Q3 2020 Earnings Call
[music].
Excuse me, ladies and gentlemen depicts the operator.
The conference call this schedule to begin momentarily.
Time your life when it can't be placed Oh, Thank you for your patience.
[music].
That might be considered forward looking and that actual results could differ materially from those projected on today's call you should not place undo reliance on these forward looking statements, which speak only as of today and the company undertakes no obligation to update them for any new information or future events.
Factors that might affect future results are discussed in our filings with the S.P.C. and we encourage you to review R.S.C.C. filings for a more detailed description of these risk factors. Please also knows that we will be referring to certain non gap financial measures on today's call such as adjusted <unk>.
Adjusted <unk> margin adjusted fully distributing that income and adjusted fully distribute net income per share.
Conciliations of these non gap financial measures to gap financial measures are included in earnings release.
Oh now turn the call over to Jack Springs.
Thank you <unk> and thank you all for joining the call.
As we sit here today more than six weeks into one of the biggest Hell's a macro economic crises, we have seen in our lifetimes I'm, even more proud of the Malibu payment our ability to deliver on our strategy.
Regardless of the environment, we're facing this pain delivers results and incredibly strong fiscal third quarter with this years boats season momentum, it's extending into March radically change in the last three weeks of the quarter.
The number of Kobe laughing cases skyrocketed, leading many states to invoke shelter in place orders, we mobilize quickly to protect our employees supporter dealers and adjust to reduce demand levels by suspending production at all of our manufacturing facilities on March 24th.
For the quarter net sales decrease 8.8% to $182.3 million gross margin increased 20 basis points to 25.1%.
Adjusted EBITDA decrease 3.7% to $36.4 million and adjust it even margin increased 110 basis points to 20%.
This performance despite an 8.8% decrease in revenue highlights what an outstanding early would've had if we are not remove seven days of production at the end of the quarter. It is also important to communicate that we are very well capitalized and have over $100 million of cash on hand more than ample for the current downturn.
Once again, our team demonstrated their agility and operational prowess to overcome these substantial headwinds deliver strong margin performance year over year the spot reduce volume.
Before the up into man late in the quarter performs across our brands was very strong.
Up until that point results from the boat shows were excellent well the exceptional performance in technology or a model year 2020 products driving Malibu in pursuit double digit compared to the prior year and cobalt was performing well.
This momentum was driven by the strength of our portfolio and the innovation our customers expect from US importantly, these competitive advantages will be what supports our resurgence as the environment returns to a new normal for Malibu, the new 23, M.S.Z. in our legacy latest flagship model. The M. 240 have been very strong.
Both of these new products feature several of our patented technologies, including our Stern turn technology and proprietary para wedged three.
Are 20, V.T. access again cornered the market as being a true crossover bode performing very well for ski wake or serve.
As you know all of our miles from Alabama, an actress or powered by our Malibu monsoon engines. This new engine by Malibu has certainly been to differentiate or in competitive advantage. We thought it would be it is quiet easy to maintain powerful and rock solid.
For cobalt, our new product innovation is continuing to accelerate or cobalt 29 has been very how to man with it sleek cobalt like features.
One of a kind of splashing stove feature the first inflatable management system has been a huge hit was an even bigger take right.
It is a perfect feature to enjoy <unk> keep the kids happy and deploy social distancing.
Further cobalt we have three new boasts being released the summer beginning in June that we will speak about on or next call.
<unk> R.D.C. 326 introduce last August was far stronger before the pandemic in sales than we implant. The new at 378 is just hitting the market having been introduced at the Miami boat show as a reminder, this boat replaces the contract built at 368 and has been designed with pure pursuit D.N.A. <unk>.
Expected to be a strong driver of margins going forward. We also introduced the S. 260, a sport in April and believe it will be a high demand boat from all year 21.
In recent weeks the full calendar year 2000, not thing market share data was released as a reminder, we do not focus on the monthly data from our to share. It is incomplete and can be skewed based on the state's reporting and there timing while quarterly market share data is more robust the annual calendar year data is complete and more accurate than any other data provider.
By S.S., what's that in mind as of the December 31st 2019 numbers I'm thrilled to say that at all brands under M.B., you had an exceptional year retail.
