Malibu Boats Q2 2026 Malibu Boats Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q2 2026 Malibu Boats Inc Earnings Call
Speaker #1: Good morning and welcome to MALIBU BOATS, a conference call to discuss second quarter 2026 results. At this time, all participants are in a listen-only mode.
Speaker #1: Later, we will conduct a question-and-answer session, and instructions will follow at that time. Reproduction of this call, in whole or in part, is not permitted without written authorization of Malibu Boats.
Speaker #1: As a reminder, today's call is being recorded. On the Mr. Steve Menneto, Chief call today for management are Executive Officer, and Mr. David Black, Chief Financial Officer.
Speaker #1: I will now turn the call over to Mr. Black to get it started. Please go ahead,
Speaker #1: sir. Thank you.
David Black: Thank you, and good morning, everyone. Joining me on today's call is our CEO, Steve Menneto. On the call, Steve will provide commentary on the business, and I will discuss our Q2 of fiscal year 2026 financials. We will then open up the call for questions. A press release covering the company's fiscal Q2 2026 results was issued today, and a copy of that press release can be found in the investor relations section of the 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, and other information that might be considered forward-looking, and that actual results could differ materially from those projected on today's call.
David Black: Thank you, and good morning, everyone. Joining me on today's call is our CEO, Steve Menneto. On the call, Steve will provide commentary on the business, and I will discuss our Q2 of fiscal year 2026 financials. We will then open up the call for questions. A press release covering the company's fiscal Q2 2026 results was issued today, and a copy of that press release can be found in the investor relations section of the 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, and other information that might be considered forward-looking, and that actual results could differ materially from those projected on today's call.
Speaker #2: And good morning, everyone. Joining me on today's call is our CEO, Steve Menneto. On the call, Steve will provide commentary on the fiscal year 2026 business, and I will discuss our second quarter of financials.
Speaker #2: We will then open up the call for questions. A press release covering the company's fiscal second quarter 2026 results was issued today, and a copy of that press release can be found in the Investor Relations section of the company's website.
Speaker #2: I also want to remind everyone that management's remarks on this call may contain certain forward-looking statements including predictions, expectations, estimates, and other information that might be considered forward-looking and that actual results could differ materially from those projected on today's call.
Speaker #2: 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 results are discussed in our filings with the SEC, and we encourage you to review our SEC filings for a more detailed description of each of these risk factors.
David Black: 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 that might affect future results are discussed in our filings with the SEC, and we encourage you to review our SEC filings for a more detailed description of each of these risk factors. Please also note that we will be referring to certain non-GAAP financial measures on today's call, such as Adjusted EBITDA, Adjusted EBITDA margin, adjusted net income (loss) per share. Reconciliations of these non-GAAP financial measures to GAAP financial measures are included in our earnings release. Finally, during today's prepared remarks, comparisons are to Q2 of fiscal 2025, unless otherwise noted. I will now turn the call over to Steve.
David Black: 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 that might affect future results are discussed in our filings with the SEC, and we encourage you to review our SEC filings for a more detailed description of each of these risk factors. Please also note that we will be referring to certain non-GAAP financial measures on today's call, such as Adjusted EBITDA, Adjusted EBITDA margin, adjusted net income (loss) per share. Reconciliations of these non-GAAP financial measures to GAAP financial measures are included in our earnings release. Finally, during today's prepared remarks, comparisons are to Q2 of fiscal 2025, unless otherwise noted. I will now turn the call over to Steve.
Speaker #2: Please also note that we will be referring to certain non-GAAP financial measures on today's call, such as adjusted EBITDA, adjusted EBITDA margin, adjusted net loss income per share.
Speaker #2: Reconciliations of these GAAP financial measures to non-GAAP financial measures are included in our earnings release. Finally, during today's prepared remarks, comparisons are to Q2 of fiscal 2025 unless otherwise noted.
Speaker #2: I will now turn the call over to Steve.
Speaker #3: Thank you, David. And good morning, everyone. Before I get into the business update, I want to take a moment to formally introduce David Black as our Chief earnings call in that Financial Officer on his first role.
