify opportunities for additional vertical integration investments across our portfolio of premium brands. We procure other components, such as electronic controls, from third-party vendors and install them on the boat.
Some of our well-known patents include our Surf Gate and Swim Step for our Malibu and Cobalt segments and Power Wedge for our Malibu segment.
Our boat patent rights relate to boat design, features and components that we feel are important to our competitive position in our business. Some of our well-known patents include our Surf Gate and Swim Step for our Malibu and Cobalt segments and Power Wedge for our Malibu segment.
Our Malibu Monsoon engines that we manufacture for Malibu and Axis models have a limited warranty of up to five years or five-hundred hours. Intellectual Property We rely on a combination of patent, trademark and copyright protection, trade secret laws, confidentiality procedures and contractual provisions to protect our rights in our brand, products and proprietary technology.
Intellectual Property We rely on a combination of patent, trademark and copyright protection, trade secret laws, confidentiality procedures and contractual provisions to protect our rights in our brand, products and proprietary technology. This is an important part of our business and we intend to continue protecting our intellectual property. By law, our patent rights have limited lives and expire periodically.
We completed expansion projects at our facilities in Kansas (Cobalt) and Florida (Pursuit) during fiscal year 2020 and at our other Florida facility (Maverick Boat Group) in fiscal year 2022. For our Malibu and Axis brands, we manufacture towers, tower accessories and stainless steel and aluminum billet at our California facility and engines and trailers at our Tennessee facility.
For our Malibu and Axis brands, we manufacture towers, tower accessories and stainless steel and aluminum billet at our California facility and engines and trailers at our Tennessee facility. For our Malibu, Axis and Cobalt brands, we produce wiring harnesses at our Alabama facility.
With our many awards and honors, we cultivate a culture of excellence and premier boat building. Diversity and Inclusion We are committed to maintaining an employee-first culture. We are dedicated to protecting the well-being of our employees while creating a culture that promotes inclusivity, acceptance, equality and diversity.
Outside of formal surveys, we allow employees to continuously share any comments, questions or concerns with our leadership team, which are addressed as needed by our executive team. Diversity and Inclusion We are committed to maintaining an employee-first culture. We are dedicated to protecting the well-being of our employees and creating a culture that promotes inclusivity, acceptance, equality and diversity.
Failure to meet the commitment volume or other terms of the program may result in partial or complete forfeiture of the dealer’s rebate. • Co-op . Dealers of the Malibu, Axis, Pursuit and Maverick Boat Group product line may earn certain co-op reimbursements upon reaching a specified level of qualifying expenditures. • Free flooring .
Failure to meet the commitment volume or other terms of the program may result in partial or complete forfeiture of the dealer’s rebate. • Free flooring .
First, we seek to introduce new boat models to target unaddressed or underserved segments of the recreational powerboat industry, while also updating and refreshing our existing boat models regularly. Second, we seek to develop and integrate innovative new or enhanced optional feature offerings into our boats.
In addition, our Chief Executive Officer and Chief Operating Officer are actively involved in the product development process and integration into manufacturing. Our product development strategy consists of a two-pronged approach. First, we seek to introduce new boat models to target unaddressed or underserved segments of the recreational powerboat industry, while also updating and refreshing our existing boat models regularly.
Cobia 12 20'-35' $60-$485 Founded in 1985, and acquired by Maverick Boat Group in 2005, Cobia models consist of center console and dual console vessels that are designed to promote ease of boating and fishing for all levels of anglers and boaters.
Cobia 11 21'-34' $60-$500 Cobia models consist of center console and dual console vessels that are designed to promote ease of boating and fishing for all levels of anglers and boaters. Pathfinder 8 22'-27' $60-$250 Pathfinder provides the most versatile inshore fishing boat.
Our top ten dealers represented 39.9%, 38.7% and 38.5%, of our net sales for fiscal year 2022, 2021 and 2020, respectively. The top ten dealers for each of the Malibu, Saltwater Fishing and Cobalt segments represented approximately 51.1%, 57.9% and 50.6%, respectively, of net sales in fiscal year 2022.
The top ten dealers for each of the Malibu, Saltwater Fishing and Cobalt segments represented approximately 53.3%, 56.8% and 53.1%, respectively, of net sales in fiscal year 2023. The top ten dealers for each segment are not the same across all segments.
We sell our boats through a dealer network that we believe is the strongest in the recreational powerboat industry. As of July 1, 2022, our distribution channel consisted of over 400 dealer locations globally. Our dealer base is an important part of our consumers’ experience, our marketing efforts and our brands.
As of June 30, 2023, our distribution channel consisted of over 400 dealer locations globally. Our dealer base is an important part of our consumers’ experience, our marketing efforts and our brands. We devote significant time and resources to find, develop and improve the performance of our dealers and believe our dealer network gives us a distinct competitive advantage.
General Motors may terminate the engine supply agreement due to market conditions with at least eighteen (18) months’ advanced written notice. Either party may terminate the agreement as a result of a change of control of Malibu Boats, Inc., as defined in the agreement, with at least eighteen (18) months’ advanced written notice.
The engine supply agreement will expire at the end of production of model year 2026, unless terminated earlier by either party as permitted under the terms of the agreement, including by General Motors due to market conditions with at least eighteen (18) months’ advanced written notice.
The following table illustrates the size of our addressable market in units and retail sales for calendar year 2021: Recreational Powerboat Category Unit Sales Retail Sales (Dollars in millions) Outboard 188,660 $ 10,388 Sterndrive 8,950 945 Performance sport boat 13,850 1,801 Jet boat 5,750 356 Cruisers 1,650 1,940 Total addressable market 218,860 $ 15,430 Our Strengths Leading Market Share Positions .
The following table illustrates the size of our addressable market in units and retail sales for calendar year 2022: Recreational Powerboat Category Unit Sales Retail Sales (Dollars in millions) Outboard 160,850 $ 10,419 Performance sport boat 12,200 $ 1,893 Sterndrive 6,900 $ 887 Jet boat 8,000 $ 495 Cruisers 1,600 $ 2,283 Total addressable market 189,550 $ 15,977 We maintain a leading market share position in a number of recreational boating categories with our various brands.
North America As of July 1, 2022, our dealer network consisted of over 300 dealer locations servicing the performance sport boat, sterndrive, and outboard markets strategically located throughout the U.S. and Canada. Approximately 50% of our dealer locations have been with us, or with Pursuit, Maverick Boat Group or Cobalt, prior to our acquisition of them, for over ten years.
We believe our dealer network is the most extensive in the market. North America As of June 30, 2023, our dealer network consisted of over 300 dealer locations servicing the performance sport boat, sterndrive, and outboard markets strategically located throughout the U.S. and Canada.
Pursuant to the engine supply agreement, we will submit purchase orders for engines to General Motors and, so long as we are not in breach of the engine supply agreement, General Motors will deliver engines pursuant to the purchase orders.
Pursuant to our engine supply agreement with General Motors, General Motors will deliver engines to us as we submit purchase orders. No minimum amount of engines is required to be ordered by us.
We also have two joint marketing agreements with Yamaha Motor Corporation, U.S.A., or Yamaha, that require us to supply most of our boats that are pre-rigged with outboard motors with Yamaha outboard engines. In August 2018, we entered into a joint marketing agreement with Yamaha that became effective upon completion of our acquisition of Pursuit.
We had joint marketing agreements with Yamaha Motor Corporation, U.S.A., or Yamaha, that required us to supply a significant percentage of our Pursuit, Cobalt and Maverick Boat Group branded boats that are pre-rigged for outboard motors with Yamaha outboard motors in exchange for certain incentives. Those agreements expired on June 30, 2023.
Our engineering teams closely collaborate with our manufacturing personnel in order to improve product quality and process efficiencies.
Our engineering teams closely collaborate with our manufacturing personnel in order to improve product quality and process efficiencies. The results of this collaboration are reflected in our receipt of numerous industry awards. We sell our boats through a dealer network that we believe is the strongest in the recreational powerboat industry.
One of our growth strategies is to drive growth in our business through targeted acquisitions that add value while considering our existing brands and product portfolio. We acquired Maverick Boat Group in December 2020, Pursuit in October 2018, and Cobalt in July 2017. In February 2022, we acquired a facility to begin manufacturing our own wiring harnesses.
Our Malibu Monsoon engines that we manufacture for Malibu and Axis models have a limited warranty of up to five years or five-hundred hours. 7 Table of Contents Strategic Acquisitions One of our growth strategies is to drive growth in our business through targeted acquisitions that add value while considering our existing brands and product portfolio.
Maverick Boat Group has introduced first of its kind "Hybrid" and "Open" Bay Boat designs in recent years.
Maverick Boat Group has introduced first of its kind "Hybrid" and "Open" Bay Boat designs in recent years. 3 Table of Contents We won the Boating Industry Magazine's "Top Product" award for the Pursuit S 358 Sport in 2022. Malibu Trailers took the coveted NMMA Innovation Award at the Miami International Boat Show in 2022.
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The results of this collaboration are reflected in our receipt of numerous industry awards, including; • the Boating Industry Magazine's "Top Product" award for the new Pursuit S 358 Sport in 2022, Malibu M220 in 2021, Malibu M240 in 2020, Pursuit S 378 in 2020, Malibu 25 LSV in 2019, Surf Band in 2018 and for our Integrated Surf Platform ("ISP") in 2016, • the 2021 and 2020 WakeWorld "Readers Choice" Wakeboard and Wakesurf Boat of the Year for the Malibu Wakesetter 23 LSV, • the “Trailers, Parts and Trailer Accessories” category at the illustrious Miami Boat Show and a Water Sports Industry Association Product Innovation Award at the annual WISA Summit for the Malibu Wakesetter 25 LSV, • the Pursuit S 428 was voted most Innovative product in the Center Console/Walkaround Fishing Boats category during the 2022 Discover Boating Miami International Boat Show, • the Sounding Trade Only Today’s “Top Most Innovative Marine Companies" for 2020 and 2019, and • the "WSIA Innovation of Year" award for our Malibu M240 M-Line Hull with Surf Gate Fusion in 2020, Malibu Monsoon Engines in 2019 and our Malibu Command Center in 2017.
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Competition in our industry is based primarily on brand name, price and product performance. During calendar year 2022, retail sales of new recreational powerboats in the United States totaled $16.0 billion.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe have started the implementation of a new enterprise resource planning (ERP) system and if we are not able to successfully develop and manage that implementation, it could adversely affect our business or results of operations. We have begun the process of designing and implementing a new ERP system. We are currently in the design phases of the project.
Biggest changeAdditionally, our contracts may not contain limitations of liability, and even where they do, there can be no assurance that limitations of liability in our contracts are sufficient to protect us from liabilities, damages, or claims related to our data privacy and security obligations We have started the design and implementation of a new enterprise resource planning (ERP) system and if we are not able to successfully develop and manage that implementation, it could adversely affect our business or results of operations.
While, historically, inflation has not had a material effect on our results of operations, significant increases in inflation, particularly those related to wages and increases in the cost of raw materials, recently have, and may continue to have, an adverse impact on our business, financial condition, and results of operations. In addition, new boat buyers often finance their purchases.
While, historically, inflation has not had a material effect on our results of operations, significant increases in inflation, particularly those related to wages and increases in the cost of raw materials, recently have had, and may continue to have, an adverse impact on our business, financial condition, and results of operations. In addition, new boat buyers often finance their purchases.
A breakdown, outage, malicious intrusion, breach, random attack, or other disruption of communications could result in erroneous or fraudulent transactions, disclosure of confidential information, loss of reputation and confidence, and may also result in legal claims or proceedings, penalties, and remediation costs.
A breakdown, outage, malicious intrusion, breach, random attack, or other disruption of communications could result in erroneous or fraudulent transactions, disclosure of confidential or other sensitive information, loss of reputation and confidence, and may also result in legal claims or proceedings, penalties, and remediation costs.
We have informal supply arrangements with many of our suppliers of components, raw materials and parts. In the event of a termination of the supply arrangement, there can be no assurance that alternate supply arrangements will be made on satisfactory terms.
Instead, we have informal supply arrangements with many of our suppliers of components, raw materials and parts. In the event of a termination of the supply arrangement, there can be no assurance that alternate supply arrangements will be made on satisfactory terms.
These and other provisions in our certificate of incorporation, bylaws and under Delaware law could discourage potential takeover attempts, reduce the price that investors might be willing to pay for shares of our Class A Common Stock in the future and result in the market price being lower than it would be without these provisions. 30 Table of Contents Item 1B.
These and other provisions in our certificate of incorporation, bylaws and under Delaware law could discourage potential takeover attempts, reduce the price that investors might be willing to pay for shares of our Class A Common Stock in the future and result in the market price being lower than it would be without these provisions. 27 Table of Contents Item 1B.
A key part of our growth strategy, as shown by our acquisition of Maverick Boat Groups in 2020, Pursuit in 2018, Cobalt in 2017 and our Australian licensee in 2014, has been to acquire other companies that expand our consumer base, enter new product categories or obtain other competitive advantages.
A key part of our growth strategy, as shown by our acquisition of Maverick Boat Group in 2020, Pursuit in 2018, Cobalt in 2017 and our Australian licensee in 2014, has been to acquire other companies that expand our consumer base, enter new product categories or obtain other competitive advantages.
If for any reason portions of the implementation are not successful, we could be required to expense rather than capitalize related amounts. 20 Table of Contents Our operations and sales in international markets require significant management attention, expose us to difficulties presented by international economic, political, legal and business factors, and may not be successful or produce desired levels of sales and profitability.
If for any reason portions of the implementation are not successful, we could be required to expense rather than capitalize related amounts. Our operations and sales in international markets require significant management attention, expose us to difficulties presented by international economic, political, legal and business factors, and may not be successful or produce desired levels of sales and profitability.
Our failure to introduce new technologies and product offerings that our markets desire could adversely affect our business, financial condition and results of operations. Also, we believe we have been able to achieve higher margins in part as a result of the introduction of new features or enhancements to our existing boat models.