Malibu increase market share by 130 basis points in calendar year, 2019, and it's almost one third of the entire domestic market.
Both the Malibu, an actress brands had significant share increases combined Malibu, an axis is number one and number two and market share in 86% of the market survey, that's an over 600 basis point increase versus 2008 thing.
Cobalt had a staggering 260 basis point increase in market share in 2000 that thing every segment length or substantially up and the all important 24 29 foot segment as well over one third of the market for COBOL.
And the outboard segment, we serve would just 23 30 feet cobalt again grew sharing units. This it's been a growing market and it will continue to be as we accelerate new product introduction and Kobe.
More outboard mom's over the next year, we will all I shared grow.
Pursued the spot ongoing capacity constraints in 2019 also continue to grow market share with our new capacity as of July 2020, and if we are bringing the market. We're very excited to see the market share growth will occur over the next several years.
Overall, we are incredibly pleased with our market share domination encounter 2000 that thing is a testament to our team or strategy in our competitive leadership.
As a pandemic swept the country in late March our employees dealers and retail customers, who are both on order have been our top priority. During this tumultuous time.
English shut down period, we continue to pay our employees for the first two weeks after that as a states and new federal employment kicked then we implemented temporary furloughs, while maintaining the regular benefits package, including health insurance as the government's relief and recovery package became effective in April we assisted are for loading <unk> ploys in collecting.
These benefits.
When we resume production at all of our plants M.B.U. you brought back all of our employees there were no layoffs or reductions in force.
Cannot say enough about our teams that Malibu cobalt in pursuit, they've been very supportive and understanding during an unknown time as a first had to be furloughed and then came back to work their attitudes and support have been inspiring I cannot think each person adequately.
In addition, many of our dealers were forced to shut down or skill back their operations due to state and local local shelter in place mandates.
Based on our conversations with dealers the impact of these shut down to varied greatly some of our dealers continued sailboats at a steady pace, but dealers in other states. We're not allowed to receive boats for an extended period of time, even if we have built in ship though.
A result, those dealers were hardest hit that said, we were proactive and aggressive in supporting our dealers by educating them on the payroll protection program under the cares that while M.B.U. was not eligible for this program and took no government funds. It was very important to our dealers most of whom are small businesses with less than 25 employees.
Wayne worked very closely with them, providing resources step by step actions and clarity on the process to apply ensure they had access to these critical small business forgivable loans.
As a result, we estimate that are dealers on average received more than $250000 per dealer, which is allowed them to maintain their staff and curb layoffs.
Yes.
In addition to that affirmative interest from Wells Fargo and curtailments. During the April May period has resulted in no known solvency issues that we are aware of with any of our dealers across the brands.
Importantly, the resiliency and strength of our dealer network has been highlighted during this difficult operating environment.
While retail so orders have held up well stock order confirmation to slowed considerably as can be expected.
Those leaders it could continue to operate the service out of their businesses and sailboats either through <unk> pre schedule one on one appointments virtual both shows or out on the water.
In addition, M.B.U.U. has significantly boosted our digital marketing virtual presentation of product and lead generation to the highest levels we've seen.
We resume production at Malibu on April 21st at Cobalt on April 27th and that pursued on May the fourth.
Prior to that we had prepared or plans for the new environment implemented mini safe workplace practices.
I'm proud to say that we served on the governor of Tennessee's Task Force I provided recommendations for reopening manufacturing in the state of Tennessee.
That is another example of M.B.U.U. leadership at play.
Boredom state that we will reopen our plants at the same production levels is when we close each plant retail ordered them man has driven the same production levels.
Simple retail customers for performance sports boats, and recreational cruising bows, specifically want their boats for memorial day week. If you have retail orders is we did it <unk> you need to build boasts to support your dealers and not support and not disappoint you retail consumers.
Further to that all of our brands, including pursuit have had retail orders remain intact with very few cancellations that is a great ormond for when we come out of this time in the indicates a very different environment from the 2008 recession.
Today, most of our plans for exclusively fulfilling retail sold orders through may that it's important to understand for a couple of reasons.