Steve Menneto: Thank you, David, and good morning, everyone. Before I get into the business update, I want to take a moment to formally introduce David Black as our Chief Financial Officer on his first earnings call in that role. As many of you know, David was appointed CFO in November of last year after serving in several key financial leadership roles with Malibu Boats. David has already played an instrumental part in our financial organization and strategic planning, and he's been deeply involved in shaping the financial priorities that support our long-term growth and disciplined capital allocation approach. I'm confident you'll appreciate his insights as he walks through the quarter and our outlook shortly. I'm pleased to have him alongside as we continue to execute our strategy and drive shareholder value. Now, turning to the quarter.
Steven Menneto: Thank you, David, and good morning, everyone. Before I get into the business update, I want to take a moment to formally introduce David Black as our Chief Financial Officer on his first earnings call in that role. As many of you know, David was appointed CFO in November of last year after serving in several key financial leadership roles with Malibu Boats. David has already played an instrumental part in our financial organization and strategic planning, and he's been deeply involved in shaping the financial priorities that support our long-term growth and disciplined capital allocation approach. I'm confident you'll appreciate his insights as he walks through the quarter and our outlook shortly. I'm pleased to have him alongside as we continue to execute our strategy and drive shareholder value. Now, turning to the quarter.
Speaker #3: As many of you know, David was appointed CFO in November of last year after serving in several key financial leadership roles with MALIBU BOATS.
Speaker #3: David has already played an instrumental part in our financial organization and strategic planning. And he's been deeply involved in shaping the financial priorities that support our long-term growth and discipline capital allocation approach.
Speaker #3: I'm confident you'll appreciate his insights as he walks through the quarter and our outlook shortly. I'm pleased to have him alongside as we continue shareholder value.
Speaker #3: Now, turning to to execute our strategy and drive the quarter, we are pleased to report solid second quarter results as we enter the early boat show season.
Steve Menneto: We are pleased to report solid Q2 results as we enter the early boat show season. Net sales of $188.6 million came in ahead of our expectations, despite what remains a continued challenging retail environment, and Adjusted EBITDA margin was in line with our plan. While the retail environment is tracking as expected through Q1 and Q2 of the year, our Malibu year-end sales event was successful and outperformed the prior year, serving as an effective tool to drive December retail activity. The promotional environment remains competitive, but during both the sales event and the early boat shows, we were encouraged by the strong customer response for our new model year boats and the continued momentum across our brands.
Steven Menneto: We are pleased to report solid Q2 results as we enter the early boat show season. Net sales of $188.6 million came in ahead of our expectations, despite what remains a continued challenging retail environment, and Adjusted EBITDA margin was in line with our plan. While the retail environment is tracking as expected through Q1 and Q2 of the year, our Malibu year-end sales event was successful and outperformed the prior year, serving as an effective tool to drive December retail activity. The promotional environment remains competitive, but during both the sales event and the early boat shows, we were encouraged by the strong customer response for our new model year boats and the continued momentum across our brands.
Speaker #3: Net sales of 188.6 million came in ahead of our expectations despite what remains a continued challenging retail environment. And adjusted EBITDA margin was in line with our plan.
Speaker #3: While the retail environment is tracking as expected through the first two quarters of the year, our MALIBU year-end sales event was successful and outperformed the prior year, serving as an effective tool to drive December retail activity.
Speaker #3: The promotional environment remains competitive, but during both the sales event and the early boat shows, we were encouraged by the strong customer response for our new model year boats and the continued momentum across our brands.
Speaker #3: Looking ahead, we're excited to debut two additional model introductions at the Miami International Boat Show next week, where we will unveil the new Pursuit 286 and the Pathfinder 2800.