Our failure to introduce new technologies and product offerings that our markets desire could adversely affect our business, financial condition and results of operations. Also, we believe we have been able to achieve higher margins in part as 19 Table of Contents a result of the introduction of new features or enhancements to our existing boat models.
Competition affects our ability to succeed in the markets we currently serve, including the saltwater outboard fishing boat market that we recently entered with our acquisitions of Pursuit and Maverick Boat Group, and new markets that we may enter in the future. Competition is based primarily on brand name, price, product selection and product performance.
Competition affects our ability to succeed in the markets we currently serve, including the saltwater 20 Table of Contents outboard fishing boat market that we recently entered with our acquisitions of Pursuit and Maverick Boat Group, and new markets that we may enter in the future. Competition is based primarily on brand name, price, product selection and product performance.
Negative incidents, such as quality and safety concerns, product recalls, severe incidents or injuries related to our products or 22 Table of Contents actions, or statements or actions of our employees or dealers or the athletes associated with our products, could lead to tangible adverse effects on our business, including lost sales or employee retention and recruiting difficulties.
Negative incidents, such as quality and safety concerns, product recalls, severe incidents or injuries related to our products or actions, or statements or actions of our employees or dealers or the athletes associated with our products, could lead to tangible adverse effects on our business, including lost sales or employee retention and recruiting difficulties.
Any of these laws, rules, or regulations may cause us to incur significant expenses to achieve or maintain compliance, require us to modify our products, or modify our approach to our workforce, adversely affecting the price of or demand for some of our products, and ultimately affect the way we conduct our operations.
Any of these laws, rules, or regulations may cause us to incur significant expenses to achieve or maintain compliance, require us to modify our products, or modify our approach to our workforce, adversely affecting the price of or demand for 23 Table of Contents some of our products, and ultimately affect the way we conduct our operations.
For instance, in fiscal year 2020 we experienced interruption to our engine supply as a result of the United Auto Workers’ strike against General Motors.
In fiscal year 2020 we experienced interruption to our engine supply as a result of the United Auto Workers’ strike against General Motors.
A significant deterioration in the number or effectiveness of our dealers could have a material adverse effect on our business, financial condition and results of operations. Our success depends, in part, upon the financial health of our dealers and their continued access to financing.
A significant deterioration in the 21 Table of Contents number or effectiveness of our dealers could have a material adverse effect on our business, financial condition and results of operations. Our success depends, in part, upon the financial health of our dealers and their continued access to financing.
Exposure to these substances could result in significant injury to our employees and damage to our property or the property of others, including natural resource damage. 18 Table of Contents Our personnel are also at risk for other workplace-related injuries.
Exposure to these substances could result in significant injury to our employees and damage to our property or the property of others, including natural resource damage. Our personnel are also at risk for other workplace-related injuries.
The limited liability company agreement of the LLC requires the LLC to make “tax distributions” which, in the ordinary course, will be sufficient to pay the actual tax liability of Malibu Boats, Inc. and to fund required payments under the tax receivable agreement.
The limited liability company agreement of the LLC requires the LLC to make 25 Table of Contents “tax distributions” which, in the ordinary course, will be sufficient to pay the actual tax liability of Malibu Boats, Inc. and to fund required payments under the tax receivable agreement.
Similarly, an overall decrease in consumer leisure time may reduce consumers’ willingness to purchase and enjoy our products. Changes in currency exchange rates can adversely affect our results. A portion of our sales are denominated in a currency other than the U.S. dollar. Consequently, a strong U.S. dollar may adversely affect reported revenues.
Similarly, an overall decrease in consumer leisure time may reduce consumers’ willingness to purchase and enjoy our products. Changes in currency exchange rates can adversely affect our results. A portion of our sales are denominated in a currency other than the U.S. dollar.
Risks Related to our Dealers We depend on our network of independent dealers, face increasing competition for dealers and have little control over their activities. Substantially all of our sales are derived from our network of independent dealers. Our top ten dealers represented 39.9%, 38.7% and 38.5% of our net sales for fiscal year 2022, 2021 and 2020, respectively.
Risks Related to our Dealers We depend on our network of independent dealers, face increasing competition for dealers and have little control over their activities. Substantially all of our sales are derived from our network of independent dealers. Our top ten dealers represented 41.1%, 39.9% and 38.7% of our net sales for fiscal year 2023, 2022 and 2021, respectively.
Certain materials we use require our employees to handle potentially hazardous or toxic substances. While our employees who handle these and other potentially hazardous or toxic materials receive specialized training and wear protective clothing, there is still a risk that they, or others, may be exposed to these substances.
While our employees who handle these and other potentially hazardous or toxic materials receive specialized training and wear protective clothing, there is still a risk that they, or others, may be exposed to these substances.
Proprietary rights relating to our products are protected from unauthorized use by third parties 19 Table of Contents only to the extent that they are covered by valid and enforceable patents or trademarks or are maintained in confidence as trade secrets.
Proprietary rights relating to our products are protected from unauthorized use by third parties only to the extent that they are covered by valid and enforceable patents or trademarks or are maintained in confidence as trade secrets.
Assuming no material changes in the relevant tax law, and that we earn sufficient taxable income to realize all tax benefits that are subject to the agreement, we expect that future payments under the tax receivable agreement relating to the purchases by Malibu Boats, Inc. of LLC Units will be approximately $45.5 million over the next fifteen (15) years.
Assuming no material changes in the relevant tax law, and that we earn sufficient taxable income to realize all tax benefits that are subject to the agreement, we expect that future payments under the tax receivable agreement relating to the purchases by Malibu Boats, Inc. of LLC Units will be approximately $43.5 million over the next sixteen (16) years.
Borrowings under the Amended Credit Agreement bear interest at a rate equal to either, at our option, (i) the highest of the prime rate, the Federal Funds Rate plus 0.5%, or one-month Term SOFR plus 1% (the “Base Rate”) or (ii) SOFR, in each case plus an applicable margin ranging from 1.25% to 2.00% with respect to SOFR borrowings and 0.25% to 1.00% with 27 Table of Contents respect to Base Rate borrowings.
Borrowings under our revolving credit facility bear interest at a variable rate equal to either, at our option, (i) the highest of the prime rate, the Federal Funds Rate plus 0.5%, or one-month Term SOFR plus 1% (the “Base Rate”) or (ii) SOFR, in each case plus an applicable margin ranging from 1.25% to 2.00% with respect to 24 Table of Contents SOFR borrowings and 0.25% to 1.00% with respect to Base Rate borrowings.
We rely on our revolving credit facility to provide us with adequate liquidity to operate our business. The credit agreement governing our revolving credit facility contains restrictive covenants regarding indebtedness, liens, fundamental changes, investments, restricted payments, disposition of assets, transactions with affiliates, negative pledges, hedging transactions, certain prepayments of indebtedness, accounting changes and governmental regulation.
We rely on our revolving credit facility to provide us with adequate liquidity to operate our business. The credit agreement governing our revolving credit facility contains restrictive covenants regarding indebtedness, liens, fundamental changes, investments, share repurchases, dividends and distributions, disposition of assets, transactions with affiliates, negative pledges, hedging transactions, certain prepayments of indebtedness, accounting changes and governmental regulation.
If we are required to replace General Motors as our engine supplier for Malibu and Axis boats for any reason, it could cause a decrease in such boats available for sale or an increase in our cost of sales, either of which could adversely affect our business, financial condition and results of operations.
If we are required to replace either General Motors or Yamaha as an engine supplier for any reason, it could cause a decrease in boats available for sale or an increase in our cost of sales, either of which could adversely 14 Table of Contents affect our business, financial condition and results of operations.
Our sales may be adversely impacted by increased consumer preference for used boats or the supply of new boats by competitors in excess of demand. During the economic downturn that commenced in 2008, we observed a shift in consumer demand toward purchasing more used boats, primarily because prices for used boats are typically lower than retail prices for new boats.
Our sales may be adversely impacted by increased consumer preference for used boats or the supply of new boats by competitors in excess of demand. In the past, we have observed a shift in consumer demand toward purchasing more used boats during economic downturns, primarily because prices for used boats are typically lower than retail prices for new boats.
We have experienced supply chain disruptions since fiscal year 2020 related to numerous factors, including COVID-19, severe weather events, labor shortages, ongoing domestic logistical constraints, West Coast port challenges and rising prices to suppliers, in part due to inflationary pressures and geopolitical conflicts.
For example, we have experienced supply chain disruptions beginning in fiscal year 2020 related to numerous factors, including COVID-19, severe weather events, labor shortages, ongoing domestic logistical constraints, West Coast port challenges and rising prices for our suppliers, in part due to inflationary pressures.
This obligation is triggered 24 Table of Contents if a dealer defaults on its debt obligations to a finance company, the finance company repossesses the boat and the boat is returned to us.
This obligation is triggered if a dealer defaults on its debt obligations to a finance company, the finance company repossesses the boat and the boat is returned to us.
If for any reason the LLC is not able to make a tax distribution in an amount that is sufficient to make any required payment under the tax receivable agreement or we otherwise lack sufficient funds, interest would accrue on any unpaid amounts at LIBOR, plus 500 basis points until they are paid.Recent actions taken by the Chief Executive of the U.K.
If for any reason the LLC is not able to make a tax distribution in an amount that is sufficient to make any required payment under the tax receivable agreement or we otherwise lack sufficient funds, interest would accrue on any unpaid amounts at LIBOR, plus 500 basis points until they are paid.
Our growth strategy includes the possible acquisition of other businesses, such as our acquisitions of Cobalt, Pursuit and Maverick, and the potential integration of new product lines or related products to our boats, such as our initiatives to integrate the production of engines and trailers for our Malibu and Axis models.
Our growth strategy includes the possible acquisition of other businesses, such as our acquisitions of Cobalt, Pursuit and Maverick Boat Group, and the potential integration of new product lines or related products to our boats, such as our initiatives to integrate the production of engines and trailers for our Malibu and Axis models, our Monsoon engines into some of our Cobalt models and our new Tooling Design Center.
In addition, the LLC may make dividends and distributions of up to $10.0 million in any fiscal year, subject to compliance with other financial covenants. The credit agreement governing our revolving credit facility contains restrictive covenants which may limit our operating flexibility and may impair our ability to access sufficient capital to operate our business.
In addition, the LLC may make dividends and distributions, subject to compliance with other financial covenants. The credit agreement governing our revolving credit facility contains restrictive covenants which may limit our operating flexibility and may impair our ability to access sufficient capital to operate our business.
Any losses that we may suffer from any such claims, including any unanticipated adverse determination of a material product liability claim or other material claim (particularly an uninsured matter), could materially and adversely affect our financial condition, and the effect that any such liability may have upon the reputation and marketability of our products may have a negative impact on our business and operating results.
Any losses that we may suffer from any such claims, including any unanticipated adverse determination of a material product liability claim or other material claim (particularly an uninsured matter), could materially and adversely affect our financial condition, and the effect that any such liability may have upon the reputation and marketability of our products may have a negative impact on our business and operating results. 22 Table of Contents Significant product repair and/or replacement costs due to product warranty claims or product recalls could have a material adverse impact on our results of operations.
For instance, a jury recently found that our subsidiary, Malibu Boats, LLC, and another entity that was the manufacturer of the boat at issue, Malibu Boats West, Inc., negligently failed to warn of a hazard posed by the boat and that such failure was a proximate cause of the death of a passenger in the boat.
For instance, we recently settled certain product liability matters for $100.0 million after a jury found that our subsidiary, Malibu Boats, LLC, and another entity that was the manufacturer of the boat at issue, Malibu Boats West, Inc., negligently failed to warn of a hazard posed by the boat and that such failure was a proximate cause of the death of a passenger in the boat.
In certain cases, payments under the tax receivable agreement to the pre-IPO owners (or any permitted assignees) of LLC Units may be accelerated or significantly exceed the actual benefits we realize in respect of the tax attributes subject to the tax receivable agreement.
We do not currently anticipate failing to pay any amounts owed under our tax receivable agreement. In certain cases, payments under the tax receivable agreement to the pre-IPO owners (or any permitted assignees) of LLC Units may be accelerated or significantly exceed the actual benefits we realize in respect of the tax attributes subject to the tax receivable agreement.
If this were to occur again, it could have the effect of reducing demand among retail purchasers for our new boats. Also, while we have taken steps designed to balance production volumes for our boats with demand, our competitors could choose to reduce the price of their products, which could have the effect of reducing demand for our new boats.
Also, while we have taken steps designed to balance production volumes for our boats with demand, our competitors could choose to reduce the price of their products, which could have the effect of reducing demand for our new boats.
Our credit agreement permits, however, (i) distributions to members of the LLC, including Malibu Boats, Inc., based on the member’s allocated taxable income, (ii) distributions to fund payments that are required under the our tax receivable agreement, (iii) purchases of stock or stock options of the LLC from former officers, directors or employees of loan parties under the credit agreement or payments pursuant to stock option and other benefit plans up to $3.0 million in any fiscal year, and (iv) distributions to Malibu Boats, Inc. for the repurchase of its capital stock of up to $35.0 million in any fiscal year subject to one-year carry forward and compliance with other financial covenants.
However, our credit agreement permits (i) distributions to members of the LLC, including Malibu Boats, Inc., based on the member’s allocated taxable income, (ii) distributions to fund payments that are required under the our tax receivable agreement, (iii) purchases of stock or stock options of the LLC from former officers, directors or employees of loan parties under the credit agreement or payments pursuant to stock option and other benefit plans up to $5.0 million in any fiscal year, and (iv) repurchases of the outstanding stock and LLC units of Malibu Boats, Inc..
Risks Related to our Common Stock Our stock price may be volatile and stockholders may be unable to sell shares at or above the price at which they purchased them. Our closing stock price ranged from $48.72 per share to $84.87 per share during fiscal year 2022.
Risks Related to our Common Stock Our stock price may be volatile and stockholders may be unable to sell shares at or above the price at which they purchased them. Our closing stock price ranged from $46.96 per share to $70.49 per share during fiscal year 2023.
This project will require significant capital and human resources, the re-engineering of many processes of our business, and the attention of our management and other personnel who would otherwise be focused on other aspects of our business.
