Executive Summary

Q2 FY25 results: Net sales $200.3M (down 5.1% YoY), GAAP diluted EPS $0.12, Adjusted fully distributed EPS $0.31; gross margin expanded 90 bps to 18.7% on favorable mix and plant efficiencies despite lower units (1,222, down 11%) .
Guidance cut: FY25 net sales now flat to down low-single digits (from prior view of low-single-digit growth) and adjusted EBITDA margin “~10%” (from 10–12%); management also guided Q3 net sales up ~10% YoY and Q3 adj. EBITDA margin of ~10–12% .
Segment dynamics: Malibu and Saltwater Fishing saw lower wholesale shipments; Cobalt grew units and sales (segment net sales: Malibu $74.1M, Saltwater $70.2M, Cobalt $56.0M) as dealers and consumer demand favored select models/price points .
Key drivers: Retail softness (especially Florida saltwater post-hurricanes) and dealer inventory discipline weighed on units; gross margin aided by mix and operational efficiency; G&A spiked on legal and compensation costs .
Near-term catalysts: Boat show reads (Miami), pace of saltwater replacement demand in Florida, legal spend normalization, and execution on Q3 growth inflection narrative .

What Went Well and What Went Wrong

What Went Well
- Gross margin expanded 90 bps YoY to 18.7% on plant efficiencies and favorable mix; consolidated net sales per unit rose 6.6% to $163,895 .
- Cobalt outperformed (segment net sales +7.8% YoY; units +18) driven by strong dealer network and new models; management highlighted Cobalt strength on the call .
- Cash generation and capital returns: management cited >$28M cash from operations in Q2, capex of $5.6M, and $10M of share repurchases, emphasizing balance sheet strength and liquidity .
What Went Wrong
- Top-line and units declined YoY: net sales down 5.1% to $200.3M; units down 11% to 1,222 on retail softness and dealer inventory discipline, especially in Malibu and Saltwater Fishing .
- Saltwater concentrated headwind: >50% of saltwater business is in Florida; replacement demand will take time due to dock/insurance timelines, pressuring near-term retail .
- SG&A pressure: G&A up 71.9% YoY (to $26.5M) on legal fees and compensation; management expects normalization over time but flagged elevated legal activity for now .

Financial Results

Headline results across periods (GAAP unless noted):

Metric	Q4 FY24	Q1 FY25	Q2 FY25	Q2 FY24
Revenue ($M)	$158.7	$171.6	$200.3	$211.1
Diluted EPS ($)	$(0.94)	$(0.25)	$0.12	$0.49
Adjusted Fully Distributed EPS ($)	$(0.39)	$0.08	$0.31	$0.57
Gross Margin (%)	7.9%	16.4%	18.7%	17.8%
Adjusted EBITDA ($M)	$(4.1)	$9.9	$16.9	$22.9
Adjusted EBITDA Margin (%)	(2.6%)	5.8%	8.4%	10.9%
Net Income Margin (%)	(12.3%)	(3.0%)	1.2%	4.8%

Segment breakdown – Q2 FY25:

Segment	Net Sales ($M)	YoY %	Unit Delta (YoY)
Malibu	$74.1	(3.0%)	(81)
Saltwater Fishing	$70.2	(15.2%)	(88)
Cobalt	$56.0	+7.8%	+18

KPIs – Q2 FY25:

KPI	Value
Units sold (Total)	1,222
Consolidated Net Sales per Unit	$163,895
Net Sales per Unit – Malibu	$141,141
Net Sales per Unit – Saltwater Fishing	$221,303
Net Sales per Unit – Cobalt	$147,442
Cash	$35.1M
Long-term Debt	$23.0M
Inventories	$144.9M
Capex (Q2)	$5.6M
Share Repurchases (Q2)	$10.0M

Notes:

YoY gross margin expansion driven by plant efficiencies and favorable model mix offsetting volume deleverage .
G&A up 71.9% YoY ($26.5M) primarily due to legal and compensation .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales growth YoY	FY25	Low single-digit increase	Flat to down low single digits	Lowered
Adjusted EBITDA Margin	FY25	10%–12%	~10%	Lowered
Net Sales growth YoY	Q3 FY25	N/A	~+10% YoY	New
Adjusted EBITDA Margin	Q3 FY25	N/A	~10%–12%	New