Steve Menneto: Looking ahead, we're excited to debut two additional model introductions at the Miami International Boat Show next week, where we will unveil the new Pursuit DC 286 and the Pathfinder 2800 Hybrid. We look forward to connecting with many of you there and showcasing our differentiated state-of-the-art products. Underscoring that differentiation, the Malibu 23 LSV is once again recognized by WakeWorld's Riders Choice Awards as Surf Boat of the Year, marking the sixth consecutive year we have received this honor. This recognition reflects our long track record of delivering performance, quality, and innovation, and reinforces our leadership position in the towboat segment. Customer-driven innovation remains central to our strategy and deeply embedded in how we operate. Regardless of the market environment, we continue to invest in our people, our partnerships, and our capabilities to push the pace of innovation and to elevate the entire ownership experience.
Steven Menneto: Looking ahead, we're excited to debut two additional model introductions at the Miami International Boat Show next week, where we will unveil the new Pursuit DC 286 and the Pathfinder 2800 Hybrid. We look forward to connecting with many of you there and showcasing our differentiated state-of-the-art products. Underscoring that differentiation, the Malibu 23 LSV is once again recognized by WakeWorld's Riders Choice Awards as Surf Boat of the Year, marking the sixth consecutive year we have received this honor. This recognition reflects our long track record of delivering performance, quality, and innovation, and reinforces our leadership position in the towboat segment. Customer-driven innovation remains central to our strategy and deeply embedded in how we operate. Regardless of the market environment, we continue to invest in our people, our partnerships, and our capabilities to push the pace of innovation and to elevate the entire ownership experience.
Speaker #3: We look forward to connecting with many of you there and showcasing our differentiated state-of-the-art products. Underscoring that differentiation, the MALIBU 23 LSVs once again recognized by Wake World's Rider's Choice Award as Surf Boat of the Year.
Speaker #3: Marking the sixth consecutive year we have received this honor. This recognition reflects our long track record of delivering performance quality and leadership position in the towboat innovation and reinforces our segment.
Speaker #3: Customer-driven innovation remains central to our strategy and deeply embedded in how we operate. Regardless of the market environment, we continue to invest in our people, our partnerships, and our capabilities to push the pace of innovation and to elevate the entire ownership experience.
Speaker #3: Guided by our build, innovate, and grow framework, we are focused on putting the boater at the center of everything we do. From performance, safety, and personalization on the water to technology, connectivity, and support throughout the ownership lifecycle.
Steve Menneto: Guided by our build, innovate, and grow framework, we are focused on putting the boater at the center of everything we do, from performance, safety, and personalization on the water, to technology, connectivity, and support throughout the ownership lifecycle. While much of this work happens behind the scenes, we are laying the foundation for future product introductions and expanded partnerships that we believe will further differentiate our brands, strengthen our dealer network, and position us to capture share and drive long-term value as the market normalizes. Turning to our dealers, we continue to work in close partnership with them as we navigate the current market environment, guided by our established playbook of prioritizing dealer health and tightly managing channel inventories. We are encouraged by the healthy and current inventory position of our model year 2026 boats, which are presenting well across our dealer network.
Steven Menneto: Guided by our build, innovate, and grow framework, we are focused on putting the boater at the center of everything we do, from performance, safety, and personalization on the water, to technology, connectivity, and support throughout the ownership lifecycle. While much of this work happens behind the scenes, we are laying the foundation for future product introductions and expanded partnerships that we believe will further differentiate our brands, strengthen our dealer network, and position us to capture share and drive long-term value as the market normalizes. Turning to our dealers, we continue to work in close partnership with them as we navigate the current market environment, guided by our established playbook of prioritizing dealer health and tightly managing channel inventories. We are encouraged by the healthy and current inventory position of our model year 2026 boats, which are presenting well across our dealer network.
Speaker #3: While much of this work happens behind the scenes, we are laying the foundation for future product introductions and expanded partnerships that we believe will further differentiate our brands, strengthen our dealer network, and position us to capture share and drive long-term value as the market normalizes.
Speaker #3: work in close partnership with them as we navigate the current market Turning environment, guided by our established playbook of prioritizing dealer health and tightly managing channel inventories.
