Q4 2023 Malibu Boats Inc Earnings Call
Okay.
Good morning, everyone and welcome to Malibu boats conference call to discuss fourth quarter and full fiscal year 2023 results.
At this time all participants are in a listen only mode.
Later, we will conduct a question and answer session and instructions will follow at that time.
Please be advised that reproduction of this call in whole or in part is not permitted without written authorization of Malibu boats.
And as a reminder, today's call is being recorded.
On the call today from management are Mr. Jack Springer, Chief Executive Officer, and Mr. David Black interim Chief Financial Officer, and Mr. Ritchie Anderson, Chief operating officer.
I'll now turn the call over to Mr. Black get started please go ahead Sir.
Thank you and good morning, everyone on the call Jack will provide commentary on the business and I will discuss our fiscal fourth quarter and full year 2023 financials. We will then open the call up for questions.
A press release covering the company's fiscal fourth quarter and full year 2023 results was issued today and a copy of that press release can be found in the Investor Relations website.
On our company's website I also want to remind everyone that management's remarks on this call may contain certain forward looking statements, including predictions expectations estimates or other information that might be considered forward looking and that actual results could differ materially from those projected on today's call.
You should not place undue 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.
Factors that might affect future results are discussed in our filings with the SEC and we encourage you to review our SEC filings for more detailed description of these risk factors. Please note that we will be referring to certain non-GAAP financial measures on today's call such as adjusted EBITDA adjusted EBITDA margin adjusted fully distributed net income.
And adjusted fully distributed net income per share.
Reconciliations of these non-GAAP financial measures to GAAP measures are included in our earnings release, I will now turn the call over to Jack Springer.
Thank you David and thank you all for joining the call.
Fiscal year 2023 was another impressive year for Malibu, which included fourth quarter and full year results that exceeded expectations, despite an increasingly challenging environment.
Our unique operating model model vertical integration capabilities and World class leadership continue to shine through allowing us to take a leading position in the marine industry no matter, what the market conditions, we find ourselves in.
For fiscal year 2023, net sales increased 14% to a record $1 4 billion gross margin remained strong at 25% and adjusted EBITDA grew 15% to a record $284 million, while adjusted EBITDA margin increased to 25%.
Asps across all brands continued to be extremely strong driven by cobalt and pursuit.
During the fiscal year, we made great strides to match wholesale production to retail demand, which we believe is important and responsible for our investors and our dealers.
The first three quarters of the year saw us matching our production to a deficient channel inventory environment to reach more normalized channel inventory levels.
The normalization occurred faster than anticipated and in the fourth quarter, we took production down and our freshwater brands to match where channel inventories were at that point.
We continue to monitor retail sales and channel inventories closely and are prepared to make adjustments quickly.
As we've said repeatedly over the last several quarters, we believe the supply chain will normalize by the end of fiscal 2023 or the beginning of fiscal 2024. We can now officially say that these challenges have largely abated, while occasional pockets of weakness still exists as a normal course of doing business, we remain committed to work.
With our supply chain partners to ensure normalized supply going forward.
While the retail environment remains uncertain, we are leveraging our culture of operational excellence to successfully navigate any lingering supply chain headwinds to provide the highest quality boats on market.
The supply chain area that is not corrected as pricing from suppliers, we were surprised to see the increases this spring and it is an area that we will continue to work on with our suppliers.
With a more normalized supply chain OEM production capabilities have also normalized and the retail environment is now the largest contributing factor to our channel inventories faster than anticipated recovery.
In general our freshwater segments were at pre COVID-19 levels or even higher in some cases, Conversely, saltwater channel inventories are still slightly below the pre COVID-19 inventory levels, but within five weeks on hand.
We are seeing that nearly all manufacturers had to cut back production to some extent due to weakening demand consistent across the broader marine industry, which resulted in a softer fourth quarter from a retail perspective.
This is primarily due to dealers expressing caution in taking on new inventory amid rising interest rates more.
More normalized channels recessionary concerns and weather driven order delays.