We have begun the process of designing and implementing a new ERP system. This project will require significant capital and human resources, the re-engineering of many processes of our business, and the attention of our management and other personnel who would otherwise be focused on other aspects of our business.
Our governing documents and Delaware law could prevent a takeover that stockholders consider favorable and could also reduce the market price of our stock. Our certificate of incorporation and bylaws contain certain provisions that could delay or prevent a change in control. These provisions could also make it more difficult for stockholders to elect directors and take other corporate actions.
Our certificate of incorporation and bylaws contain certain provisions that could delay or prevent a change in control. These provisions could also make it more difficult for stockholders to elect directors and take other corporate actions.
If the rate used to calculate interest on our outstanding floating rate debt under our Prior Credit Agreement or Amended Credit Agreement were to increase by 1.0%, we would expect to incur additional interest expense on such indebtedness as of June 30, 2022 of approximately $1.2 million on an annualized basis.
If the rate used to calculate interest on our outstanding floating rate debt under our revolving credit facility Credit Agreement were to increase by 1.0%, we would expect to incur additional interest expense on such indebtedness as of August 24, 2023 of approximately $0.7 million on an annualized basis.
Any natural or environmental disaster, pandemic or other serious disruption to our facilities due to fire, flood, earthquake, acts of terrorism, civil insurrection or social unrest or any other unforeseen circumstances could adversely affect our business, financial condition and results of operations.
We rely on the continuous operation of our facilities in Tennessee, Florida, Kansas, California, Alabama, and Australia. Any natural or environmental disaster, pandemic or other serious disruption to our facilities due to fire, flood, earthquake, acts of terrorism, civil insurrection or social unrest or any other unforeseen circumstances could adversely affect our business, financial condition and results of operations.
If our security measures are breached or fail, unauthorized persons may be able to obtain access to or acquire personal or other confidential data.
If our security measures are breached or fail, unauthorized persons may be able to obtain access to or acquire personal or other confidential data, or we may need to temporarily suspend production or operations in order to restore security.
Inflation could adversely affect our financial results. The market prices of certain materials and components used in manufacturing our products, especially resins that are made with hydrocarbon, feedstocks, copper, aluminum and stainless steel, can be volatile.
We do not currently use hedging or other derivative instruments to mitigate our foreign currency risks. Inflation could adversely affect our financial results. The market prices of certain materials and components used in manufacturing our products, especially resins that are made with hydrocarbon, feedstocks, copper, aluminum and stainless steel, can be volatile.
We cannot assure you that we will not have to suspend our operations again, whether voluntarily or as a result of federal, state or local mandates, and such closures could extend for a longer term than the prior shutdown of our facilities relating to COVID-19.
We cannot assure you that we will not have to suspend our operations again, whether voluntarily or as a result of federal, state or local mandates, and such closures could extend for a longer term than the prior shutdown of our facilities relating to COVID-19. 18 Table of Contents Changes in climate could also adversely affect our operations by limiting or increasing the costs associated with equipment or fuel supplies.
Changes in laws and policies governing foreign trade could adversely affect our business and trigger retaliatory actions by affected countries. There is significant uncertainty with respect to future trade regulations, including the imposition by the U.S. of tariffs and penalties on products manufactured outside the U.S., and existing international trade agreements, as shown by Brexit in Europe.
There is significant uncertainty with respect to future trade regulations, including the imposition by the U.S. of tariffs and penalties on products manufactured outside the U.S., and existing international trade agreements, as shown by Brexit in Europe.
Changes in climate could also adversely affect our operations by limiting or increasing the costs associated with equipment or fuel supplies. In addition, adverse weather conditions, such as increased frequency and/or severity of storms, or floods could impair our ability to operate by damaging our facilities and equipment or restricting product delivery to customers.
In addition, adverse weather conditions, such as increased frequency and/or severity of storms, or floods could impair our ability to operate by damaging our facilities and equipment or restricting product delivery to customers.
Furthermore, any Class A Common Stock that we issue in connection with our Long-Term Incentive Plan or other equity incentive plans that we 29 Table of Contents may adopt in the future, our acquisitions or otherwise would dilute the percentage ownership of holders of our Class A Common Stock.
Furthermore, any Class A Common Stock that we issue in connection with our Long-Term Incentive Plan or other equity incentive plans that we may adopt in the future, our acquisitions or otherwise would dilute the percentage ownership of holders of our Class A Common Stock. 26 Table of Contents Our governing documents and Delaware law could prevent a takeover that stockholders consider favorable and could also reduce the market price of our stock.
Our reliance upon patents, trademark laws and contractual provisions to protect our proprietary rights may not be sufficient to protect our intellectual property from others who may sell similar products and may lead to costly litigation. We are currently, and may be in the future, party to lawsuits and other intellectual property rights claims that are expensive and time-consuming.
Our reliance upon patents, trademark laws and contractual provisions to protect our proprietary rights may not be sufficient to protect our intellectual property from others who may sell similar products and may lead to costly litigation.
Sales to our dealers under common control of OneWater Marine, Inc. represented approximately 16.8% , 16.3% and 15.2% of consolidated net sales in fiscal years 2022, 2021 and 2020, respectively. The loss of a significant number of these dealers could have a material adverse effect on our financial condition and results of operations.
Sales to our dealers under common control of Tommy's Boats represented approximately 10.7%, 9.4% and 7.3% of our consolidated net sales in the fiscal years ended June 30, 2023 , 2022 and 2021 respectively. The loss of a significant number of these dealers could have a material adverse effect on our financial condition and results of operations.
For example, Malibu Boats, Inc. may have an obligation to make tax receivable agreement payments for a certain amount while receiving distributions from the LLC in a lesser amount, which would negatively affect our liquidity.
For example, Malibu Boats, Inc. may have an obligation to make tax receivable agreement payments for a certain amount while receiving distributions from the LLC in a lesser amount, which would negatively affect our liquidity. The payments under the tax receivable agreement are not conditioned upon the pre-IPO owners’ (or any permitted assignees’) continued ownership of us.
In some instances, we purchase components, raw materials and parts that are ultimately derived from a single source or geographic area and we may therefore be at an increased risk for supply disruptions. Historically, we have not entered into long-term agreements with suppliers of our raw materials and components other than for our engines and outboard motors.
In some instances, we purchase components, raw materials and parts that are ultimately derived from a single source or geographic area or a limited number of suppliers and we may therefore be at an increased risk for supply disruptions.
Our standard warranties require us, through our dealer network, to repair or replace defective products during such warranty periods. In addition, if any of our products are, or are alleged to be, defective, we 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 our products are, or are alleged to be, defective, we may be required to participate in a recall of that product if the defect or alleged defect relates to safety.
The loss of services of any members of our senior management or key personnel or the inability to hire or retain qualified personnel in the future could adversely affect our business, financial condition, and results of operations.
The loss of services of any members of our senior management or key personnel or the inability to hire or retain qualified personnel in the future could adversely affect our business, financial condition, and results of operations. For instance, we are currently conducting a search process to identify and appoint a new permanent Chief Financial Officer.
While this recall did not have a material impact on our business, the repair and replacement costs we could incur in connection with a recall could materially and adversely affect our business and could cause consumers to question the safety or reliability of our products. 25 Table of Contents Changes to U.S. trade policy, tariffs, and import/export regulations may have a material adverse effect on our business, financial condition, and results of operations.
While this recall did not have a material impact on our business, the repair and replacement costs we could incur in connection with a recall could materially and adversely affect our business and could cause consumers to question the safety or reliability of our products.
Although we maintain property, casualty and business interruption insurance of the types and in the amounts that we believe are customary for the industry, we are not fully insured against all potential natural disasters or other disruptions to our facilities. 21 Table of Contents Increases in income tax rates or changes in income tax laws or enforcement could have a material adverse impact on our financial results.
Although we maintain property, casualty and business interruption insurance of the types and in the amounts that we believe are customary for the industry, we are not fully insured against all potential natural disasters or other disruptions to our facilities.
Our business operations could be negatively impacted by an outage or breach of our information technology systems, operational technology systems, or a cybersecurity event. We manage our business operations through a variety of information technology (IT) and operational technology systems which we continually enhance to increase efficiency and security.
Our business operations could be negatively impacted by an outage or breach of our information technology systems or operational technology systems (or those of the third parties upon which we rely), our sensitive data, or a cybersecurity event. We manage our business operations through a variety of information technology (IT) and operational technology systems (“IT Systems”).
We depend on these systems for commercial transactions, customer interactions, manufacturing, branding, employee tracking, and other applications. New system implementations, such as the current implementation of our new enterprise resource planning (ERP) system, across the enterprise also pose risks of outages or disruptions, which could affect our suppliers, commercial operations, and customers.
We depend on these systems for commercial transactions, customer interactions, manufacturing, branding, employee tracking, processing sensitive data and other applications. New system implementations, across the enterprise also pose risks including without limitation those in connection with future or past business transactions, to our IT systems, including risks of outages or disruptions, which could affect our suppliers, commercial operations, and customers.
The primary raw materials used in manufacturing our boats are petroleum-based resins, fiberglass and vinyl. Our profitability is affected by significant fluctuations in the prices of the raw materials and commodities that we use in our products and in the cost of freight and shipping to source materials, commodities, and other component parts necessary to assemble our products.
Our profitability in recent years has been, and in the future may be, affected by significant fluctuations in the prices of the raw materials and commodities that we use in our products and in the cost of freight and shipping of source materials, commodities, and other component parts necessary to assemble our products.
The integration process with any acquisition may disrupt our business and, if implemented ineffectively, may preclude realization of the full benefits expected by us and could harm our results of operations. In addition, the overall integration of the combining companies may result in unanticipated problems, expenses, liabilities and competitive responses and may cause our stock price to decline.
The integration process with any acquisition may disrupt our business and, if implemented ineffectively, may preclude realization of the full benefits expected by us and could harm our results of operations.
Additionally, competition for qualified employees could require us to pay higher wages to attract a sufficient number of employees. Significant increases in manufacturing workforce costs could materially adversely affect our business, financial condition or results of operations. The nature of our business exposes us to workers' compensation claims and other workplace liabilities.
Significant increases in manufacturing workforce costs could materially adversely affect our business, financial condition or results of operations. The nature of our business exposes us to workers' compensation claims and other workplace liabilities. Certain materials that we use require our employees to handle potentially hazardous or toxic substances.
The payments under the 28 Table of Contents tax receivable agreement are not conditioned upon the pre-IPO owners’ (or any permitted assignees’) continued ownership of us. Malibu Boats, Inc. is required to make a good faith effort to ensure that it has sufficient cash available to make any required payments under the tax receivable agreement.
Malibu Boats, Inc. is required to make a good faith effort to ensure that it has sufficient cash available to make any required payments under the tax receivable agreement.
In addition, legal requirements are constantly evolving, and changes in laws, regulations or policies, or changes in interpretations of the foregoing, could result in compliance shortfalls, require additional product development investment, increase consumer pricing, and increase our costs or create liabilities where none exists today. 26 Table of Contents Risks Related to our Capital Structure The only material asset of Malibu Boats, Inc. is our interest in the LLC, and therefore Malibu Boats, Inc. is dependent upon distributions from the LLC for any cash obligations of Malibu Boats, Inc.
In addition, legal requirements are constantly evolving, and changes in laws, regulations or policies, or changes in interpretations of the foregoing, could result in compliance shortfalls, require additional product development investment, increase consumer pricing, and increase our costs or create liabilities where none exists today.
We also sell U.S. manufactured products into certain international markets in U.S. dollars, including the sale of products into Canada, Europe and Latin America. Demand for our products in these markets may also be adversely affected by a strengthening U.S. dollar. We do not currently use hedging or other derivative instruments to mitigate our foreign currency risks.
A portion of our selling, general and administrative costs are transacted in Australian dollars as a result. We also sell U.S. manufactured products into certain international markets in U.S. dollars, including the sale of products into Canada, Europe and Latin America. Demand for our products in these markets may also be adversely affected by a strengthening U.S. dollar.
Malibu Boats West, Inc. is not, and has never been, a subsidiary of ours but was a separate legal entity whose assets were purchased by Malibu Boats, LLC in 2006.
Malibu Boats West, Inc. is not, and has never been, a subsidiary of ours but was a separate legal entity whose assets were purchased by Malibu Boats, LLC in 2006. See Note 17 of our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information.
Any number of factors, including labor disruptions, weather events, the occurrence of a contagious disease or illness, contractual or other disputes, unfavorable economic or industry conditions, delivery delays or other performance problems or financial difficulties or solvency problems, could disrupt our suppliers’ operations and lead to uncertainty in our supply chain or cause supply disruptions for us, which could, in turn, disrupt our operations.
Supply chain disruptions could occur for any number of factors, including facility closures due to labor disruptions, weather events, cyber intrusions, the occurrence of a contagious disease or illness, such as COVID-19, contractual or other disputes, unfavorable economic or industry conditions, political instability, delivery delays, performance problems, or financial difficulties of suppliers.
We continue to upgrade, streamline, and integrate these systems but, like those of other companies, our systems are susceptible to outages due to natural disasters, power loss, computer viruses, security breaches, hardware or software vulnerabilities, disruptions, and similar events. We exchange information with many trading partners across all aspects of our commercial operations through our IT systems.
We continue to upgrade, streamline, and integrate these systems but, like those of other companies, our systems and data, and those of the third parties we rely on, are susceptible to outages due to natural disasters, power loss, computer viruses, and worms, malware, personnel misconduct or error, ransomware attacks, supply-chain attacks, security breaches, hardware or software vulnerabilities, disruptions, and similar events.
We hold patents and trademarks relating to various aspects of our products and believe that proprietary technical know- how is important to our business.
We have in the past, and may be in the future, party to lawsuits and other intellectual property rights claims that are expensive and time-consuming. We hold patents and trademarks relating to various aspects of our products and believe that proprietary technical know- how is important to our business.
Changes in domestic and international tax legislation could expose us to additional tax liability and could impact the amount of our tax receivable agreement liability. Although we monitor changes in tax laws and work to mitigate the impact of proposed changes, such changes may negatively impact our financial results.