Speaker #3: We are encouraged by the healthy and current inventory position of our model year 26 boats, which are presenting well across our dealer network. While the broader industry continues to work through a modest overhang on non-current inventory, this disciplined approach allows us to introduce new products with confidence, support our dealers in meeting retail demand, and position ourselves to capture share as the market stabilizes.
Steve Menneto: While the broader industry continues to work through a modest overhang on non-current inventory, this disciplined approach allows us to introduce new products with confidence, support our dealers in meeting retail demand, and position ourselves to capture share as the market stabilizes. In addition, our dealers continue to be encouraged by the early traction we are seeing with MBI Acceptance as we work closely with our financing partners to thoughtfully roll out this tool across our network. Program provides a competitive retail financing option, including rates as low as 3.99%, and gives dealers another effective way to engage customers and close sales. What began as a pilot within our Malibu and Axis brands is gaining momentum as we expand the program across our broader portfolio.
Steven Menneto: While the broader industry continues to work through a modest overhang on non-current inventory, this disciplined approach allows us to introduce new products with confidence, support our dealers in meeting retail demand, and position ourselves to capture share as the market stabilizes. In addition, our dealers continue to be encouraged by the early traction we are seeing with MBI Acceptance as we work closely with our financing partners to thoughtfully roll out this tool across our network. Program provides a competitive retail financing option, including rates as low as 3.99%, and gives dealers another effective way to engage customers and close sales. What began as a pilot within our Malibu and Axis brands is gaining momentum as we expand the program across our broader portfolio.
Speaker #3: In addition, our dealers continue to be encouraged by the early traction we are seeing with MBI acceptance as we work closely with our financing partners to thoughtfully roll out this tool across our network.
Speaker #3: Program provides our competitive retail financing option, 3.99%, and gives dealers including rates as low as another effective way to engage customers in close sales.
Speaker #3: What began as a pilot within our MALIBU and AXIS brands is gaining momentum as we expand the program across our broader portfolio. to build OEM to OEM relationships through We are also continuing our newly announced marine components business, which represents a natural extension of our vertically integrated business model.
Steve Menneto: We are also continuing to build OEM-to-OEM relationships through our newly announced Marine Components business, which represents a natural extension of our vertically integrated business model. Our initial focus has been on putting the right business systems and processes in place, and as the foundation comes together, we are beginning to see early traction with our soft grip flooring and trailer offerings, including engagement with two new customers, which provides an early proof point of adoption. While these initiatives remain in the early stages, we are focused on applying these learnings to further strengthen our capabilities, refine our approach, and thoughtfully expand this platform over time. We will provide updates as these efforts progress. Finally, I want to touch on our operational excellence and continuous improvement initiatives, which remain a hallmark of our organization, regardless of the market environment.
Steven Menneto: We are also continuing to build OEM-to-OEM relationships through our newly announced Marine Components business, which represents a natural extension of our vertically integrated business model. Our initial focus has been on putting the right business systems and processes in place, and as the foundation comes together, we are beginning to see early traction with our soft grip flooring and trailer offerings, including engagement with two new customers, which provides an early proof point of adoption. While these initiatives remain in the early stages, we are focused on applying these learnings to further strengthen our capabilities, refine our approach, and thoughtfully expand this platform over time. We will provide updates as these efforts progress. Finally, I want to touch on our operational excellence and continuous improvement initiatives, which remain a hallmark of our organization, regardless of the market environment.
Speaker #3: Our initial focus has been on putting the right business systems and processes in place. And as the foundation comes together, we are beginning to see early traction with our soft grip flooring and trailer offerings, including engagement with two new customers, which provides an early proof point of the early stages, we are focused on applying these learnings to further strengthen our capabilities, refine our adoption.
Speaker #3: approach, and thoughtfully expand this platform over time. We will While these initiatives remain in provide updates as these efforts
Speaker #1: Progress . Finally , I want to touch on our operational excellence and continuous improvement initiatives , which remain hallmark of a regardless of the market organization environment .