Regarding interest rates dealers, who face the effect of higher inventory levels on their lot compounded with paying higher interest rates on that inventory, which has driven their costs are and made them more passive about carrying higher levels of inventory.
On the consumer side, we are seeing customers delay bulk purchases and what historically has been a strong season for them to buy for example, our freshwater segment, particularly in the ski wake category experienced weakness as a result of unseasonable weather conditions across the country through June the <unk>.
Cool rainy spring across the country, along with drought conditions in certain regions of Texas, which is the number one state for wake boats delayed the customers' appetite to purchase.
However, despite the slow start to the selling season, we have continued to gain share across the board in all of our brands year to date through July Malibu Axis has gained 320 basis points of share with Malibu and axis, both having the largest share gains by large margin over competitors.
Trailing 12 months share has increased 180 basis points again, with Malibu and axis being the far and away leaders of share gains.
The January through July market share has been exceptionally strong and in some months exceeding 35% for our Malibu and axis brands.
Within cobalt and our Stern drive segment, we are getting the 100 Navy bases points of share over the trailing 12 month period and year to date, our stern drive share is up 240 basis points, topping 35% and increasing our share lead over the nearest competitor by nearly 17 100 basis points in the 23 foot to.
36 foot segment, where we play.
In the saltwater segment, we are gaining share in all of our brands across our competitive segments year to date pursuit. His gained 270 basis points of share against its competitive segment and Covia has gained 80 basis points of share Pathfinder continues to perform extremely well extending the share lead in this competitive segment.
The trailing 12 months and the year to date share game is 300 basis points for Pathfinder fiscal year 2023 has been very strong for all of our brands and picking up market share as we continue to stand out with purchasers proving that we are winning the competitive battle with great products better dealers and a much better value.
Our position.
This also goes to show that our customers remain fiercely loyal while we are being successful at converting buyers to our brands with our longstanding experience successfully navigating through challenging market cycles. We are confident in our operational capabilities, coupled with our ability to execute in any environment, all the while continuing to push.
The pace of innovation.
New products are the lifeblood of our brands and we continue to ramp our engines and then push full throttle when it comes to delivering premium products for all <unk> brands.
Our actions have allowed us to maintain our dominant position in every market, we serve and we continue to invest in products that make us a stronger strongest player in the marine industry.
Our model year 2024 lineup only raises the bar further on the innovation our customers expect from us to that end. We are extremely excited to announce our exceptional 2024 product lineup.
For Malibu and Axis, we are again once again, introducing four new boats, which is far more than any other competitor.
This includes the all new twenty-three L. S V. The best selling towboat evolved com, the new and highly anticipated M $2 42, which takes our M series to the next level of premium features and performance for.
For Axis, we have our new 845, which is one of the best selling axis models with these new additions, we believe the Malibu and axis brands will continue to perform strongly and build upon their leading position.
Turning to cobalt, we are replacing our most David series of boats with an all new cobalt sports series in the 'twenty two to 'twenty three foot segment.
This will include both to Stern drive boats, and a new surf boat featuring Malibu's proprietary surf gate, which completely transformed the surf industry over the last decade first and wake boats and then in the Stern drive segment.
We're also introducing a new or 33 surf boat, our largest surf boat ever at 33 feet, which will feature surf gate and all of our proprietary technology.
Additionally, the rollout of the monsoon engine to cobalt boats has begun and we will scale this opportunity over the next few years.
At pursuit, we are introducing the brand new Oss four O fab the smaller brother to the highly successful OS for 45 as well as a new center console that will be introduced in the first quarter of fiscal year 2024.
Paired with the successful build out of our 100000 square foot tooling design center on pursuit property, which is part of our multiyear plan to bring product tooling in house, we are extremely optimistic and excited about the future of the pursuit brand.
For Maverick boat company, we are developing much needed new products for Kobe and Pathfinder between the two brands, we will introduce four new models, which will bring the portfolio more current and compel buyers with exciting new features while retaining the attributes that have made pathfinder and Kobe is top of the segment performance.