<unk> highlights the strength of our retail order book, we had a significant number of retail orders at all three companies in nearly every boat being built is a retail sold order.
Secondly, this means that we will not resumed building stockholders I will go into the channel until June.
As a result, we will go to and a half months without putting in Missouri into the channel while dealership continued to sail boats. This will greatly help and driving channel inventories down in a post coven 19 environment, if pent up demand exist this'll be a strong tell went on for us coming out of the crisis.
Furloughed employees are back at work as previously mentioned, we brought back all of our team members with no layoffs or reductions in force. We've made a number of decisions to align our cost structure to the current landscape and realized significant reductions in expenses.
Despite these measures we have maintained for production capabilities for each of our brands to ensure we have the capacity and the throughput to deliver retail so both already under contract with our dealers.
While the completely impact of the state mandated shelter in place orders is not entirely known at this point, we expect new orders will pick up as restrictions are lifted the timing of when that happens we'll have a material impact on the summer season.
If they listed and get back to business. This month or early June that will be very positive as they will have the summer to sell boats.
I will also note that this place to a captive customer at travel sports select leagues camps and other activities families are normally involved in in the summer are cancelled for the summer of 2020.
From an inventory standpoint, we believe the channels healthy across our brands prior to the disruption in March further when reviewing externally generated segment data from a per premiere marine resources are aged inventories remarkably better than our competitors by large margin.
Means our age channel inventories are minimal and we pulled out on the segment averages as I previously mentioned from late March until June dealers will not receive any stock inventory, while they continue to sell boats. We believe this will allow them a tory channel to adjust even further that said given the rapidly changing environment. Today, we are prepared to swiftly adapt.
Our production to continue to prudently manage our inventory levels.
Further the foundation of our business industry, leading innovation vertical integration, an operational excellence will continue to propel us forward in the uncharted waters, we were in today.
Our unparalleled vertical integration strategy allows us to controller greater <unk> portion of our supply chain than our competitors and as it is a true differentiated from Alabama. In addition, or variable costs structure allows us to quickly flex costs.
With our top line, allowing us to preserve operating margins in a lower demand environment evidence by our performances quarter variable costs make up over 90% of our costs of goods, So which again is substantial competitive advantage for a business.
Especially within the current environment.
We remain on track to complete our production capacity expansion of both cobalt tamper suit.
Cobalt plan expansion was nearly finished practices spending work at our facilities in March and are now completed for large cruisers and non schedule in our phased approach for the small boat plant.
We're also nearing completion with our pursuit expansion, which is on track to be completed in June we will begin building both in the new pursuit plant with the new model year, which begins in July. This includes a brand new asked 378, which replaces the low margin contract Bill S. 368.
Our teams unwavering commitment to operational excellence will enable us to pretend continue progressing on our strategic initiatives through this environment.
I've already seen this expertise and play while we know competitors had issues with their supply chain and receiving sufficient supply parts are brands did not at all.
There, we were able to ramp up production at the same production volumes without fear of not having sufficient parts.
This is the <unk> operational excellence is just another example of our operational excellence and being prepared since we have started back to building. Both we have had no supply chain issues and there are none that we are aware of today that can be an issue for us.
I am confident in our teams ability to extend our leadership during this period of uncertainty or management team is comprised of exceptional leaders with considerable experience managing company through various environments.
We have navigating through that cycles in 1989 1994, after 911 and during the great recession in 2009.
More specifically waning with other members of the management team successfully navigated Malibu during the most significant downturn of our lifetime and we <unk>, we emerged as a better and stronger company. We will again this time.
In summary of the quarter, we delivered strong results the spot facing unprecedented headwinds as a result of the ongoing global pandemic.
Despite these unforeseen circumstances, our team mobilize quickly to address the situation took action to protect or employees.
Support our dealers and we delivered exceptional operating margin performance. Our strategy remains unchanged, we remain laser focused on delivering industry, leading new product innovation.
Greasing vertical integration initiatives and leveraging our our outstanding operational execution the impact on Malibu will not be as deep.
<unk> I guess for others and are essential out of the crisis will be faster and more pronounced as a result, we're well positioned to navigate through this downturn and recover it a quicker pace in our competition.