Speaker #1: We continue to , our regardless of the market environment , we continue leverage the to MBI advantage to drive quality , efficiency consistency across the business .
Steve Menneto: We continue to leverage the MBI advantage to drive quality, efficiency, and consistency across the business. During the quarter, we made further progress on our centralized sourcing initiatives, where we are seeing benefits across our brands as we leverage our scale to improve supply chain management, lower direct costs, and enhance quality controls. These efforts ultimately support a better customer experience and position us well to mitigate potential tariff impacts as we look to minimize price increases passed on to the consumer. Looking ahead, our expectations for the broader marine industry remain unchanged. We will continue to monitor signals for broader market recovery and manage the business guided by our priorities: protecting dealer health, maintaining operational discipline, and driving innovation. With that, I'll turn the call over to David for a detailed review of our financial results.
Steven Menneto: We continue to leverage the MBI advantage to drive quality, efficiency, and consistency across the business. During the quarter, we made further progress on our centralized sourcing initiatives, where we are seeing benefits across our brands as we leverage our scale to improve supply chain management, lower direct costs, and enhance quality controls. These efforts ultimately support a better customer experience and position us well to mitigate potential tariff impacts as we look to minimize price increases passed on to the consumer. Looking ahead, our expectations for the broader marine industry remain unchanged. We will continue to monitor signals for broader market recovery and manage the business guided by our priorities: protecting dealer health, maintaining operational discipline, and driving innovation. With that, I'll turn the call over to David for a detailed review of our financial results.
Speaker #1: quarter , we made further progress on our During the centralized sourcing initiatives where seeing benefits across our brands as we leverage our scale to improve chain management , lower supply costs direct and quality and controls enhance .
Speaker #1: we are ultimately These efforts support a better customer experience and position us mitigate impacts . As we tariff potential look to minimize price increases passed on to the consumer .
Speaker #1: Looking ahead , our expectations for marine the broader industry remain unchanged . We will continue to monitor signals for broader market recovery and manage the business guided by our priorities .
Speaker #1: Protecting health , maintaining operational dealer discipline driving innovation . With and that , I'll turn the call over to David for a review of our financial results .
David Black: Thanks, Steve. Our results in Q2 were slightly above our expectations. Net sales decreased 5.8% to $188.6 million, and unit volume decreased 9.5% to 1,106 units. The decrease in net sales was driven primarily by decreased unit volumes across all segments, resulting primarily from lower wholesale shipments and driven by unfavorable segment mix and unfavorable model mix in our Malibu segment, partially offset by a favorable model mix in our Cobalt and saltwater fishing segments and inflation-driven year-over-year price increases. From a mix perspective, Malibu and Axis represented approximately 46.4% of unit sales, saltwater fishing represented 25.5%, and Cobalt made up the remaining 28.1%.
David Black: Thanks, Steve. Our results in Q2 were slightly above our expectations. Net sales decreased 5.8% to $188.6 million, and unit volume decreased 9.5% to 1,106 units. The decrease in net sales was driven primarily by decreased unit volumes across all segments, resulting primarily from lower wholesale shipments and driven by unfavorable segment mix and unfavorable model mix in our Malibu segment, partially offset by a favorable model mix in our Cobalt and saltwater fishing segments and inflation-driven year-over-year price increases. From a mix perspective, Malibu and Axis represented approximately 46.4% of unit sales, saltwater fishing represented 25.5%, and Cobalt made up the remaining 28.1%.
Speaker #2: Thanks , Steve . Our second quarter were
Speaker #2: Results were in line with our expectations. Net sales, slightly above, decreased to $188.6 million, down 5.8%, and unit volume decreased 9.5% to 1,106 units.
Speaker #2: The decrease in net sales was driven primarily by detailed decreased unit across all volumes segments , resulting from lower wholesale primarily driven by unfavorable segment shipments mix and unfavorable model mix .
Speaker #2: In our Malibu segment, partially favorable in our mix model offset by a Cobalt and segments fishing and saltwater inflation over year price increases, mix perspective.