As we look ahead the outlook remains mixed driven largely by dealer concerns with retail and channel inventories, reaching adequate inventory levels.
It is important to remember that for the last three years, we have been building every boat, we possibly could do to the COVID-19 generated demand and the supply chain issues everyone encountered.
Now we are very focused on matching our supply with the retail demand environment. We currently expect fiscal year 2024 to be down versus fiscal year 2023.
In 2023 channel inventories were still too low and production was in full throttle building boats to return back to where we where inventories have historically been.
We also expect dealer headwinds throughout fiscal year 2024 dealers are currently displaying a lack of confidence due to delayed retail and the interest rates that are more than double for dealers and consumers versus two to three years ago.
Based on what we are currently seeing we expect wholesale demand to be decrease across all of our brands David will discuss this as part of our full year outlook in a few minutes.
As we have stated dealers are concerned about the retail environment.
However, I want to be very clear that this is not 2009, when the customer disappeared.
We have been able to confirm is the retail customer is still there and willing to purchase in September we had planned to have a labor day promotion for Malibu and axis to keep channel inventories in check and assist dealers and moving 2023 product.
We decided to move this event up to July beginning the fourth of July weekend.
Despite seeing lower retail in May and June we were astounded at the positive results of this event unit sales were 52% more than what we had projected this led to our warranty registration as being the highest in the last six years, except for 2020, when anything that had an engine sold.
Registrations were 151 units ahead of 2019, which we have been benchmarking against for awhile.
This convinces us the customers are out there, we and our dealers has to be creative and reach them.
Overall, our teams hard work commitment to excellence and agility in the midst of an ongoing challenging environment has delivered superior results.
As we embark in fiscal year 2024, we believe we will only further our track record of success.
<unk> culture of operational excellence combined with our loyal customer base introduction of our new model year, 2024 product and vertical integration efforts will allow us to successfully navigate any choppy waters, we face and extend our leading industry leading position.
This will undoubtedly leave us extremely well positioned to drive substantial growth and profitability all the while delivering long term value for our shareholders in fiscal year 2024 and beyond.
I will now turn the call over to David for further remarks on the quarter.
Thanks, Jack in the fourth quarter net sales increased five 4% to $372 3 million and unit volumes decreased one 8% to 2000 and 550 bps. The increase in net sales was driven primarily by increased unit volumes and our saltwater fishing segment and a favorable model.
Mix across all segments, partially offset by lower unit volumes, and the Malibu and cobalt segments and by increased dealer flooring program costs, resulting from higher interest rates and increased inventory levels.
The Malibu and Axis brands represented approximately 41, 1% of unit sales or 1253 boats.
Cobalt represented 22, 4% or 571 votes and saltwater fishing represented the remaining 28, 5% or 726 boats.
Consolidated net sales per unit increased seven 3% to approximately 146000.
Primarily driven by year over year price increases and favorable model mix, partially offset by increased dealer falling costs.
Gross profit increased 14, 3% to $102 5 million and gross margin was 27, 5%. This compares to a gross margin of 25, 4% in the prior year.
Selling and marketing expenses increased one 8% to $5 4 million in the fourth quarter as a percentage of sales selling and marketing expenses were flat year over year at one 5%.
General and administrative expenses increased 587, 3% or $100 8 million. The increase was driven primarily by settlement of product liability cases for 100 million. The remaining increase in general and administrative expenses was driven by an increase in compensation and personnel related expenses.
As a percentage of sales G&A expenses, excluding amortization was 31, 7%.
Net income for the quarter decreased 136, 3% to a loss of $18 million.
Adjusted EBITDA for the quarter increased 21, 9% to $90 1 million and adjusted EBITDA margin increased 330 basis points to 24, 2%.
non-GAAP adjusted fully distributed net income per share increased 22, 6% to $2 98 per share.
This is calculated using utilizing a C corp tax rate of 24, 3% and a fully distributed weighted average share count of approximately 21 3 million shares.
For a reconciliation of adjusted EBITDA and adjusted fully distributed net income per share to GAAP metrics. Please see the tables in our earnings release.