Company rationale: demand indicators below original assumptions, continued retail softness (especially saltwater), and disciplined production to preserve dealer health .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 FY24 and Q1 FY25)	Current Period (Q2 FY25)	Trend
Retail demand/interest rates	Market challenging; promotional costs elevated; plan to return inventories to normalized levels . Q1: payment buyers need sustained rate cuts; retail challenging .	Market down double-digits YTD; indicators below assumptions; cautious into selling season .	Deteriorated vs plan
Dealer inventory discipline	Progress in Q4 trimming channel inventory; upgrading dealer network . Q1: inventories aligned with historical averages; focus on managing channel .	Continue disciplined production; dealers focused on clearing non-current units .	Ongoing discipline
Saltwater/Florida impact	Q4: Saltwater pressured by retail weakness and flooring costs . Q1: hurricanes caused shipment delays; minimal full-year impact planned .	Florida >50% of saltwater; replacement demand to phase in slowly; segment weak .	Headwind persists
Promotions/pricing/mix	Q4: elevated promotions compressed margins . Q1: promotions moderating; ASPs up on mix; modest pricing .	Modest price increases; ASP growth primarily mix-driven; promotional support expected to moderate .	Improving mix; promos easing
Legal/litigation costs	Q4: legal/professional fees noted . Q1: $3.5M settlement; elevated legal fees .	G&A +71.9% YoY on legal and comp; expect normalization over time .	Elevated near term
Boat show reads	Q1: anticipating boat shows; strong lineup (M230, Cobalt R31) .	“Decent” early shows; mixed signals; watching Miami for saltwater cues .	Mixed
Tariffs	Not a focus prior	Minimal FY25 impact expected given exposure and timing .	Neutral

Management Commentary

CEO: “We are adjusting our production levels to match a challenging retail environment… updating our full-year guidance to reflect the reality of weaker retail market trends… Our priority is maintaining dealer health and aligning production with demand” .
CEO: “Results… slightly higher than expected… indicators of demand are below our original assumptions” .
CFO: “For the full fiscal year, we now expect sales to be flat to down low single-digits… we still expect to return to growth in the second half… Q3 net sales to increase ~10% YoY; Q3 adjusted EBITDA margins ~10–12%” .
CFO: “We continue to demonstrate the resilience of our business model, generating over $28 million in cash from operations in the quarter… capex $5.6M, repurchased $10M of stock” .

Q&A Highlights

Saltwater/Florida: >50% of saltwater business in Florida; replacement demand expected to phase in gradually due to docks/insurance timing, limiting a near-term rebound .
H2 visibility: Good visibility into Q3 on orders; H2 growth largely a function of easier comps and retail unfolding (60% of retail still ahead) .
G&A detail: Elevated legal and compensation costs; Q2 was a tough YoY compare; management expects normalization over time .
Dealer sentiment/inventory: Dealers “cautiously optimistic,” clearing inventories without excessive promo versus some competitors; company keeping production disciplined .
Pricing/mix: ASP strength driven mainly by mix; price increases modest; expect mix to moderate in back half as saltwater mix normalizes .
Tariffs: Preliminary view is immaterial FY25 impact; more detail likely in FY26 if needed .
Lending environment: Consumer rates remain “stubbornly high”; no signs of rising defaults .

Estimates Context

Wall Street consensus (S&P Global) for Q2 FY25 and Q3 FY25 was unavailable due to data access limitations at the time of this analysis; therefore, we cannot provide an objective “beat/miss” versus S&P Global consensus for revenue or EPS [No S&P Global values returned via tool].
Management characterized Q2 results as “slightly higher than expected,” indicating a modest beat versus internal expectations, but this is not comparable to Street consensus .

Key Takeaways for Investors

Mixed but improving sequentially: Revenue, gross margin, and adjusted EBITDA improved sequentially through Q4→Q1→Q2 as promotions normalized and mix improved, though YoY growth remains negative pending demand recovery .
Guidance reset lowers the bar: FY25 outlook cut (flat to down LSD revenue; ~10% adj. EBITDA margin), setting up a cleaner setup if boat shows and in-season demand stabilize or improve .
Q3 inflection watch: Management guiding Q3 net sales +~10% YoY and 10–12% adj. EBITDA margins; execution on this will be a key stock catalyst .
Saltwater is the swing factor: Florida concentration (>50% of saltwater) and slow replacement demand are the principal near-term headwinds; monitor Miami and other shows plus insurance/dock replacements .
Legal expense normalization could aid margin: Elevated legal costs drove G&A in Q2; moderation back toward historical levels would support EPS and EBITDA .
Cobalt stability offsets Malibu/Saltwater volatility: Cobalt unit and sales growth suggests diversified brand portfolio can buffer segment cyclicality .
Balance sheet supports flexibility: Positive operating cash flow, manageable debt ($23M), and continued buybacks provide optionality while maintaining dealer health .

Appendix: Additional Tables

YoY deltas cited by the company (Q2 FY25 vs Q2 FY24):

Metric	YoY Change
Net Sales	(5.1%)
Units	(11.0%)
Gross Profit	(0.2%)
GAAP Net Income	(76.1%)
Diluted EPS	(76%)
Adjusted EBITDA	(26.3%)
Adjusted EBITDA Margin	Down from 10.9% to 8.4%

Non-GAAP reconciliation context:

Adjusted EBITDA adds back interest, taxes, D&A, and specific non-cash/non-recurring items including professional fees and stock-based comp (and litigation settlement in 1H) .
Adjusted fully distributed EPS reflects a normalized tax rate and full exchange of LLC units; Q2: GAAP diluted EPS $0.12 vs Adjusted fully distributed EPS $0.31 .

MALIBU BOATS, INC. (MBUU)·Q2 2025 Earnings Summary