Although we monitor changes in tax laws and work to mitigate the impact of proposed changes, such changes may negatively impact our financial results. Expected changes in current tax law beyond fiscal 2023 could impact our financial results in a material way.
We depend on key personnel and we may not be able to retain them or to attract, assimilate, and retain highly qualified employees in the future.
In addition, any increase in individual income tax rates would negatively affect our potential consumers’ discretionary income and could decrease the demand for our products. We depend on key personnel and we may not be able to retain them or to attract, assimilate, and retain highly qualified employees in the future.
As a result of doing business in foreign countries and with foreign partners, we are exposed to a heightened risk of violating anti-corruption and trade control laws and sanctions regulations.
As a result of doing business in foreign countries and with foreign partners, we are exposed to a heightened risk of violating anti-corruption and trade control laws and sanctions regulations. Catastrophic events, including natural or environmental disasters, pandemics, such as the COVID-19 pandemic or other disruptions at our facilities could adversely affect our business, financial condition and results of operations.
The applicable margin will be based upon the consolidated leverage ratio of the LLC and its subsidiaries.
The applicable margin will be based upon the consolidated leverage ratio of the LLC and its subsidiaries. As of August 24, 2023, we had $65.0 million outstanding under our revolving credit facility.
For instance, even when there are high unemployment rates in the regions where we have manufacturing facilities, it can be difficult to retain skilled employees. Although none of our employees are currently covered by collective bargaining agreements, we cannot assure you that our employees will not elect to be represented by labor unions in the future.
Although none of our employees are currently covered by collective bargaining agreements, we cannot assure you that our employees will not elect to be represented by labor unions in the future. Additionally, competition for qualified employees could require us to pay higher wages to attract a sufficient number of employees.
Significant product repair and/or replacement costs due to product warranty claims or product recalls could have a material adverse impact on our results of operations. We provide limited warranties for our boats. Although we employ quality control procedures, sometimes a product is distributed that needs repair or replacement.
We provide limited warranties for our boats. Although we employ quality control procedures, sometimes a product is distributed that needs repair or replacement. Our standard warranties require us, through our dealer network, to repair or replace defective products during such warranty periods.
Borrowings under our revolving credit facility are at variable rates of interest and expose us to interest rate risk. Interest rates are currently at relatively low levels.
Borrowings under our revolving credit facility are at variable rates of interest and expose us to interest rate risk. During the past year, interest rates have been increasing, which results in increased debt service obligations under our revolving credit facility even if our amount borrowed remains the same.
Consequently, decreased demand or the need to reduce production can lower our ability to absorb fixed costs and materially impact our financial condition or results of operations. Shortages, or increases in the cost, of raw materials, commodities, component parts and transportation could negatively impact our business.
Consequently, decreased demand or the need to reduce production can lower our ability to absorb fixed costs and materially impact our financial condition or results of operations. Our financial results may be adversely affected by our third-party suppliers ’ increased costs or inability to meet required production levels due to changing demand or global supply chain disruptions.
We also maintain a portion of our manufacturing operations in Australia which partially 23 Table of Contents mitigates the impact of a strengthening U.S. dollar in that country. A portion of our selling, general and administrative costs are transacted in Australian dollars as a result.
Consequently, a strong U.S. dollar may adversely affect reported revenues and, with the recent strengthening of the U.S. dollar, we have experienced a corresponding negative impact on our financial results with respect to our foreign operations. We also maintain a portion of our manufacturing operations in Australia which partially mitigates the impact of a strengthening U.S. dollar in that country.
We have experienced cyber-attacks, but to our knowledge, we have not experienced any material disruptions or breaches of our information technology systems or connected products. The risk of these systems-related events and security breaches occurring has intensified, in part because we maintain certain information necessary to conduct our businesses in digital form stored on cloud servers.
We have experienced cyber-attacks, but to our knowledge, we have not experienced any material disruptions or breaches of our information technology systems or connected products. While we have implemented security measures designed to protect against security incidents, there can be no assurance that these measures will be effective.
We have agreed to purchase substantially all of our outboard motors from Yamaha, which makes us reliant on Yamaha for our supply of outboard engines. We have two joint marketing agreements with Yamaha Motor Corporation, U.S.A., or Yamaha, that require us to supply most of our boats that are pre-rigged with outboard motors with Yamaha outboard engines.
We currently purchase engines from General Motors LLC, or General Motors, that we then prepare for marine use for certain Malibu, Axis and Cobalt boats, and we purchase outboard engines from Yamaha Motor Corporation, U.S.A., or Yamaha, for a significant percentage of our Cobalt, Pursuit and Maverick Boats Group branded boats that are pre-rigged for outboard motors.
Removed
In addition, our suppliers could face increased costs or an inability to meet required production levels due to their own limited market supply and, the tariffs the U.S. has imposed on certain foreign goods, including raw materials and components used in our manufacturing process.
Added
We rely on a global supply chain of third parties to supply raw materials used in our manufacturing process, including resins, fiberglass, and vinyl, as well as parts and components. The prices for these raw materials, parts, and components fluctuate depending on market conditions and, in some instances, commodity prices or trade policies, including tariffs.
Removed
This could negatively impact our cost of sales, by increasing the price of raw materials and components used in our supply chain. Any disruption in our suppliers’ operations could disrupt our production schedule.
Added
Substantial increases in the prices of raw materials, parts, and components would increase our operating costs, and could reduce our profitability if we are unable to recoup the increased costs through higher product prices or improved operating efficiencies.

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Item 2. Properties

Properties — owned and leased real estate

5 edited+2 added−0 removed5 unchanged
Biggest changeWe own the property where our Pursuit facilities are located which consist of six manufacturing facilities for aggregating to 398,000 square feet of manufacturing space. Our Maverick Boat Group boats are manufactured at a separate location in Fort Pierce, Florida. We own the property where our Maverick Boat Group facilities are located.
Biggest changeWe own the property where our Pursuit facilities are located which consist of six manufacturing facilities aggregating to 398,000 square feet of manufacturing space. On March 1, 2023, we launched our new 116,000 square foot Tooling Design Center located on our Pursuit property.
Australia We manufacture and test boats at two facilities in Albury, Australia with combined square-footage of 68,200. Each facility is leased pursuant to a lease agreement and each with a term through October 22, 2024, with two five-year options to extend lease term. Our Albury facilities are used in our Malibu segment.
Australia We manufacture and test boats at two facilities in Albury, Australia with combined square-footage of 68,200. Each facility is leased pursuant to a lease agreement and each with a term through October 22, 2024, with two five-year options to extend lease term. Our Albury facilities are used in our Malibu segment. 28 Table of Contents
Our Tennessee facilities are used in our Malibu segment. Kansas Our Cobalt boats are manufactured in Neodesha, Kansas. We own the property in Neodesha, where we have four manufacturing facilities aggregating to 493,000 square feet of manufacturing space. Our Neodesha facilities are used in our Cobalt segment. Florida Our Pursuit boats are manufactured in Fort Pierce, Florida.
We own the property in Neodesha, where we have four manufacturing facilities aggregating to 493,000 square feet of manufacturing space. Our Neodesha facilities are used in our Cobalt segment. Florida Our Pursuit boats are manufactured in Fort Pierce, Florida.
Our two manufacturing facilities for Maverick Boat Group aggregate to 330,000 square feet of manufacturing space, including the expansion completed in 2022 of 110,000 square feet of manufacturing space. Our Fort Pierce facilities for Pursuit and the Maverick Boat Group are used in our Saltwater Fishing segment.
We own the property where our Maverick Boat Group facilities are located. Our two manufacturing facilities for Maverick Boat Group aggregate to 330,000 square feet of manufacturing space. Our Fort Pierce facilities for Pursuit and the Maverick Boat Group are used in our Saltwater Fishing segment.
The property is leased pursuant to a lease agreement that has a term through December 31, 2022, with the option to extend for one additional term of two years. We also own 165,000 square-feet of space neighboring our manufacturing facility in Loudon, Tennessee that we use for trailer production, engine production, shipping and office space.
The property is leased pursuant to a lease agreement that has a term through December 31, 2024. We also own 165,000 square-feet of space neighboring our manufacturing facility in Loudon, Tennessee that we use for trailer production, engine production, shipping and office space, respectively. Our Loudon facilities are used in our Malibu segment.
Added
On July 25, 2023, we completed the purchase of a 260,000 square-foot facility in Lenoir City, Tennessee. This new facility provides for the opportunity to expand production of boats and provides more opportunities for vertical integration initiatives. Kansas Our Cobalt boats are manufactured in Neodesha, Kansas.
Added
The new facility is a vertical integration initiative that will first focus on the tooling needs of our Pursuit brand, with the goal to build the majority of tooling across all of our brands at this site. Our Maverick Boat Group boats are manufactured at a separate location in Fort Pierce, Florida.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+1 added−2 removed5 unchanged
Biggest changeDuring the fiscal year ended June 30, 2022, we repurchased 554,995 shares of Class 33 Table of Contents A Common Stock for $34.6 million in cash including related fees and expenses. As of June 30, 2022, $35.4 million was available to repurchase shares of Class A Common Stock and LLC Units under the Repurchase Program.
Biggest changeAs of June 30, 2023, $100.0 million was available to repurchase shares of Class A Common Stock and LLC Units under the 2022 Repurchase Program. Unregistered Sales of Equity Securities Not Applicable.
The following graph shows the cumulative total stockholder return of an investment of $100 in cash at market close at the end of each of the years within the five-year period ended June 30, 2022 for (i) our Class A Common Stock, (ii) the Russell 2000 Index and (iii) the Dow Jones Recreational Product Index.
The following graph shows the cumulative total stockholder return of an investment of $100 in cash at market close at the end of each of the years within the five-year period ended June 30, 2023 for (i) our Class A Common Stock, (ii) the Russell 2000 Index and (iii) the Dow Jones Recreational Product Index.
Issuer Purchases of Equity Securities On November 3, 2021, our Board of Directors authorized a stock repurchase program to allow for the repurchase of up to $70.0 million of our Class A Common Stock and the LLC's LLC Units (the “ Repurchase Program”) for the period from November 8, 2021 to November 8, 2022.
Issuer Purchases of Equity Securities On November 3, 2021, our Board of Directors authorized a stock repurchase program to allow for the repurchase of up to $70.0 million of our Class A Common Stock and the LLC's LLC Units (the “2021 Repurchase Program”) for the period from November 8, 2021 to November 8, 2022.
Equity Compensation Plan Information Equity compensation plan information required by this Item 5 will be included in our definitive proxy statement for our annual meeting of stockholders, which will be filed with the SEC no later than 120 days after the end of our fiscal year ended June 30, 2022 (the "Proxy Statement"), and is incorporated herein by reference. 34 Table of Contents Item 6. [RESERVED] 35 Table of Contents
Equity Compensation Plan Information Equity compensation plan information required by this Item 5 will be included in our definitive proxy statement for our annual meeting of stockholders, which will be filed with the SEC no later than 120 days after the end of our fiscal year ended June 30, 2023 (the "Proxy Statement"), and is incorporated herein by reference. 31 Table of Contents Item 6. [RESERVED] 32 Table of Contents
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our Class A Common Stock is listed on the Nasdaq Global Select Market under the symbol "MBUU". On August 23, 2022, the last reported sale price on the Nasdaq Global Select Market of our Class A Common Stock was $66.82 per share.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our Class A Common Stock is listed on the Nasdaq Global Select Market under the symbol "MBUU". On August 24, 2023, the last reported sale price on the Nasdaq Global Select Market of our Class A Common Stock was $53.31 per share.
As of August 23, 2022, we had approximately five holders of record of our Class A Common Stock and 10 holders of record of our Class B Common Stock.
As of August 24, 2023, we had approximately four holders of record of our Class A Common Stock and 12 holders of record of our Class B Common Stock.
During the three months ended June 30, 2022, we repurchased 79,852 shares of Class A Common Stock for $4.4 million in cash including related fees and expenses. The Repurchase Program expires on November 8, 2022.
During the fiscal year ended June 30, 2023, we repurchased 143,759 shares of Class A Common Stock for $7.9 million in cash including related fees and expenses under the 2021 Repurchase Program.
Removed
This table provides information with respect to purchases by us of shares of our Class A Common Stock under our Repurchase Program during the quarter ended June 30, 2022 (in thousands except share and per share data).
Added
On 30 Table of Contents November 3, 2022, our Board of Directors authorized a new stock repurchase program to allow for the repurchase of up to $100.0 million of our Class A Common Stock and the LLC's LLC Units (the “2022 Repurchase Program”) for the period from November 8, 2022 to November 8, 2023.