Our performance in fiscal year, 2023, reaffirmed our role as industry trailblazers, emphasizing our dedication to innovation and operational efficiency. We are focused on navigating a volatile retail environment, but we are confident in the foundation, we have built operationally along with the strength of our pre.
<unk> portfolio and the agility of our entire team.
Our premium boats continue to be highly sought after by consumers and our 2020 for model year introduction will continue to push the limits and strengthen our market leading position.
This combined with our previously outlined plans to increase our manufacturing capacity expand our vertical integration footprint grow our distribution network and bring key capabilities in house leaves us extremely well positioned to drive market share gains as we enter fiscal year 2024 and beyond.
Looking at full year numbers net sales increased 14, 3% to a record 1.39 billion and unit volumes increased six 6% to 9863 boats.
Consolidated net sales per unit increased seven 2% to 140765, driven by increased sales of new more expensive models high optional feature revenues, an inflationary year over year price increases, partially offset by increased dealer flooring program costs.
Gross profit increased 13, 3% to 351 3 million net income for the year decreased 34% to $107 9 million and adjusted EBITDA increased 15, 2% to $284 million for the full year.
For the full year non-GAAP adjusted fully distributed earnings per share increased 16, 2% to $9 19 per share.
Echoing Jack sentiments, while the outlook for fiscal year 2024 present, some uncertainties are unmatched innovation product quality and team agility position us at the forefront of the marine industry. Despite this.
This uncertainty we will continue to showcase our best in class operational capabilities matching wholesale to retail demand as we launch our new model year lineup.
Delighted by our unmatched innovation quality and feature rich boats. We believe we are positioned extraordinarily well within the marine industry as we continue to gain share and deliver for our customers.
Based on our current operating plan our expectations for fiscal year 2024 are as follows we anticipate a year over year decline in net sales ranging from mid to high teens percentage in terms of cadence, we anticipate our first half revenue decline approaching 20%.
Solidago adjusted EBITA margin is expected to be down 300 to 400 basis points year over year with first quarter headwinds of double the annual rates.
In closing fiscal year 2023, it was another momentous year for Malibu, we continue to navigate retail uncertainty and an evolving operating environment, while delivering solid quarterly and full year results proving that no matter. The challenge we had the visionary leadership tried and true strategy and unmatched production.
Abilities to push the throttle forward in the year ahead.
Our differentiated best in class portfolio continues to perform at the top of the marine industry and our fiscal year 2024 lineup will only drive further market share growth and profitability in each of the markets we serve.
Overall, we remain extremely confident in our ability to extend our leading position and deliver long term value for our customers and shareholders with that I'd like to open the call up for questions.
Ladies and gentlemen at this time, we'll begin the question and answer session.
To ask a question please press star and one on your Touchtone telephone.
If you would like to withdraw your question you May press star and choose to remove yourself from the question queue.
Please standby, while we compile the Q&A roster.
Our first question today comes from Michael Swartz from trustee.
Trustee Securities. Please go ahead with your question.
Okay.
Hey, good morning, guys.
Just to start on on retail demand, obviously, we've all seen the numbers year to date, and obviously the ski wake or towboat segment.
And one of the softer areas within the industry. So maybe Jack Jack I guess, what do you attribute that to is that just the impact of pricing over the past couple of years or is there something.
Nothing more to that and I guess any commentary on what <unk> seen maybe in the retail trends over the past maybe four to six weeks.
Yes, Mark I mean, I think there are several elements of this one would be pricing, although I wouldn't say that pricing in the ski wake segment has been.
Outpacing other segments.
What I think that we're seeing a little bit more than anything is maybe people were waiting a little bit longer to trade in their boat and buy their boat.
Some other factors that I believe certainly exist as you do have some segment of that especially on the axis side. The consumer's dependent upon interest rates and it's become very apparent that interest rates are an issue for our dealers as well as for consumers in certain markets. The third thing I would point to is whether an and.
Although we hate to point to weather.
