Boat Market Remains Stalled, but Easier Comparisons Ahead Aid Malibu's Growth Outlook

Malibu is a long-established name in performance sport boats, venturing into the sterndrive and saltwater segments via acquisitions over the last decade. We believe that its brand, innovative products, and pricing power contribute to a brand intangible asset, which underpins our narrow moat rating. Supporting its market leadership, Malibu has demonstrated an ability to meet evolving customer preferences, bringing new products to market quickly, with updated models and features rolled out annually across all of its segments. It has capitalized on its brand strength by expanding into adjacent categories like trailers and accessories, which we expect to continue. Malibu is also curating savings through streamlined production and rising efficiencies through vertical integration. Efforts in the saltwater segment increasedits EBT margin to 13% in fiscal 2023 from 9% in 2020 before retreating in 2024 as a result of weak sales and a Maverick impairment. With continuous improvements to the manufacturing process, Malibu should be able to limit expense growth over time as top-line growth resumes.