Now I'll turn to call back over Duane to take you through the quarterly results in more detail.
Thanks Jack.
In the third quarter net sales decrease 8.8% to $182.3 million and unit volume decreased 14.2% to 1796 boats.
As Jack mentioned, we suspended production our plants on March 24th this resulted in about a week last of production in the quarter. However, historically, we experience higher shipping volumes at the end of the quarter and the shut down in the last week impacted us in excess of $20 million and sales.
Malvern access brands represent approximately 63.4% of unit sales for 1139 units.
Cobalt represented 29% or 521 boats and pursuit made up the remaining 136 Bucks.
[noise] consolidate a net sales per unit increase 6.3% to approximately $101500 reflective of a higher mix of pursuits sales you're over your price increases in increase mix of larger boats across her mouth and an access spreads.
Crust profit decreased 7.8% to 44 $45.8 million and gross margin was 25.1%.
This compares to gross margin of 24.9% and the prior your period.
This margin included.
$900000.
Cost related to the U.A.W. strike.
Selling and marketing expense decreased 13.3%.
Or zero point $7 million in the second quarter as a percentage of sales selling and marking expense decrease by 10 basis points general and administrative expenses decrease 21.8% or $2.7 million.
Decrease <unk> was predominantly driven by temporary suspensions at our manufacturing facilities, along with acquisition related expenses that were attributable to the addition of pursuit boats in the crowd of your period as a percentage of sales G.N.A. expenses, excluding amortization decreased 90 basis points to 5.3%.
In addition to temporarily suspending production, we reacted quickly to take costs out of the business and targeted uncommitted expenses for the fiscal fourth quarter to more closely aligned or cost structure to lower expected <unk>.
We are currently in the process of evaluating the expected wholesale shipment needs for fiscal 2021, and accordingly, we'll make appropriate adjustments to our expense structure heading into the year to align our costs structure with expected demand.
Yeah, I didn't come for the quarter increase 7.5% to $23.9 million adjusted EBITDA after the quarter decreased 3.7%.
Already $6.4 million and adjust the Dom margin increased 110 basis points to 20.0%.
In 19 likely impacted our fiscal Q3, adjusted eat negatively by nearly $5 million.
Non gap.
Rusted fully distributing net income per share decreased 1.7% to $1.13 cents per share. This is calculated using a normalize c. corp tax rate of 23.5% and fully distributed weighted average share account of approximately 21.6 million shares.
For reconciliation of adjusted eat Dot and adjusted fully distributing that income per share to get metrics. Please see the tables in our earnings release.
As Jack mentioned in his prepared remarks, we also took aggressive action to make sure we have sufficient liquidity to support our operations and strategic investments. The end of March we drew down $98.8 million on our revolver as of May 5th 2020, we had cash and cash equivalents of approximately 130.
Million dollars, which reflects a temporary use of cash in working capital that will normalize over the coming weeks. Following the restarting a production at our facilities are robust balance sheet allows us to continue to invest in our business and pursue strategic investment opportunities.
Given unprecedented uncertainty related to the cover 19 pandemic as previously disclosed on March 24th we have withdrawn our fiscal year 2020 outlook.
As Jack said, while we felt comfortable with inventories prior to slow down and late March short term retail demand shocks poses a threat to leave us in over in Detroit position as always we're focused on keeping channel and then Tories at appropriate levels are lower production forecast for fiscal coupons combined with the fact that the vast majority of what.
We are producing today or retail sold units should position or channel inventories well heading into fiscal 2021.
Based on our current operating plan, we're anticipating fourthquarter revenues to be down approximately 50 per cent on a year over year basis. Despite our efforts given the speed and magnitude of this decrease we do expect margins to be meaningfully impacted in the court.
In the then have a prolonged downturn that brings a 20 to 30 per cent top line decline we are confident.
In our ability to maintain it down margins in the mid teens percentage range.
We are constantly evaluating the <unk> dynamic environment today and will provide further information when we report are your end results in August.
In closing.
We delivered a solid quarter in light of substantial headwinds imposed on our business.
Our experience.