The simple fact of the matter is that in May and June it was a cooler spring and then.
One thing that you haven't heard a lot about and no. One has really talked about it is there is a drought going on in certain sections of Texas and that being the number one ski wake segment I think is having an impact in terms of what we've seen over the last six or eight weeks and I alluded to this in the remarks, but.
A little bit of a concern is always a are we dealing with a scenario where the customers disappeared and where the program that we ran over the fourth of July and for the month of July .
And that showed us that theyre not to have warranty registration is a 156 more than 2019 was pretty staggering for us and so I think more than anything that just showed us we have to figure it out and figure out the way in all of our brands not just gateway to reach that consumer and entice them to buy.
Okay. Thank you that's helpful. And then just on the on the guidance the 300 to 400 basis points in EBIT.
Margin decline year over year, I guess, it was a little more than I had anticipated so maybe.
Walk through that.
That range that you gave us how much of that is volume related versus maybe dealer support versus presumably.
Into the debate that saltwater outpaces the rest of the business I guess, how much of a mixed drag would that be if that is that the correct way of looking at it.
No youre hitting on the right points I would tell you that the great majority of it is volume driven.
And the volume is going to come out of all the brands not evenly but all the brands are going to be down.
The supporting of the dealers I don't think thats going to be a huge marginal items, certainly less than 75 basis points and probably around 50 basis points. So it's not going to have that much of an impact is going to be mainly volume related.
The thing that I think is important to understand as we've been preaching for five years now that in a down environment and a 30% down environment, we can still be above 15% margins and even though this may look a little bit less than what you had anticipated looking at 18% to 20%.
Down type of environment, and still maintaining an above 17% EBITDA margin just continues to drive home that we can be extremely profitable even in a prolonged downturn.
Okay, great. Thanks for the color Jack I appreciate it.
Sure.
Our next question comes from Jamie Katz from Morningstar. Please go ahead with your question.
Ashish.
Been queued up.
Yes.
Jamie I'm not sure that Jamie Katz is being queued up on the Q&A session.
And miscast is it possible your phone is on mute.
Okay.
Okay.
And I apologize everyone. This may be on my end one moment.
Yeah.
Okay.
Yeah.
Excuse me.
Are you ready for your next question. Please.
Yes, we are thank you. The next question comes from Jamie Katz from Morningstar. Please go ahead.
Can you hear me now.
We can Jamie how are you.
Good how are you.
Ed.
I think you guys had mentioned that first half revenues were going to be down 20%. So I think that sort of you know.
Back end loaded.
<unk> 2024, and I'm just curious what gives you guys the confidence to feel like maybe there will be a.
A little bit of bounce back in consumer sentiments.
At the beginning of next calendar year to support that given what we're seeing currently.
Yeah. That's a fair question, obviously, we can't predict the year, we have a really good I think vision.
Vision on what that first quarter is going to look like.
And we think that if there is a rebound we can't promise rebounded in the second half, but we believe that that could occur in the second half and so that's why we plan in the second half up a little bit, but ultimately the year's going to Pan out and we'll know a lot more each quarter.
Are you guys seeing anything different in how consumers are.
Maybe adding an upgrade.
The fourth quarter sounded pretty solid but has.
Has that changed at all as we've entered the new year is that that.
Consumers are picking and choosing what they're adding more cautiously to their units.
That's an interesting part of the dilemma, we are seeing obviously some of the the velocity of the of the volume go down, but we're not seeing the asp's or they continue to order input. The people that are buying both are putting new features new options upgrading.
The features and options that they used to have so we're not seeing that from a standpoint of the asps are strong across the board.
Okay, and then lastly.
Is there any update to that.
The new facility I know you guys had talked about change in the past, but any update there that would be noteworthy.
Yeah, well, we're as we said talked about is going to be additional capacity and so part of what we're doing with that and we're not utilizing all the facility for it but we're going to be moving a part of the cobalt.
Smaller boats to that facility for a couple of reasons number one we for a number of years have just been up against the ceiling and the number of both that we can produce and we think that is going to be that way again in a relatively short period of time and cobalt is one of the strongest brands that we have with all new products and so.