Removed
Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan (1) April 1, 2022 through April 30, 2022 — $ — 475,143 $ 39,790 May 1, 2022 through May 31, 2022 79,852 55.50 554,995 35,359 June 1, 2022 through June 30, 2022 — — 554,995 35,359 Total 79,852 $ 55.50 554,995 $ 35,359 Unregistered Sales of Equity Securities Not Applicable.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

127 edited+44 added−83 removed94 unchanged
Biggest changeThe following table shows the reconciliation of the numerator and denominator for net income available to Class A Common Stock per share to Adjusted Fully Distributed Net Income per Share of Class A Common Stock for the periods presented (in thousands except share and per share data): 48 Table of Contents Fiscal Year Ended June 30, 2022 2021 2020 Reconciliation of numerator for net income available to Class A Common Stock per share to Adjusted Fully Distributed Net Income per Share of Class A Common Stock: Net income attributable to Malibu Boats, Inc. $ 157,632 $ 109,841 $ 61,562 Provision for income taxes 46,535 33,979 19,076 Professional fees 1 — 5,817 1,013 Acquisition and integration related expenses 2 6,653 10,558 4,262 Fair value adjustment for interest rate swap 3 — — 68 Stock-based compensation expense 4 6,342 5,581 3,042 UAW strike impact 5 — — 2,564 Adjustment to tax receivable agreement liability 6 1,025 (88) (1,672) Net income attributable to non-controlling interest 7 5,798 4,441 3,094 Fully distributed net income before income taxes 223,985 170,129 93,009 Income tax expense on fully distributed income before income taxes 8 53,308 40,150 21,857 Adjusted Fully Distributed Net Income $ 170,677 $ 129,979 $ 71,152 Fiscal Year Ended June 30, 2022 2021 2020 Reconciliation of denominator for net income available to Class A Common Stock per share to Adjusted Fully Distributed Net Income per Share of Class A Common Stock: Weighted average shares outstanding of Class A Common Stock used for basic net income per share: 20,749,237 20,752,652 20,662,750 Adjustments to weighted average shares of Class A Common Stock: Weighted-average LLC units held by non-controlling unit holders 9 600,919 665,217 806,943 Weighted-average unvested restricted stock awards issued to management 10 252,135 212,579 155,433 Adjusted weighted average shares of Class A Common Stock outstanding used in computing Adjusted Fully Distributed Net Income per Share of Class A Common Stock: 21,602,291 21,630,448 21,625,126 The following table shows the reconciliation of net income available to Class A Common Stock per share to Adjusted Fully Distributed Net Income per Share of Class A Common Stock for the periods presented: 49 Table of Contents Fiscal Year Ended June 30, 2022 2021 2020 Net income available to Class A Common Stock per share $ 7.60 $ 5.29 $ 2.98 Impact of adjustments: Provision for income taxes 2.24 1.64 0.92 Professional fees 1 — 0.28 0.05 Acquisition and integration related expenses 2 0.32 0.51 0.21 Fair value adjustment for interest rate swap 3 — — — Stock-based compensation expense 4 0.31 0.27 0.15 UAW strike impact 5 — — 0.12 Adjustment to tax receivable agreement liability 6 0.05 — (0.08) Net income attributable to non-controlling interest 7 0.28 0.21 0.15 Fully distributed net income per share before income taxes 10.80 8.20 4.50 Impact of income tax expense on fully distributed income before income taxes 8 (2.57) (1.93) (1.06) Impact of increased share count 11 (0.32) (0.26) (0.15) Adjusted Fully Distributed Net Income per Share of Class A Common Stock $ 7.91 $ 6.01 $ 3.29 (1) For fiscal years 2021 and 2020, represents legal and advisory fees related to our litigation with Skier's Choice, Inc.
Biggest changeThe following table shows the reconciliation of the numerator and denominator for net income available to Class A Common Stock per share to Adjusted Fully Distributed Net Income per Share of Class A Common Stock for the periods presented (in thousands except share and per share data): 44 Table of Contents Fiscal Year Ended June 30, 2023 2022 2021 Reconciliation of numerator for net income available to Class A Common Stock per share to Adjusted Fully Distributed Net Income per Share of Class A Common Stock: Net income attributable to Malibu Boats, Inc. $ 104,513 $ 157,632 $ 109,841 Provision for income taxes 33,581 46,535 33,979 Litigation settlement 1 100,000 — — Professional fees 2 4,781 — 5,817 Acquisition and integration related expenses 3 6,654 6,653 10,558 Stock-based compensation expense 4 5,894 6,342 5,581 Adjustment to tax receivable agreement liability 5 188 1,025 (88) Net income attributable to non-controlling interest 6 3,397 5,798 4,441 Fully distributed net income before income taxes 259,008 223,985 170,129 Income tax expense on fully distributed income before income taxes 7 62,939 53,308 40,150 Adjusted Fully Distributed Net Income $ 196,069 $ 170,677 $ 129,979 Fiscal Year Ended June 30, 2023 2022 2021 Reconciliation of denominator for net income available to Class A Common Stock per share to Adjusted Fully Distributed Net Income per Share of Class A Common Stock: Weighted average shares outstanding of Class A Common Stock used for basic net income per share: 20,501,844 20,749,237 20,752,652 Adjustments to weighted average shares of Class A Common Stock: Weighted-average LLC units held by non-controlling unit holders 8 543,909 600,919 665,217 Weighted-average unvested restricted stock awards issued to management 9 272,116 252,135 212,579 Adjusted weighted average shares of Class A Common Stock outstanding used in computing Adjusted Fully Distributed Net Income per Share of Class A Common Stock: 21,317,869 21,602,291 21,630,448 The following table shows the reconciliation of net income available to Class A Common Stock per share to Adjusted Fully Distributed Net Income per Share of Class A Common Stock for the periods presented: 45 Table of Contents Fiscal Year Ended June 30, 2023 2022 2021 Net income available to Class A Common Stock per share $ 5.10 $ 7.60 $ 5.29 Impact of adjustments: Provision for income taxes 1.64 2.24 1.64 Litigation settlement 1 4.88 — — Professional fees 2 0.23 — 0.28 Acquisition and integration related expenses 3 0.32 0.32 0.51 Stock-based compensation expense 4 0.29 0.31 0.27 Adjustment to tax receivable agreement liability 5 0.01 0.05 — Net income attributable to non-controlling interest 6 0.17 0.28 0.21 Fully distributed net income per share before income taxes 12.64 10.80 8.20 Impact of income tax expense on fully distributed income before income taxes 8 (3.07) (2.57) (1.93) Impact of increased share count 10 (0.38) (0.32) (0.26) Adjusted Fully Distributed Net Income per Share of Class A Common Stock $ 9.19 $ 7.91 $ 6.01 (1) Represents settlement of product liability cases in June 2023 for $100.0 million.
We currently sell our boats under eight brands as shown in the table below, and we report our results of operations under three reportable segments, Malibu, Cobalt and Saltwater Fishing.
We currently sell our boats under eight brands as shown in the table below, and we report our results of operations under three reportable segments, Malibu, Saltwater Fishing and Cobalt.
General and administrative expenses also include product development expenses associated with our vertical integration initiative and acquisition or integration related expenses. Amortization expenses are associated with the amortization of intangibles. Other (Income) Expense, Net Other (income) expense, net consists of interest expense and other income or expense, net.
General and administrative expenses also include product development expenses associated with our vertical integration initiative and acquisition or integration related expenses. Amortization expenses are associated with the amortization of intangibles. Other Expense (Income), Net Other expense (income), net consists of interest expense and other income or expense, net.
Non-controlling interest Non-controlling interest represents the ownership interests of the members of the LLC other than us and the amount recorded as non-controlling interest in our consolidated statements of operations and comprehensive income is computed by multiplying pre-tax income for the applicable fiscal year by the percentage ownership in the LLC not directly attributable to us.
Non-controlling interest Non-controlling interest represents the ownership interests of the members of the LLC other than us and the amount recorded as non-controlling interest in our consolidated statements of operations and comprehensive income is computed by multiplying pre-tax income for the applicable fiscal year by the percentage ownership in the LLC not directly attributable to us.
Investing Activities Net cash used in investing activities was $61.6 million for fiscal year 2022 compared to $181.1 million for the same period in 2021, a decrease of cash used in investing activities of $119.5 million.
Net cash used in investing activities was $61.6 million for fiscal year 2022 compared to $181.1 million for the same period in 2021, a decrease of cash used in investing activities of $119.5 million.
Financing Activities Net cash used in financing activities was $60.4 million for fiscal year 2022 compared to net cash provided by financing activities of $57.3 million for fiscal year 2021, a change of $117.7 million.
Net cash used in financing activities was $60.4 million for fiscal year 2022 compared to net cash provided by financing activities of $57.3 million for fiscal year 2021, a change of $117.7 million.
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.
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.
(5) For fiscal year 2022, we recognized other expense from an adjustment in our tax receivable agreement liability due to an increase in the state tax rate used in computing our future tax obligations and in turn, an increase in the future benefit we expect to pay under our tax receivable agreement with pre-IPO owners.
For fiscal year 2022, we recognized other expense from an adjustment in our tax receivable agreement liability due to an increase in the state tax rate used in computing our future tax obligations and in turn, an increase in the future benefit we expect to pay under our tax receivable agreement with pre-IPO owners.
(6) For fiscal year 2022, we recognized other expense from an adjustment in our tax receivable agreement liability due to an increase in the state tax rate used in computing our future tax obligations and in turn, an increase in the future benefit we expect to pay under our tax receivable agreement with pre-IPO owners.
For fiscal year 2022, we recognized other expense from an adjustment in our tax receivable agreement liability due to an increase in the state tax rate used in computing our future tax obligations and in turn, an increase in the future benefit we expect to pay under our tax receivable agreement with pre-IPO owners.
Our indirect subsidiary, Malibu Boats, LLC is the borrower under the Amended Credit Agreement and its obligations are guaranteed by the LLC and, subject to certain exceptions, the present and future domestic subsidiaries of Malibu Boats, LLC, and all such obligations are secured by substantially all of the assets of the LLC, Malibu Boats, LLC and such subsidiary guarantors.
Our indirect subsidiary, Malibu Boats, LLC is the borrower under the Credit Agreement and its obligations are guaranteed by the LLC and, subject to certain exceptions, the present and future domestic subsidiaries of Malibu Boats, LLC, and all such obligations are secured by substantially all of the assets of the LLC, Malibu Boats, LLC and such subsidiary guarantors.
This increase in tax rate was partially offset by a windfall benefit generated by certain stock-based compensation, as well as the benefits of the research and development tax credit, and the impact of non-controlling interests in the LLC.
This increase in the effective tax rate was partially offset by a windfall benefit generated by certain stock-based compensation, as well as the benefits of the research and development tax credit, and the impact of non-controlling interests in the LLC.
Nearly all of our boat sales include optional feature upgrades purchased by the consumer, which increase the average selling price of our boats; and • Parts and other sales —consists of sales of replacement and aftermarket boat parts and accessories to our dealer network; and consists of royalty income earned from license agreements with various boat manufacturers, including Nautique, Chaparral, Mastercraft, and Tige related to the use of our intellectual property. • Net sales are net of: • Sales returns —consists primarily of contractual repurchases of boats either repossessed by the floor plan financing provider from the dealer or returned by the dealer under our warranty program; and 41 Table of Contents • Rebates and free flooring —consists of incentives, rebates and free flooring, we provide to our dealers based on sales of eligible products.
Nearly all of our boat sales include optional feature upgrades purchased by the consumer, which increase the average selling price of our boats; and • Parts and other sales —consists of sales of replacement and aftermarket boat parts and accessories to our dealer network; and consists of royalty income earned from license agreements with various boat manufacturers, including Nautique, Chaparral, Mastercraft, and Tige related to the use of our intellectual property. • Net sales are net of: • Sales returns —consists primarily of contractual repurchases of boats either repossessed by the floor plan financing provider from the dealer or returned by the dealer under our warranty program; and • Rebates and free flooring —consists of incentives, rebates and free flooring, we provide to our dealers based on sales of eligible products.
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 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.
Integration related expenses for fiscal year 2021 include post-acquisition adjustments to cost of goods sold of $0.9 million for the fair value step up of inventory acquired from Maverick Boat Group, which was sold during the third quarter of fiscal year 2021. (3) Represents equity-based incentives awarded to certain of our employees under the Malibu Boats, Inc.
Integration related expenses for fiscal year 2021 include post-acquisition adjustments to cost of goods sold of $0.9 million for the fair value step up of inventory acquired from Maverick Boat Group, which was sold during the third quarter of fiscal year 2021. (4) Represents equity-based incentives awarded to certain of our employees under the Malibu Boats, Inc.
(9) Represents the weighted average shares outstanding of LLC Units held by non-controlling interests assuming they were exchanged into Class A Common Stock on a one-for-one basis. (10) Represents the weighted average unvested restricted stock awards included in outstanding shares during the applicable period that were convertible into Class A Common Stock and granted to members of management.
(8) Represents the weighted average shares outstanding of LLC Units held by non-controlling interests assuming they were exchanged into Class A Common Stock on a one-for-one basis. (9) Represents the weighted average unvested restricted stock awards included in outstanding shares during the applicable period that were convertible into Class A Common Stock and granted to members of management.
In the ordinary course of business, we enter into purchase orders from a variety of suppliers, primarily for raw materials, in order to manage our various operating needs. The orders are expected to be purchased throughout fiscal year 2023. We or the vendor can generally terminate the purchase orders at any time.
In the ordinary course of business, we enter into purchase orders from a variety of suppliers, primarily for raw materials, in order to manage our various operating needs. The orders are expected to be purchased throughout fiscal year 2024. We or the vendor can generally terminate the purchase orders at any time.
We have experienced supply chain disruptions since fiscal year 2020 related to numerous factors, including COVID-19, severe weather events, labor shortages, ongoing domestic logistical constraints, West Coast port challenges and rising prices to suppliers, in part due to inflationary pressures.
We have experienced supply chain disruptions since fiscal year 2020 related to numerous factors, including COVID-19, severe weather events, labor shortages, ongoing domestic logistical constraints, West Coast port challenges and rising prices for our suppliers, in part due to inflationary pressures.
Under the tax receivables agreement, we pay the pre-IPO owners (or any permitted assignees) 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax or franchise tax that we actually realize, or in some circumstances are deemed to realize, as a result of an expected increase in our share of tax basis in LLC’s tangible and intangible assets, including increases attributable to payments made under the tax receivable agreement.
Under the tax receivables agreement, we pay the pre-IPO owners (or any permitted assignees) 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax or franchise tax that we actually realize, or in some 47 Table of Contents circumstances are deemed to realize, as a result of an expected increase in our share of tax basis in LLC’s tangible and intangible assets, including increases attributable to payments made under the tax receivable agreement.
The estimated normalized annual effective income tax rate for fiscal years 2022, 2021 and 2020 is based on the federal statutory rate plus a blended state rate adjusted for the research and development tax credit, the foreign derived intangible income deduction, and foreign income taxes attributable to our Australian subsidiary.
The estimated normalized annual effective income tax rate for fiscal years 2023, 2022 and 2021 is based on the federal statutory rate plus a blended state rate adjusted for the research and development tax credit, the foreign derived intangible income deduction, and foreign income taxes attributable to our Australian subsidiary.
In accordance with the tax receivable agreement, the next payment is anticipated to occur approximately 75 days after filing the federal tax return which is due on April 15, 2023. Operating Lease Obligations. Lease commitments consist principally of leases for our manufacturing facilities.