Operational excellence and variable cost structure allow us to react to that dynamic environment. We are in today and largely preserve our margins structure in the event of the continues Florida.
As we navigate through ongoing economic uncertainty or strong balance sheet and liquidity position enable us to continue to position ourselves to execute on our long term strategy for grow up with that I'd like to open the.
<unk> up for questions.
Okay Alright.
The question. Please stop number one on your sometimes people what pops against the Mama.
<unk>.
I can't sounds question will come from the line.
Right Okay.
Yeah, aligning so hmm.
Hey, good morning, I'm, hoping can you give us any more detail on on April retail trends and.
I guess more importantly, the cadence of April.
The month progressed and I think you talked about some geographic a disparity of as well. So if there's any color on that and then the last one is just.
Any comments I may retail.
Yeah, we're for April and May brand. We're we're hearing a lot of successful retail stores like I think everybody else has.
And we think retails going up it's only natural to assume that as states open up and it was our dealers can come back and start selling boats that that retail logo up the I think one thing is helping us what we did not have last year from retail perspective is temperatures are cooperating so continue to cooperate so.
So we are seeing that up ticking retail and we <unk>, it's progressive week to week. So if you look at the first of April it was lower but it has progressed true even last week and we see that retail increase I think it's too early to talk about.
This is going to mean for the corridor or for the next quarter or anything like that.
Yeah that because we're we're all just kind of in and discovery period and not even all the states are open back up yet.
We get into the first quarter of 2001, we're going to be spending the next five or six weeks talking to dealers and getting a better understanding of what that's going to look like but but I would say that generally is positive.
So when you say retailing crazy mean retailers tracking up the earlier.
Not all year over year, but it's tracking of versus where it was in March or the first of April I'm, saying that each week retail gets a little bit better, but you still have a lot of dealers that are not opens up as an example, Maryland just open about this morning.
Yep I understood. Thank you for that occurred to there and then just so obviously impressive margins in the corridor.
About.
The fourth quarter weighing can you walk us through that kind of correct.
You know take variable structure and how we should model the next recorders and.
What's that nicotine d., but that margin.
Reference to four Q.
That mid teens or even down margin. It was not in reference to the to four q. that that's in foray out.
Out there for eight yeah kind of 20 to 30 per cent down more you know prolonged you experience, where we can make sure we have the appropriate cost structure. The the magnitude of the decrease being 50 per cent <unk> approximately 50 per cent in Q. for obviously, you know increases the magnitude of that in.
Packed on the margin.
And frankly speaking in in shorter time frames, there's a little bit more sticking this around some of those costs. So when we reference cost of goods sold as being over 90% variable I would you tell ya. It's in the mid eighties, probably or maybe a hair.
Under that you know in in kind of a cue for scenario, where you're dealing with just the speed and the magnitude of that.
So does that is that helpful.
That is thank you.
And and just referencing I think one what you were trying to get at around April May I think yeah. What we've seen is is that retailed them in in in the April late March.
In April timeframe, you knew how to shock down in that 20 to 30 per sack range.
And that it really was generally pretty solidified.
And and kind of <unk> reached a base there and and has you know climbed back a little little bit for you know from there and and gotten a little bit more meant so it's not like it's accelerating down <unk> and so I think that's where we think the market is today.
Also helpful. Appreciate the colors.
Okay next question comes from the line.
Well <unk>.
Thank you gentlemen, and first of all congrats for the whole team.
Continue to create execution throughout this whole mess.
One or just plain just to just make sure we heard that last statement that you made in in in response to press question. So so you're saying that you solve the I guess second derivatives bottom at the end of March early April retailers that set the correct way to interpret that.
Yeah, I I think what from what we saw that you saw it the the deepest part in a kind of <unk>.
First half of the end of the first half of April as what we saw in the in and it kind of held there for a little while and you've seen it improving and the.
Most recent you had a couple of weeks.
Okay.
And so are we get on a year over year weekly basis, or we get positive <unk> can any color on that.
Retail no.
No no good yeah, no no <unk>, we're not saying you know pot odds of contact I mean, it's a it's a look you have a small percentage of the dealers that are not open you have a small <unk>. You know you have some percentage of the dealers that have limited operations. So it is not.
