Analyst Note| Jaime M. Katz, CFA |
We don’t plan any material change to our $104 fair value estimate for narrow-moat Malibu Boats after digesting first-quarter results and view shares as undervalued trading at just 11 times our 2022 EPS estimate. Malibu delivered sales growth of 40% in the period, to $253 million, with units up 24% (including Maverick) and an average sales per unit increase of 13%. The gross margin contracted 170 basis points to 23.6%, with a majority of the decline attributable to a portfolio mix shift as saltwater climbed to represent 24% of sales versus 9% in the year-ago period. And while input inflation and labor costs could continue to have a near-term impact on EBITDA margins (which contracted 250 basis points to 17.6% in the quarter), we expect such degradation will begin to improve in the back half of fiscal 2022 if supply chain constraints ease.