As we come out of this we think cobalt is going to grow very very quickly.
And have the capability or need the capability of producing a lot more units. So that's the first foray that we're going to utilize out of that 260000 square foot facility and we'll start that in the second half of this year. We will continue to build boats in Kansas, Some will be small boats and largely it will be cruisers, but we'll have two different located.
So we're building cobalt.
If we can't make a enviable acquisition of pontoon company over the next 15 to 18 months.
Then we would look to greenfield bond who's in the rest of that facility.
Alright excellent.
The next question comes from Brandon <unk> with D. A Davidson. Please go ahead.
Good morning, Thank you for taking my questions.
Just briefly on the ski wake category do you feel like you know the.
Category is being impacted by potentially other segments that.
It might be able to bring along some of the same features that ski wake boats.
Already provide.
Yeah, that's a great question, Brandon I think and it's something we've looked at a lot.
Only in what I would call that entry level consumer. Thank you do see a little bit about.
That you have a scenario in that stern drive market, where their waves have improved there are they are 789, 10, though but for that entry level customer they don't necessarily need that 789, 10, and so they're looking at maybe other both or do other things and I think it I think it.
For the entire ski wake industry, I think that that really puts us on a market we need to figure out how to combat that if we want that entry level consumer and we have some plans in place that I'll probably be talking about next quarter that we think that will certainly impact that.
Okay, Great and then just on the promotional support.
Obviously, great success with that Labor day event being moved up do you feel like that's the right level of promotional activity moving forward or is there a potential for more support maybe on the wholesale side for dealers moving forward.
You guys going to be dictated by the market really and we think that we have planned sufficient programs in place you know in a couple of different brands is probably a little bit more than we've done even prior to COVID-19, but we think it's the right level and again, there's no more than a 50 75 basis point increase or decrease.
To the EBITDA line and so we will monitor it based on how the market goes.
We think we have the right level, but we'll just see but we'll also make adjustments if we need to.
Great and just one last question just on the first quarter guidance for fiscal year fiscal year 'twenty four.
I think you had said there was the EBITDA headwind I missed how much of a headwind there would be in the first quarter. If you could repeat that sorry about that.
Yes, sure we say about double the annual decrease so call it.
Five to 700 bps.
Alright, thank you.
The next question comes from Fred Wightman with Wolfe Research. Please go ahead.
Hey, guys. Good morning, I, just wanted to follow up on the comments about supplier pricing it sounded like that caught you a little bit flat footed just wondering maybe if you could quantify that and then if those discussions are yielding any explanation for the disconnect.
Yes, I mean, I wouldn't say flat footed I think we were surprised by our.
I would probably prognosticate that all of the Oems, where we're a little bit surprised that the pricing all the way from engines to smaller parts.
<unk> held higher we we felt like we would see more of a decrease or more of a movement back to where it was a couple of years ago and did not see that to the extent that we wanted to.
Did that necessarily take that and pricing all the way through we felt like we needed to control pricing from our standpoint, and not pass that along to the consumer to.
To your question have we been seeing it come down yes, we've been working hard in some cases frankly, we've changed suppliers I think that all of US both dealers and Oems have to be very careful in this environment, especially with interest rates and our suppliers need to be becoming more logical and.
Their pricing and we all need to be taking pricing down where we can.
Great and then just on some of the inventory stats that you guys gave helpful to have that sort of broken out freshwater versus saltwater but.
It's sort of a two part question one how do you sort of think those compare to what you are seeing in the rest of the industry I wasn't sure. If that's for Malibu only or if that was sort of an industry comment and then too.
If you think that dealer inventory levels should we be indexing those off of 19 do you think that they sort of need to come down versus 19, how do you sort of think about that.
So on the first question Fred.
The comments that we made were relative to the Malibu. So about weeks on hand being about what they were pre COVID-19 or maybe a little bit more in the Malibu case, our company Casey and beyond in saltwater being three to five weeks down overall, what I would tell you is that our benchmarking against the rest of the segmentation.