In accordance with the tax receivable agreement, the next payment is anticipated to occur approximately 75 days after filing the federal tax return which is due on April 15, 2024. Operating Lease Obligations. Lease commitments consist principally of leases for our manufacturing facilities.
Our flagship Malibu boats offer our latest innovations in performance, comfort and convenience, and are designed for consumers seeking a premium performance sport boat experience. We are the market leader in the United States in the performance sport boat category through our Malibu and Axis Wake Research boat brands.
Our flagship Malibu boats offer our latest innovations in performance, comfort and convenience, and are designed for consumers seeking a premium performance sport boat experience. We are the market leader in the United States in the performance sport boat category through our Malibu and Axis boat brands.
The increase in cash provided by operating activities primarily resulted from an increase of $51.7 million in net income (after consideration of non-cash items included in net income, primarily related to depreciation, amortization, deferred tax assets and non-cash compensation) and a net decrease in operating assets and liabilities of $18.2 million related to the timing of collections of accounts receivables, payments for accruals and payables, and purchases of inventory.
The increase in cash provided by operating activities primarily resulted from an increase of $51.7 million in net income (after consideration of non-cash items included in net income, primarily related to depreciation, amortization, deferred tax assets and non-cash compensation) and a net decrease in 48 Table of Contents operating assets and liabilities of $18.2 million related to the timing of collections of accounts receivables, payments for accruals and payables, and purchases of inventory.
(11) Reflects impact of increased share counts assuming the exchange of all weighted average shares outstanding of LLC Units into shares of Class A Common Stock and the conversion of all weighted average unvested restricted stock awards included in outstanding shares granted to members of management. 50 Table of Contents Liquidity and Capital Resources Overview and Primary Sources of Cash Our primary uses of cash have been for funding working capital and capital investments, repayments under our debt arrangements, acquisitions, cash distributions to members of the LLC, cash payments under our tax receivable agreement and stock repurchases under our stock repurchase program.
(10) Reflects impact of increased share counts assuming the exchange of all weighted average shares outstanding of LLC Units into shares of Class A Common Stock and the conversion of all weighted average unvested restricted stock awards included in outstanding shares granted to members of management. 46 Table of Contents Liquidity and Capital Resources Overview and Primary Sources of Cash Our primary uses of cash have been for funding working capital and capital investments, repayments under our debt arrangements, acquisitions, cash distributions to members of the LLC, cash payments under our tax receivable agreement and stock repurchases under our stock repurchase program.
Within our Saltwater Fishing segment, higher per unit material and labor costs contributed $87.3 million to the increase in cost of sales and were driven by the acquisition of Maverick Boat Group on December 31, 2020 and an increased mix of larger products that corresponded with higher net sales per unit.
Within our Saltwater Fishing segment, higher per unit material and labor costs contributed $87.3 million to the increase in cost of sales and were driven by the acquisition of Maverick Boat Group on December 31, 2020 and an increased mix of larger products that corresponded with higher net sales 41 Table of Contents per unit.
Unit volumes increased 607 units for fiscal year 2022 compared to fiscal year 2021. The increase in net sales was driven primarily by the acquisition of Maverick Boat Group on December 31, 2020, year-over-year price 43 Table of Contents increases and a favorable model mix. The increase in unit volumes resulted primarily from our addition of the Maverick Boat Group.
Unit volumes increased 607 units for fiscal year 2022 compared to fiscal year 2021. The increase in net sales was driven primarily by the acquisition of Maverick Boat Group on December 31, 2020, year-over-year price increases and a favorable model mix. The increase in unit volumes resulted primarily from our addition of the Maverick Boat Group.
These obligations will not be paid if we do not realize cash tax savings. We estimate that approximately $4.0 million will be due under the tax receivable agreement within the next 12 months.
These obligations will not be paid if we do not realize cash tax savings. We estimate that approximately $4.1 million will be due under the tax receivable agreement within the next 12 months.
New Accounting Pronouncements See "Part II, Item 8. Financial Statements and Supplementary Data—Note 1—Organization, Basis of Presentation, and Summary of Significant Accounting Policies—New Accounting Pronouncements.” 56 Table of Contents
New Accounting Pronouncements See "Part II, Item 8. Financial Statements and Supplementary Data—Note 1—Organization, Basis of Presentation, and Summary of Significant Accounting Policies—New Accounting Pronouncements.” 51 Table of Contents
We had goodwill outstanding of $100.8 million as of June 30, 2022. When determining such fair values, we make significant estimates and assumptions, especially with respect to intangible assets. Critical estimates in valuing certain intangible assets include but are not limited to projected future cash flows, dealer attrition and discount rates.
We had goodwill outstanding of $100.6 million as of June 30, 2023. When determining such fair values, we make significant estimates and assumptions, especially with respect to intangible assets. Critical estimates in valuing certain intangible assets include but are not limited to projected future cash flows, dealer attrition and discount rates.
We also offer our dealers other incentives, including rebates, seasonal discounts, promotional co-op arrangements and other allowances. We facilitate floor plan financing programs for many of our dealers by entering into repurchase agreements with certain third-party lenders, which enable our dealers, under certain circumstances, to establish lines of credit with the third-party lenders to purchase inventory.
We also offer our dealers other incentives, including rebates, seasonal discounts and other allowances. We facilitate floor plan financing programs for many of our dealers by entering into repurchase agreements with certain third-party lenders, which enable our dealers, under certain circumstances, to establish lines of credit with the third-party lenders to purchase inventory.
We believe our vertical integration initiatives will reduce our reliance on third-party suppliers while reducing the risk that a change in cost or production from any third-party supplier could adversely affect our business. In fiscal year 2022, we acquired a facility to begin manufacturing our own wiring harnesses.
We believe our vertical integration initiatives will reduce our reliance on third-party suppliers while reducing the risk that a change in cost or production from any third-party supplier 36 Table of Contents could adversely affect our business. In fiscal year 2022, we acquired a facility to begin manufacturing our own wiring harnesses.
During fiscal year, 2022, we received proceeds of $72.0 million from additional borrowings under our revolving credit facility to fully repay the $72.0 million of outstanding term 52 Table of Contents loans that matured on July 1, 2022.
During fiscal year, 2022, we received proceeds of $72.0 million from additional borrowings under our revolving credit facility to fully repay the $72.0 million of outstanding term loans that matured on July 1, 2022.
For fiscal years 2021 and 2020, the weighted average non-controlling interest attributable to ownership interests in the LLC not directly attributable to us was 3.1% and 3.8%, respectively. 46 Table of Contents GAAP Reconciliation of Non-GAAP Financial Measures Adjusted EBITDA Adjusted EBITDA and adjusted EBITDA margin are non-GAAP financial measures that are used by management as well as by investors, commercial bankers, industry analysts and other users of our financial statements.
For fiscal years 2022 and 2021, the weighted average non-controlling interest attributable to ownership interests in the LLC not directly attributable to us was 2.8% and 3.1%, respectively. 42 Table of Contents GAAP Reconciliation of Non-GAAP Financial Measures Adjusted EBITDA Adjusted EBITDA and adjusted EBITDA margin are non-GAAP financial measures that are used by management as well as by investors, commercial bankers, industry analysts and other users of our financial statements.
For fiscal years 2021 and 2020, respectively, we recognized other income from an adjustment in our tax receivable agreement liability as a result of a decrease in the estimated tax rate used in computing our future tax obligations and in turn, a decrease in the future tax benefit we expect to pay under our tax receivable agreement with pre-IPO owners.
For fiscal year 2021, we recognized other income from an adjustment in our tax receivable agreement liability as a result of a decrease in the estimated tax rate used in computing our future tax obligations and in turn, a decrease in the future tax benefit we expect to pay under our tax receivable agreement with pre-IPO owners.
For fiscal years 2021 and 2020, respectively, we recognized other income from an adjustment in our tax receivable agreement liability as a result of a decrease in the estimated tax rate used in computing our future tax obligations and in turn, a decrease in the future tax benefit we expect to pay under our tax receivable agreement with pre-IPO owners.
For fiscal year 2021, we recognized other income from an adjustment in our tax receivable agreement liability as a result of a decrease in the estimated tax rate used in computing our future tax obligations and in turn, a decrease in the future tax benefit we expect to pay under our tax receivable agreement with pre-IPO owners.
Refer to Note 12 of our consolidated financial statements included elsewhere in this Annual Report. (6) We calculate net income margin as net income divided by net sales and we define adjusted EBITDA margin as adjusted EBITDA divided by net sales.
For more information, refer to Note 12 of our consolidated financial statements included elsewhere in this Annual Report. (6) We calculate net income margin as net income divided by net sales and we define adjusted EBITDA margin as adjusted EBITDA divided by net sales.
For more information, refer to Note 17 of our consolidated financial statements included elsewhere in this Annual Report. (2) For fiscal year ended June 30, 2021, represents legal and advisory fees incurred in connection with our acquisition of Maverick Boat Group on December 31, 2020.
For more information, refer to Note 17 of our consolidated financial statements included elsewhere in this Annual Report. (3) For fiscal year ended 2021, represents legal and advisory fees incurred in connection with our acquisition of Maverick Boat Group on December 31, 2020.
Our ability to continue to increase inventory levels at our dealers will be important to maintain and grow our market share across our brands. We believe our new product pipeline, strong dealer network and ability to increase production will allow us to maintain and potentially expand our industry leading market position in performance sports boats.
Further, our ability to maintain inventory levels at our dealers will be important to sustain and grow our market share across our brands. We believe our new product pipeline, strong dealer network and ability to increase production will allow us to maintain, and potentially expand, our leading market position in performance sports boats.
Refer to Note 12 of our consolidated financial statements included elsewhere in this Annual Report. (7) Reflects the elimination of the non-controlling interest in the LLC as if all LLC members had fully exchanged their LLC Units for shares of Class A Common Stock.
For more information, refer to Note 12 of our consolidated financial statements included elsewhere in this Annual Report. (6) Reflects the elimination of the non-controlling interest in the LLC as if all LLC members had fully exchanged their LLC Units for shares of Class A Common Stock.
A hypothetical change of a 10% increase or decrease to our estimate of the warranty liability as of June 30, 2022 would have affected net income for the fiscal year ended June 30, 2022 by approximately $3.9 million. Refer to Note 9 to the audited consolidated financial statements included elsewhere in this Annual Report for further information on warranties.
A hypothetical change of a 10% increase or decrease to our estimate of the warranty liability as of June 30, 2023 would have affected net income for the fiscal year ended June 30, 2023 by approximately $4.2 million. Refer to Note 9 to the audited consolidated financial statements included elsewhere in this Annual Report for further information on warranties.
General and administrative expenses include, among other things, salaries, benefits and other personnel related expenses for employees engaged in product development, engineering, finance, information technology, human resources and executive management. Other costs include outside legal and accounting fees, investor relations, risk management (insurance) and other administrative costs.
General and administrative expenses include, among other things, salaries, benefits and other personnel related expenses for employees engaged in product development, engineering, finance, information technology, human resources and executive management. Other costs include outside legal and accounting fees, investor relations, risk 37 Table of Contents management (insurance) and other administrative costs.
Additional segment information is contained in Note 19 - Segment Reporting, in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. % of Total Revenues Fiscal Year Ended June 30, Segment Brands 2022 2021 2020 Malibu Malibu 50.0% 52.2% 54.3% Axis Saltwater Fishing Pursuit 28.1% 26.2% 18.9% Maverick Cobia Pathfinder Hewes Cobalt Cobalt 21.9% 21.6% 26.8% Our Malibu segment participates in the manufacturing, distribution, marketing and sale throughout the world of Malibu and Axis performance sports boats.
Additional segment information is contained in Note 19 - Segment Reporting, in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. % of Total Revenues Fiscal Year Ended June 30, Segment Brands 2023 2022 2021 Malibu Malibu 45.8% 50.0% 52.2% Axis Saltwater Fishing Pursuit 32.4% 28.1% 26.2% Maverick Cobia Pathfinder Hewes Cobalt Cobalt 21.8% 21.9% 21.6% Our Malibu segment participates in the manufacturing, distribution, marketing and sale throughout the world of Malibu and Axis performance sports boats.
These purchase orders do not contain any termination payments or other penalties if cancelled. As of June 30, 2022, we had purchase orders in the amount of $139.1 million due within the next 12 months. Stock Repurchase Program .
These purchase orders do not contain any termination payments or other penalties if cancelled. As of June 30, 2023, we had purchase orders in the amount of $97.1 million due within the next 12 months. Stock Repurchase Program .
To combat this, we implemented a surcharge across all brands effective December 1, 2021. These surcharges could have negatively impacted retail demand, but we do not believe they have impacted our wholesale shipments in fiscal 2022. Further, new boat 39 Table of Contents buyers often finance their purchases.
To combat this, we implemented a surcharge across all brands effective December 1, 2021. These surcharges could have negatively impacted retail demand, but we do not believe they impacted our wholesale shipments in fiscal year 2022. Further, new boat buyers often finance their purchases.
Our interest expense increased by $0.3 million during fiscal year 2022 compared to fiscal year 2021 due to higher average interest rates on outstanding debt. 44 Table of Contents Provision for Income Taxes Our provision for income taxes for fiscal year 2022 increased $12.6 million, or 37.0% to $46.5 million compared to fiscal year 2021.
Our interest expense increased by $0.3 million during fiscal year 2022 compared to fiscal year 2021 due to higher average interest rates on outstanding debt. Provision for Income Taxes Our provision for income taxes for fiscal year 2022 increased $12.6 million, or 37.0% to $46.5 million compared to fiscal year 2021.
Our financial exposure under these agreements is limited to the difference between the amounts unpaid by the dealer with respect to the repossessed product plus costs of repossession and the amount received on the resale of the repossessed product. For fiscal year 2022, we did not repurchase any boats under our repurchase agreements.
Our financial exposure under these agreements is limited to the difference between the amounts unpaid by the dealer with respect to the repossessed product plus costs of repossession and the amount received on the resale of the repossessed product. For fiscal years 2023, 2022 and 2021, we did not repurchase any boats under our repurchase agreements, respectively.