Positive at this time.
Okay and on that front any any color Jack or Wayne whoever wants to take this on one dealers are fully open what dealers are partially open of of the of the collective network of all the brands.
This is pretty intuitive is a state by state situation you still have the dealers in California that in California, I would say in Michigan or the least amount open but then when you get in some of the southern states. Other stays there they're much more open you had a scenario in Utah for a period of time and.
Which the dealerships could be open, but all the lake for clothes, so that didn't make a whole lot of sense, but you know yet a lot of different variables that were impacting the dangers the but I would say, they're probably today, they're still in that neighborhood of 20% to 25% that have some constraints on being open.
Okay, and and then alone that line jacket.
It sounds like it's probably going to go this way geographically the dealers were they may be light or heavy on inventory and then I guess in relation to that oil patch can you comment on how the oil patches doing from what you're seen so far in the U.S. and in a in west.
From Canada.
Yeah, you know see them as you know I grew up in the we'll all patch I spent the first 24 years of my life in Odessa, So I'm very well versed in that.
Yeah, we had to drive three hours to get to a lake in West, Texas. So I think the number of customers that are being impacted in the old patch, except for Canada will note that pretty minimal but at the same time. When you have a negative you always have a positive. So you have dealers across the rest of the nation that are being able to say to those potential <unk>.
Ours that you know your fuel costs are going to be less than half. They were if you heard about about last summer. So I I look at things Yeah, you have some negative impacts maybe as it relates to the economy in the all patches, but you have some very positive economic drugs that are affecting a lot of other parts of the country.
So specifically, Texas, how how's that doing Jack and.
Yeah, Texas is very diverse Texas is is easily probably the most prolific economic engine in the nation because of their diversity and so when you get into the Dallas, San Antonio Austin, Houston, Marcus they're not nearly impacted with oil and gas prices Houston little bit.
So, but even through previous crosses crises, rather yeah, Texas has been a sour we saw during the great recession that as we were coming out at Texas actually went from number three to number one and you had some will and gas phenomenon going on at that time for what we're saying is in Texas.
Continues to be very strong and or dealers continue to be very strong in terms of our overall dealer base.
Okay. Thank you gentlemen.
Thank you.
Okay. Next question comes from the line of Mikes what time.
Mm.
Hey get money gosh.
<unk>, just usually start weighing with your commentary on fourth quarter revenue down 50 per cent I'm just trying to foot.
<unk>.
With your commentary on production rates coming back to.
<unk> Kobe levels when you when you've restarted it if I just do the straight math it seems like that would be imply more you know down in the thirties, maybe even low forties, but it is I guess is April that much more of a production based in May June is that why but it it it does skew a little.
Down a little farther.
Yeah, well it it.
Mm.
Look at it can be a little bit, but but really you got to go back to some of the comments that Jack was making about any retail demand and and those that are needing to be delivered before memorial day. So we we came back and and we may be running you know friday's to get those votes out to make sure those folks.
Have the they're they're both before memorial day, and frankly, we we may idle you know a factory yeah. After <unk> Memorial day week or for Memorial day week, because we're going to run it hard to to make sure we deliver to those customers and and we typically bleed down.
And that number or that that throughput in in the latter part of June or <unk>. The June timeframe. So ultimately it's it's really the combination of those types of factors. If you look at when pursuit started up as opposed to Malibu. That's that's a couple of weeks difference you look.
How we're managing the factory dynamically to make sure we're delivering yeah, and and converting those contracted sales into earnings for us and our dealers. We're just trying to optimize that and that's why you see a little bit of a difference in the in those numbers.
That's that's that's helpful. Thanks for that and then just <unk> comments.
Sticking with some of your your comments on meeting the retail sold inventory in in really yeah for the time being not really putting anything into dealers inventory.
<unk> I guess you you you likely dumb the the analysis.
Hey, what level of demand would you start to have more concerned that maybe you you're under inventory's going into maybe junior in July.
Yeah. It it really that's why I say that were a little bit an unknown territory market. It depends on what we see the rest of May and June as space open back up could that happen as we get into them. All your 21, depending how hard this comes back absolutely. If you think about it in terms of the amount of time.