We have been at the lower end of the spectrum for every single brand. So the inventory on hand, with our dealers is less than other dealers with competitors and so we do feel good about that moving to your second question.
I think you know.
You get into a dilemma here and I understand where the dealers are coming from and I understand the costs that are being driven but the bottom line to the equation is 50% or more of the boats are bought at the dealer lot and if you don't have the inventory youre not going to sell the boat. So theres a happy medium that we can't go too far and push inventory.
Tories too high Conversely, we can't go too far and not have enough inventory at dealer size, because that's a guaranteed proposition for losing so we have to work with the dealers and we have to to look at things I think to benchmark. Your 2019 comment channel inventories probably need to be just slightly.
To add a little bit lower than what they were a weeks on hand in 2019.
Super helpful. Thank you.
The next question comes from Kevin Condon with Baird. Please go ahead.
Hi, Good morning, Thank you for taking my question.
I wanted to ask a bit about the balance sheet.
You guys didn't report any debt for the quarter and I think.
Location of that settlement you announced.
Earlier, this summer that you'd be using our revolver.
Some of that but just bigger picture, how do you feel about your capital structure.
The need for any new debt to fit in there.
I think when you look at our balance sheet, even taken into account.
Drawing on the revolver of $75 million to address the litigation settlement, we feel like we're in a very healthy position I think you know as we look at it over time, that's something that we'll consider from a capital allocation perspective, and one of those things that will always be considering is what that means from a share repurchase perspective.
But overall, we feel like we're very healthy on the balance sheet side.
Does that comment extend.
Some of these initiatives.
The new capacity you have there.
You know as long as all that tooling center.
Do you feel like you can cover that or.
Absolutely so the in terms of the tooling center, that's really already been covered.
Off a pretty nice M&A transaction, if it comes to market I think the other power of this when David talks about the borrowings over the last quarter is the rapidity, because we're at 90% variable business and the rapidity with.
With which we're going to pay it off so we'll be back to our net leverage position pretty quickly.
Great. Thank you.
The next question comes from Joe also Bello with Raymond James. Please go ahead.
Good morning, This is Marc Mcconnell on for Jonathan.
Just a quick question about the guide you did mention the sales decline to mid to high teens, just trying to get a breakout between volume and pricing and how does that play off each other.
We don't typically provide guidance on the volume side, but I think you can back into it with the implied.
With the implied guidance that we gave around revenues depending on what your ASP assumption is I'd say you know on the volume side, you're probably looking at a 15% to 20% down.
Sounds good thank you.
I'm not showing any further questions at this time I would now like to turn the call back to Jack Springer for any further remarks.
So very much in summary, our fourth quarter and fiscal year results demonstrate the unbeatable strength and capabilities of our business model led by our unmatched operational manufacturing capabilities. We consistently provide the most innovative highest quality boats to a loyal customer base.
We continue to extend our strong track record of performance delivering another record year for sales and EBITDA the spot margin pressures as volumes and inventories normalize.
While the economic environment continues to evolve we remain very confident in our ability to execute on our strategy and may match wholesale to retail demand.
In every brand we've increased market share and in some cases the market share increases had been in the hundreds of basis points and gains our strategic.
Planning operational excellence and supply chain management further supports our outperformance of the marine industry and will remain a key differentiator in this environment going forward, while at the same time continuing to drive profitability for Malibu product portfolio.
Our culture of innovation continues to attract consumers to our premium suite of large feature rich MBR brands for Malibu and axis to cobalt to pursuit in Maverick, we are pushing the limits on the innovation and quality with our model year 'twenty four lineup.
A lot of uncertainty remains but we are confident that in the areas of the business that we can control, which are a leading vertical integration strategies production capabilities, our premium product portfolio and our industry, leading operational execution that we will drive further growth and deliver long term value to our shareholders I want to thank everybody for.
Being on the call. This morning and for your continued support have a great day.
This concludes today's conference call. Thank you for participating you may now disconnect.
Yes.
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