For more information, refer to Note 17 of our consolidated financial statements included elsewhere in this Annual Report. (2) For fiscal year 2022, represents amortization of intangibles acquired in connection with the acquisition of Maverick Boat Group, Pursuit and Cobalt.
For more information, refer to Note 17 of our consolidated financial statements included elsewhere in this Annual Report. (3) For fiscal years 2023 and 2022, represents amortization of intangibles acquired in connection with the acquisition of Maverick Boat Group, Pursuit and Cobalt.
If we continue to experience supply disruptions or they intensify, we may not be able to develop alternate sourcing quickly or at all.
If we were to further experience supply disruptions or they intensify, we may not be able to develop alternate sourcing quickly or at all.
(8) Reflects income tax expense at an estimated normalized annual effective income tax rate of 23.8% of income before taxes for fiscal year 2022, 23.6% for fiscal year 2021, and 23.5% of income before taxes for fiscal year 2020, in each case assuming the conversion of all LLC Units into shares of Class A Common Stock.
(7) Reflects income tax expense at an estimated normalized annual effective income tax rate of 24.3% of income before taxes for fiscal year 2023, 23.8% of income before taxes for fiscal year 2022 and 23.6% of income before taxes for fiscal year 2021, in each case assuming the conversion of all LLC Units into shares of Class A Common Stock.
The 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 Credit Agreement also requires compliance with certain customary financial covenants consisting of a minimum ratio of EBITDA to 49 Table of Contents interest expense and a maximum ratio of total debt to EBITDA.
On November 3, 2021, our Board of Directors authorized a stock repurchase program to allow for the repurchase of up to $70.0 million of our Class A Common Stock and the LLC's LLC Units (the “Repurchase Program”) for the period from November 8, 2021 to November 8, 2022.
On November 3, 2022, our Board of Directors authorized a stock repurchase program to allow for the repurchase of up to $100.0 million of our Class A Common Stock and the LLC's LLC Units (the “2022 Repurchase Program”) for the period from November 8, 2022 to November 8, 2023.
For fiscal years 2022 and 2021, the weighted average non-controlling interest attributable to ownership interests in the LLC not directly attributable to us was 2.8% and 3.1%, respectively.
For fiscal years 2023 and 2022, the weighted average non-controlling interest attributable to ownership interests in the LLC not directly attributable to us was 2.6% and 2.8%, respectively.
Our future capital requirements beyond the next 12 months will depend on many factors, including the general economic environment in which we operate and our ability to generate cash flow from operations, which are more uncertain as a result of inflation, increasing interest rates, increasing fuel prices, ongoing supply chain disruptions and the continuing impact of COVID-19.
Our future capital requirements beyond the next 12 months will depend on many factors, including the general economic environment in which we operate and our ability to generate cash flow from operations, which are more uncertain as a result of inflation, increasing interest rates and fluctuating fuel prices.
The Amended Credit Agreement contains restrictive covenants regarding indebtedness, liens, fundamental changes, investments, restricted payments, disposition of assets, transactions with affiliates, negative pledges, hedging transactions, certain prepayments of indebtedness, accounting changes and governmental regulation. The Amended Credit Agreement also contains customary events of default.
The Credit Agreement contains restrictive covenants regarding indebtedness, liens, fundamental changes, investments, share repurchases, dividends and distributions, disposition of assets, transactions with affiliates, negative pledges, hedging transactions, certain prepayments of indebtedness, accounting changes and governmental regulation. The Credit Agreement also contains customary events of default.
Our estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates and changes could be significant. Furthermore, our estimates might change as additional information becomes available.
Our estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates and changes could be significant.
Net Income Attributable to Non-controlling Interest As of June 30, 2022 and 2021, we had a 97.2% controlling economic interest and 100% voting interest in the LLC and, therefore, we consolidate the LLC's operating results for financial statement purposes. Net income attributable to non-controlling interest represents the portion of net income attributable to the non-controlling LLC members.
Net Income Attributable to Non-controlling Interest As of each of June 30, 2023 and 2022, we had a 97.8% and 97.2%, respectively, controlling economic interest and 100% voting interest in the LLC and, therefore, we consolidate the LLC's operating results for financial statement purposes.
Malibu Boats, Inc. was not a party to the Prior Credit Agreement and is not a party to the Amended Credit Agreement. 53 Table of Contents All borrowings under the Amended Credit Agreement bear interest at a rate equal to either, at our option, (i) the highest of the prime rate, the Federal Funds Rate plus 0.5%, or one-month Term SOFR plus 1% (the “Base Rate”) or (ii) SOFR, in each case plus an applicable margin ranging from 1.25% to 2.00% with respect to SOFR borrowings and 0.25% to 1.00% with respect to Base Rate borrowings.
All borrowings under the Credit Agreement bear interest at a rate equal to either, at our option, (i) the highest of the prime rate, the Federal Funds Rate plus 0.5%, or one-month Term SOFR plus 1% (the “Base Rate”) or (ii) SOFR, in each case plus an applicable margin ranging from 1.25% to 2.00% with respect to SOFR borrowings and 0.25% to 1.00% with respect to Base Rate borrowings.
The increase in cash provided by operating activities primarily resulted from an increase of $56.4 million in net income (after consideration of non-cash items included in net income, primarily related to depreciation, amortization, deferred tax assets and non-cash compensation) and a net decrease in operating assets and liabilities of $19.2 million related to the timing of collections of accounts receivables, payments for accruals and payables, and purchases of inventory.
The increase in cash provided by operating activities primarily resulted from a net increase in operating assets and liabilities of $94.8 million related to the timing of collections of accounts receivables, payments for accruals and payables, and purchases of inventory, and partially offset by a decrease of $74.9 million in net income (after consideration of non-cash items included in net income, primarily related to depreciation, amortization, deferred tax assets and non-cash compensation).
A fixed percentage discount is earned by the independent representative at the time of shipment to the representative as a reduction in the price of the boat and is recorded in 55 Table of Contents our consolidated statement of operations as a reduction in sales.
A fixed percentage discount is earned by the independent representative at the time of shipment to the representative as a reduction in the price of the boat and is recorded in our consolidated statements of operations and comprehensive income as a reduction in sales.
We define adjusted EBITDA margin as adjusted EBITDA divided by net sales. Adjusted EBITDA and adjusted EBITDA margin are not measures of net income as determined by GAAP.
Adjusted EBITDA and adjusted EBITDA margin are not measures of net income as determined by GAAP.
While there is still some uncertainty surrounding the COVID-19 pandemic, on-going supply chain disruptions, and rising prices to our suppliers, in part due to inflationary pressures, we believe we are well positioned strategically in the recreational powerboat market with brands that are market leaders in their segments.
While there is still some uncertainty surrounding current macroeconomic conditions, and rising prices to our suppliers, in part due to inflationary pressures, we believe we are well positioned strategically in the recreational powerboat market with brands that are market leaders in their segments.
Management's Discussion and Analysis of Financial Condition and Results of Operations Overview 36 Impact of the COVID-19 Pandemic 37 Outlook 38 Factors Affecting Our Results of Operations 39 Components of Results of Operations 41 Results of Operations 42 GAAP Reconciliation of Non-GAAP Financial Measures 47 Liquidity and Capital Resources 51 Critical Accounting Policies 55 New Accounting Pronouncements 56 Overview We are a leading designer, manufacturer and marketer of a diverse range of recreational powerboats, including performance sport boats, sterndrive and outboard boats.
Management's Discussion and Analysis of Financial Condition and Results of Operations Overview 33 Outlook 34 Factors Affecting Our Results of Operations 35 Components of Results of Operations 37 Results of Operations 38 GAAP Reconciliation of Non-GAAP Financial Measures 43 Liquidity and Capital Resources 47 Critical Accounting Policies 50 New Accounting Pronouncements 51 Overview We are a leading designer, manufacturer and marketer of a diverse range of recreational powerboats, including performance sport boats, sterndrive and outboard boats.
Efforts to stop or limit inflation are resulting in higher interest rates that translate into an increased cost of boat ownership. We have seen increased interest rates for our customers in the first half of calendar year 2022. We expect higher than recent years’ levels of inflation to persist for the foreseeable future.
Efforts to stop or limit inflation are resulting in higher interest rates that translate into an increased cost of boat ownership. We have seen increased interest rates for our customers throughout calendar year 2022 and the first half of calendar year 2023.
In fiscal year 2021, we reduced our tax receivable agreement liability by $0.1 million that resulted in a corresponding amount being recognized as other income during the same period, compared to fiscal year 2020, when we reduced our tax receivable agreement liability by $1.7 million that resulted in a corresponding amount being recognized as other income during fiscal year 2020.
In fiscal year 2023, we increased our tax receivable agreement liability by $0.2 million that resulted in a corresponding amount being recognized as other expense during the same period, compared to fiscal year 2022 when we increased our tax receivable agreement liability by $1.0 million.
For fiscal year 2023, our expected operating lease payments will be $2.5 million and our total committed lease payments are $13.4 million as of June 30, 2022.
For fiscal year 2024, our expected operating lease payments will be $2.6 million and our total committed lease payments are $11.0 million as of June 30, 2023.
For fiscal year 2020, our effective tax rate of 22.8% differed from the statutory federal income tax rate of 21% primarily due to the impact of U.S. state taxes, and partially offset by the impact of non-controlling interests in the LLC.
This increase in the effective tax rate was partially offset by the benefit of the research and development tax credit as well as the impact of non-controlling interests in the LLC. For fiscal year 2022, our effective tax rate of 22.2% differed from the statutory federal income tax rate of 21% primarily due to the impact of U.S. state taxes.
We have implemented various initiatives to reduce our cost base and improve the efficiency of our manufacturing process. We are continuously monitoring and reviewing our manufacturing processes to identify improvements and create additional efficiencies.
Our product costs vary based on the costs of supplies and raw materials, as well as labor costs. We have implemented various initiatives to reduce our cost base and improve the efficiency of our manufacturing process. We are continuously monitoring and reviewing our manufacturing processes to identify improvements and create additional efficiencies.
Certain totals for the table below will not sum to exactly 100% due to rounding. 42 Table of Contents Fiscal Year Ended June 30, 2022 2021 2020 $ % Revenue $ % Revenue $ % Revenue Net sales 1,214,877 100.0 % 926,515 100.0 % 653,163 100.0 % Cost of sales 904,826 74.5 % 690,030 74.5 % 503,893 77.2 % Gross profit 310,051 25.5 % 236,485 25.5 % 149,270 22.8 % Operating expenses: Selling and marketing 22,900 1.9 % 17,540 1.9 % 17,917 2.8 % General and administrative 66,371 5.4 % 61,915 6.6 % 39,912 6.1 % Amortization 6,957 0.6 % 7,255 0.8 % 6,131 0.9 % Operating income 213,823 17.6 % 149,775 16.2 % 85,310 13.0 % Other expense (income), net: Other expense (income), net 983 0.1 % (1,015) (0.1) % (2,310) (0.4) % Interest expense 2,875 0.2 % 2,529 0.3 % 3,888 0.6 % Other expense (income), net 3,858 0.3 % 1,514 0.2 % 1,578 0.2 % Income before provision for income taxes 209,965 17.3 % 148,261 16.0 % 83,732 12.8 % Provision for income taxes 46,535 3.8 % 33,979 3.7 % 19,076 2.9 % Net income 163,430 13.5 % 114,282 12.3 % 64,656 9.9 % Net income attributable to non-controlling interest 5,798 0.5 % 4,441 0.5 % 3,094 0.5 % Net income attributable to Malibu Boats, Inc. 157,632 13.0 % 109,841 11.8 % 61,562 9.4 % Fiscal Year Ended June 30, 2022 2021 2020 Unit Volumes % Total Unit Volumes % Total Unit Volumes % Total Volume by Segment Malibu 5,173 55.9 % 4,841 59.1 % 3,980 61.8 % Saltwater Fishing 1 2,035 22.0 % 1,428 17.5 % 508 7.9 % Cobalt 2,047 22.1 % 1,916 23.4 % 1,956 30.3 % Total Units 9,255 8,185 6,444 Net sales per unit $ 131,267 $ 113,197 $ 101,360 (1) We acquired all of the outstanding stock of Maverick Boat Group on December 31, 2020.
Certain totals for the table below will not sum to exactly 100% due to rounding. 38 Table of Contents Fiscal Year Ended June 30, 2023 2022 2021 $ % Revenue $ % Revenue $ % Revenue Net sales 1,388,365 100.0 % 1,214,877 100.0 % 926,515 100.0 % Cost of sales 1,037,070 74.7 % 904,826 74.5 % 690,030 74.5 % Gross profit 351,295 25.3 % 310,051 25.5 % 236,485 25.4 % Operating expenses: Selling and marketing 24,009 1.7 % 22,900 1.9 % 17,540 1.9 % General and administrative 175,694 12.7 % 66,371 5.4 % 61,915 6.6 % Amortization 6,808 0.5 % 6,957 0.6 % 7,255 0.8 % Operating income 144,784 10.4 % 213,823 17.6 % 149,775 16.2 % Other expense (income), net: Other expense (income), net 331 — % 983 0.1 % (1,015) (0.1) % Interest expense 2,962 0.2 % 2,875 0.2 % 2,529 0.3 % Other expense (income), net 3,293 0.2 % 3,858 0.3 % 1,514 0.2 % Income before provision for income taxes 141,491 10.2 % 209,965 17.3 % 148,261 16.0 % Provision for income taxes 33,581 2.4 % 46,535 3.8 % 33,979 3.7 % Net income 107,910 7.8 % 163,430 13.5 % 114,282 12.3 % Net income attributable to non-controlling interest 3,397 0.3 % 5,798 0.5 % 4,441 0.5 % Net income attributable to Malibu Boats, Inc. 104,513 7.5 % 157,632 13.0 % 109,841 11.8 % Fiscal Year Ended June 30, 2023 2022 2021 Unit Volumes % Total Unit Volumes % Total Unit Volumes % Total Volume by Segment Malibu 5,127 52.0 % 5,173 55.9 % 4,841 59.1 % Saltwater Fishing 1 2,585 26.2 % 2,035 22.0 % 1,428 17.5 % Cobalt 2,151 21.8 % 2,047 22.1 % 1,916 23.4 % Total Units 9,863 9,255 8,185 Net sales per unit $ 140,765 $ 131,267 $ 113,197 (1) We acquired all of the outstanding stock of Maverick Boat Group on December 31, 2020.