That and I have to speak to Malibu and you can extrapolated to the other companies.
Time to Malibu and shut down and we're coming back and we're building retail so both almost exclusively what that's going to do with the retail cells that are going to happen for the six week period of time, there's gonna be well over a thousand both taken out of the channel. So we think that we were in pretty good shape from an inventory standpoint before the show.
Down and when you take that into account as well we feel pretty good if we have any level of come back.
Yeah, and and Mike Gee, we've mottled an immense array of potential outcomes here and and ultimately I think you in what you hear from us and what our plan for Q4 is primarily focused on is is is making sure that needs a balance we we think we're <unk>.
And right balance in terms of the the balance of factors that if this were to go <unk> different direction and a little bit further south.
And and so I think we are monitoring very aggressively what's happening at the you know <unk> in that in terms of that true retail activity not just the delivery of the bugs that are under contract, but the new conversions to to give us as much information as possible to.
<unk> to react there's there's plenty of inventory right. We are we are a seasonal business our dealers were prepared heading into the season for.
Larger year and show.
We believe that were striking that balance correctly and and.
The chances that they're gonna be meaningfully under him into worried are are probably pretty low and and it's a little bit of defense to make sure. You can you know if it goes other direction, you're you're not just chasing it for a longer period of time.
Okay. Thanks, guys.
Oh my picking on people like ask a question. Please.
Number one.
Some will come from a line of <unk>.
Guys. Good morning, hopefully you're only as well.
To follow up on on my question regarding manufacturing, Yeah, with you guys resuming production.
In April one alley today, what kind of capacity utilization of you guys operating at I manage.
Yeah.
Well at least through Memorial day week were operating as saying faster utilization. We were in March and February we we came back at the same production right.
Okay, Okay, but no shit and I still can't imagine right.
Retail shipments I mean, we're shipping to dealers today.
If we're building 22, both today than 22, both will go out the dealers, but they are retail so both so the way to think about that is that all of the both were building have a customer name on them. So we're not putting <unk>, putting relatively few or no boat in the channel inventory.
For dealers to hold and stuff.
Okay. That's awful that just just to follow up on that you mentioned earlier.
But it's coming out.
Yeah, and obviously, so it's coming out doesn't sound like this is impacting your plans ramada, you're 21 at all so I'm curious.
Hurting you push back and dealers yet or it sounds like at full speed ahead from all of your 21.
No the dealers want new boats and and just to monitor correction. The three we both are coming out and COBOL. So cobalt will have three new both coming out this summer Malibu have for new boats. We were on a an aggressive plan with pursuit and that will continue but in terms of tutors are always anxious to have.
New product, especially for a new model year, and so will continue to give them that.
Okay, great. Thank you guys.
Sure. Thank you.
Oh boy.
Okay.
Mmm.
Okay. Thank you very much.
In summary of our quarter, we delivered strong operating margin performance, despite experiencing unforeseen unprecedented headwinds as a result of the coding 19 pandemic.
It's impressive and should inspire investor confidence that we were able to close production for seven days in the corridor continue to pay employees and benefits and still generate a 20% even the margin into three.
We talk a lot about our people being are number one asset and we demonstrated by taking care of them paying them continuing to cover their benefits and bring 100% of them back to work when it was proven.
We assisted or dealers, we believe better than any other marine manufacture and getting educated and receiving the limited P.P.P. funds.
We restarted production and our focus on prudently managing our production and delivering outstanding boast or customers.
Our core business strategy remains unchanged as we focus on enhancing our brands and market share during this period.
Or vertical integration strategy and variable cost structure is a differentiator in this environment.
We have taken Swip action, and then have to enhance our financial flexibility and liquidity and our balance sheet is strong enough to whether any storm.
Finally, they experienced leadership team combine with our industry, leading operational execution will enable malibu to emerge as a stronger company.
I think each of you for your continue supportive Malibu for joining our call today I Hope you have those around you were all things safe and healthy have a fantastic day.
Lady from Canada.
Main conference call. Thanks.
Hmm.
[laughter].
[music].
[noise] [noise].
[music].
[music].
[music].