Historically, we have been able to realize higher sales and margins when we sell larger boats compared to our smaller boats, our premium brands compared to our entry-level brands and our boats that are fully-equipped with optional features. We intend to continue to develop new features and models and maintain an attractive product mix that optimizes sales growth and margins.
Historically, we have been able to realize higher sales and margins when we sell larger boats compared to our smaller boats, our premium brands compared to our entry-level brands and our boats that are fully-equipped with optional features.
The following table summarizes the cash flows from operating, investing and financing activities (dollars in thousands): Fiscal Year Ended June 30, 2022 2021 2020 Total cash provided by (used in): Operating activities $ 164,846 $ 131,314 $ 94,141 Investing activities (61,621) (181,095) (40,394) Financing activities (60,380) 57,346 (47,323) Impact of currency exchange rates on cash balances (580) 127 (29) Increase in cash $ 42,265 $ 7,692 $ 6,395 Comparison of the Fiscal Year Ended June 30, 2022 to the Fiscal Year Ended June 30, 2021 Operating Activities Net cash provided by operating activities was $164.8 million for fiscal year 2022, compared to $131.3 million for the same period in 2021, an increase of $33.5 million.
The following table summarizes the cash flows from operating, investing and financing activities (dollars in thousands): Fiscal Year Ended June 30, 2023 2022 2021 Total cash provided by (used in): Operating activities $ 184,733 $ 164,846 $ 131,314 Investing activities (54,638) (61,621) (181,095) Financing activities (134,574) (60,380) 57,346 Impact of currency exchange rates on cash balances (328) (580) 127 (Decrease) increase in cash $ (4,807) $ 42,265 $ 7,692 Cash Flows From Operating Activities Net cash provided by operating activities was $184.7 million for fiscal year 2023, compared to $164.8 million for the same period in 2022, an increase of $19.9 million.
Vertical Integration We have vertically integrated a number of key components of our manufacturing process, including the manufacturing of boat trailers, towers and tower accessories, machined and billet parts, soft grip flooring, and most recently, wiring harnesses. We began producing our own engines, branded as Malibu Monsoon engines, in our Malibu and Axis boats for model year 2019.
Vertical Integration We have vertically integrated a number of key components of our manufacturing process, including the manufacturing of our Monsoon engines, boat trailers, towers and tower accessories, machined and billet parts, soft grip flooring, wiring harnesses and most recently, certain tooling for our Pursuit brand.
The increase in cost of sales was driven by higher costs related to higher net sales in our Malibu and Saltwater Fishing segments. In the Malibu segment, higher material and labor costs contributed $70.4 million to the increase in cost of sales and were driven by an increased mix of larger product that corresponded with higher net sales per unit.
In the Saltwater Fishing segment, higher per unit material and labor costs contributed $2.2 million to the increase in cost of sales and were driven by increased prices due to inflationary pressures and an increased mix of larger models that corresponded with higher net sales per unit.
During fiscal year 2021, we also repaid $28.8 million of borrowings under our revolving credit facility, we repaid $0.6 million on our term loan, paid $1.2 million on taxes for shares withheld upon the vesting of restricted stock awards, paid $0.6 million in deferred financing costs, paid $1.8 million in distributions to LLC unit holders and received $0.3 million in proceeds from the exercise of stock options.
We also paid $3.1 million on taxes for shares withheld upon the vesting of restricted stock awards, paid $3.4 million in distributions to LLC Unit holders and paid $1.4 million in deferred financing costs. During fiscal year 2023, we received proceeds of $1.3 million from the exercise of stock options.
Our Axis boats appeal to consumers who desire a more affordable performance sport boat product but still demand high performance, 36 Table of Contents functional simplicity and the option to upgrade key features. Retail prices of our Malibu and Axis boats typically range from $70,000 to $225,000.
Our Axis boats appeal to consumers who desire a more affordable performance sport boat product but still demand high performance, functional simplicity and the option to upgrade key features.
The following table sets forth a reconciliation of net income as determined in accordance with GAAP to adjusted EBITDA and presentation of net income margin and adjusted EBITDA margin for the periods indicated (dollars in thousands): Fiscal Year Ended June 30, 2022 2021 2020 Net income $ 163,430 $ 114,282 $ 64,656 Provision for income taxes 46,535 33,979 19,076 Interest expense 2,875 2,529 3,888 Depreciation 19,365 15,636 12,249 Amortization 6,957 7,255 6,131 Professional fees 1 — 5,817 1,013 Acquisition and integration related expenses 2 — 5,112 — Stock-based compensation expense 3. 6,342 5,581 3,042 UAW strike impact 4 — — 2,564 Adjustment to tax receivable agreement liability 5 1,025 (88) (1,672) Adjusted EBITDA $ 246,529 $ 190,103 $ 110,947 Net Sales $ 1,214,877 $ 926,515 $ 653,163 Net Income Margin 6 13.5 % 12.3 % 9.9 % Adjusted EBITDA Margin 6 20.3 % 20.5 % 17.0 % 47 Table of Contents (1) For fiscal years 2021 and 2020, represents legal and advisory fees related to our litigation with Skier's Choice, Inc.
The following table sets forth a reconciliation of net income as determined in accordance with GAAP to adjusted EBITDA and presentation of net income margin and adjusted EBITDA margin for the periods indicated (dollars in thousands): Fiscal Year Ended June 30, 2023 2022 2021 Net income $ 107,910 $ 163,430 $ 114,282 Provision for income taxes 33,581 46,535 33,979 Interest expense 2,962 2,875 2,529 Depreciation 21,912 19,365 15,636 Amortization 6,808 6,957 7,255 Litigation settlement 1 100,000 — — Professional fees 2 4,781 — 5,817 Acquisition and integration related expenses 3 — — 5,112 Stock-based compensation expense 4 5,894 6,342 5,581 Adjustment to tax receivable agreement liability 5 188 1,025 (88) Adjusted EBITDA $ 284,036 $ 246,529 $ 190,103 Net Sales $ 1,388,365 $ 1,214,877 $ 926,515 Net Income Margin 6 7.8 % 13.5 % 12.3 % Adjusted EBITDA Margin 6 20.5 % 20.3 % 20.5 % 43 Table of Contents (1) Represents settlement of product liability cases in June 2023 for $100.0 million.
We expect capital expenditures between $65.0 million and $70.0 million for fiscal year 2023 primarily for investments in new models, capacity enhancements and vertical integration initiatives. Other investment opportunities, such as potential strategic acquisitions, may require additional funding. Principal and Interest Payments.
We expect capital expenditures between $70.0 million and $80.0 million for fiscal year 2024 primarily for the outfitting of our Roane County property and investments in new models, capacity enhancements and vertical integration initiatives. Other investment opportunities, such as potential strategic acquisitions, may require additional funding. Roane County Property Purchase and Related Improvements .
The combination of strong retail market activity through 2020 and into early 2021 and supply chain disruptions experienced in 2021 and continuing through 2022 have depleted our inventory levels at our dealers below pre-COVID levels throughout 2021 and 2022.
The combination of strong retail market activity in calendar years 2020 and 2021 along with supply chain disruptions in calendar year 2021 that continued through calendar year 2022 depleted inventory levels at our dealers in calendar year 2022 below pre-COVID levels.
Additionally, it allows us to have greater control over design, consumer customization options, construction quality, and our supply chain. We continually review our manufacturing process to identify opportunities for additional vertical integration investments across our portfolio of premium brands. Components of Results of Operations Net Sales We generate revenue from the sale of boats to our dealers.
We continually review our manufacturing process to identify opportunities for additional vertical integration investments across our portfolio of premium brands. Components of Results of Operations Net Sales We generate revenue from the sale of boats to our dealers.
The LLC is a pass-through entity for federal purposes but incurs income tax in certain state jurisdictions. Maverick Boat Group is separately subject to U.S. federal and state income tax with respect to its net taxable income.
Income Taxes Malibu Boats, Inc. is subject to U.S. federal and state income tax in multiple jurisdictions with respect to our allocable share of any net taxable income of the LLC. The LLC is a pass-through entity for federal purposes but incurs income tax in certain state jurisdictions.
We define adjusted EBITDA as net income before interest expense, income taxes, depreciation, amortization and non-cash, non-recurring or non-operating expenses, including certain professional fees, acquisition and integration-related expenses, non- cash compensation expense, expenses related to interruption to our engine supply during the labor strike by United Auto Workers ("UAW") against General Motors and adjustments to our tax receivable agreement liability.
We define adjusted EBITDA as net income before interest expense, income taxes, depreciation, amortization and non-cash, non-recurring or non-operating expenses, including settlement of litigation claims, certain professional fees, acquisition and integration-related expenses, non- cash compensation expense and adjustments to our tax receivable agreement liability. We define adjusted EBITDA margin as adjusted EBITDA divided by net sales.
Integration related expenses for fiscal year 2021 include post-acquisition adjustments to cost of goods sold of $0.9 million for the fair value step up of inventory acquired from Maverick Boat Group, which was sold during the third quarter of fiscal 2021. For fiscal year 2020, represents amortization of intangibles acquired in connection with the acquisition of Pursuit and Cobalt.
Integration related expenses for fiscal year 2021 include post-acquisition adjustments to cost of goods sold of $0.9 million for the fair value step up of inventory acquired from Maverick Boat Group, which was sold during the third quarter of fiscal 2021. (4) Represents equity-based incentives awarded to certain of our employees under the Malibu Boats, Inc.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+1 added−5 removed5 unchanged
Biggest changeBased on a sensitivity analysis at June 30, 2022, a 100 basis point increase in interest rates would increase our annual interest expense by approximately $1.2 million. On July 8, 2022, we entered into our Amended Credit Agreement.
Biggest changeAt August 24, 2023, the interest rate on our revolving credit facility was 6.70% under the terms of the Credit Agreement. Based on a sensitivity analysis at August 24, 2023, a 100 basis point increase in interest rates would increase our annual interest expense by approximately $0.7 million.
Certain assets and liabilities related to intercompany positions reported on our consolidated balance sheet that are denominated in a currency other than the functional currency are translated at the foreign exchange rates at the balance sheet date and the associated gains and losses are included in net income.
Certain assets and liabilities related to intercompany positions reported on our consolidated balance sheets that are denominated in a currency other than the functional currency are translated at the foreign exchange rates at the balance sheet date and the associated gains and losses are included in net income.
We had a gain of $0.2 million in foreign currency translation for fiscal year 2021 and a gain of $0.1 million in foreign currency translation for fiscal year 2020. We are also subject to risks relating to changes in the general economic conditions in the countries where we conduct business.
We had a loss of $0.1 million in foreign currency translation for fiscal year 2022 and a gain of $0.2 million in foreign currency translation for fiscal year 2021. We are also subject to risks relating to changes in the general economic conditions in the countries where we conduct business.
Revenues and expenses of our foreign subsidiary are translated at the average foreign exchange rate in effect for each month of the quarter.
Revenues and expenses of our foreign subsidiary are translated at the average foreign exchange rate in effect for each month of the year.
Our Australian operations purchase key components from our U.S. operations, as well as other U.S. based suppliers, and pay for these purchases in U.S. dollars. Fluctuations in the foreign exchange rate of the U.S. dollar against the Australian dollar have resulted in a loss of $0.1 million in foreign currency translation in the fiscal year ended June 30, 2022.
Our Australian operations purchase key components from our U.S. operations, as well as other U.S. based suppliers, and pay for these purchases in U.S. dollars. Fluctuations in the foreign exchange rate of the U.S. dollar against the Australian dollar resulted in immaterial gains in foreign currency translation in the fiscal year ended June 30, 2023.
Interest Rate Risk We are subject to interest rate risk in connection with borrowings under our revolving credit facility and term loans, which bear interest at variable rates. At June 30, 2022, we had $23.1 million of term loans outstanding under our term loan facility and $97.0 million outstanding debt under our revolving credit facility.
Interest Rate Risk We are subject to interest rate risk in connection with borrowings under our revolving credit facility, which bear interest at variable rates. At June 30, 2023, we had no outstanding debt under our revolving credit facility. As of June 30, 2023, the undrawn borrowing amount under our revolving credit facility was $348.4 million.
Removed
As of June 30, 2022, the undrawn borrowing amount under our revolving credit facility was $71.6 million. At June 30, 2022, the interest rate on our term loan and revolving credit facility was 3.04% under the terms of the Prior Credit Agreement.
Added
If interest rates continue to increase, as they did throughout fiscal year 2023, we will be obligated to make higher interest payments to our lenders. 52
Removed
The Amended Credit Agreement provides for a revolving credit facility in an aggregate principal amount of up to $350.0 million (of which $121.7 million was drawn on July 8, 2022 to refinance the loans under the Prior Credit Agreement as well as to pay certain fees and expenses related to entering into the Amended Credit Agreement) with a maturity date of July 8, 2027.
Removed
All borrowings under the Amended Credit Agreement bear interest at a rate equal to either, at our option, (i) the highest of the prime rate, the Federal Funds Rate plus 0.5%, or one-month Term SOFR plus 1% (the “Base Rate”) or (ii) SOFR, in each case plus an applicable margin ranging from 1.25% to 2.00% with respect to SOFR borrowings and 0.25% to 1.00% with respect to Base Rate borrowings.
Removed
The applicable margin will be based upon the consolidated leverage ratio of the LLC and its subsidiaries. The Prior Credit Agreement had used LIBOR, instead of SOFR, as the benchmark rate.
Removed
Assuming we had entered into our Amended Credit Agreement on June 30, 2022 and based on our outstanding debt as of June 30, 2022, a 100 basis point increase in interest rates under the terms of our Amended Credit Agreement would have resulted in an increase in our annual interest expense by approximately $1.2 million. 57

Other MBUU 10-K year-over-year comparisons