Speaker #2: from a Access Malibu and represented approximately 46.4% of unit sales . Saltwater driven year fishing represented 25.5% , and the remaining 28.1% . Consolidated net sales per increased unit 4.1% $170,544 per unit .
David Black: Consolidated net sales per unit increased 4.1% to $170,544 per unit. The increase in overall consolidated net sales per unit was driven primarily by a favorable model mix in our Cobalt and saltwater fishing segments and inflation-driven year-over-year price increases, partially offset by an unfavorable model mix in our Malibu segment and an unfavorable segment mix overall. We expect segment mix to remain unfavorable, pressuring ASPs throughout the fiscal year. This is primarily driven by a challenging year-over-year comparison, influenced by timing of production cuts across segments and the ongoing seasonal segment mix shift. Turning to profitability, gross profit decreased 32.9% to $25.1 million, and gross margin as a percentage of sales was 13.3%.
David Black: Consolidated net sales per unit increased 4.1% to $170,544 per unit. The increase in overall consolidated net sales per unit was driven primarily by a favorable model mix in our Cobalt and saltwater fishing segments and inflation-driven year-over-year price increases, partially offset by an unfavorable model mix in our Malibu segment and an unfavorable segment mix overall. We expect segment mix to remain unfavorable, pressuring ASPs throughout the fiscal year. This is primarily driven by a challenging year-over-year comparison, influenced by timing of production cuts across segments and the ongoing seasonal segment mix shift. Turning to profitability, gross profit decreased 32.9% to $25.1 million, and gross margin as a percentage of sales was 13.3%.
Speaker #2: The to overall consolidated net increase in unit was driven primarily mix . favorable model In our cobalt and saltwater fishing segments . And inflation driven year over year price increases , partially by an unfavorable mix in our Malibu model segment and an segment mix unfavorable offset overall .
Speaker #2: We expect mix to remain unfavorable , ASPs throughout the fiscal year . pressuring This is primarily driven by a challenging year over year production comparison timing of , influenced by cuts across segments seasonal segment ongoing shift and the mix .
Speaker #2: Turning to profitability, gross profit decreased to $25.1 million, and gross margin as a percentage of sales was 13.3%. This represents a decrease of 32.9%, or 540 basis points, compared to the prior year period.
David Black: This represents a decrease of 540 basis points compared to the prior year period. The decrease in gross margin was driven primarily by fixed cost deleverage across all segments due to lower sales and higher per unit labor and material costs across all segments. Selling and marketing expenses increased 1.4% year over year, driven primarily by higher personnel-related expenses. As a percentage of sales, selling and marketing expenses increased 20 basis points to 3.2%. General and administrative expenses decreased 21.5% or $5.7 million. The decrease was driven primarily by a decrease in legal fees, incentive pay, and stock-based compensation expense. As a percentage of sales, G&A expenses were 11%, which represents a 230 basis point decline versus the prior year.
David Black: This represents a decrease of 540 basis points compared to the prior year period. The decrease in gross margin was driven primarily by fixed cost deleverage across all segments due to lower sales and higher per unit labor and material costs across all segments. Selling and marketing expenses increased 1.4% year over year, driven primarily by higher personnel-related expenses. As a percentage of sales, selling and marketing expenses increased 20 basis points to 3.2%. General and administrative expenses decreased 21.5% or $5.7 million. The decrease was driven primarily by a decrease in legal fees, incentive pay, and stock-based compensation expense. As a percentage of sales, G&A expenses were 11%, which represents a 230 basis point decline versus the prior year.
Speaker #2: prior The gross margin was decrease in driven primarily by fixed cost deleverage across all segments , lower due to sales and higher per unit labor and costs across all segments .
Speaker #2: Selling and marketing expenses increased 1.4% year over year , driven by material higher personnel related expenses . As a percentage of primarily sales .
Speaker #2: Selling and marketing expenses increased 20 basis points to 3.2% . General and administrative expenses decreased 21.5% , or $5.7 million . The decrease was driven by a decrease in primarily fees and stock , incentive pay , compensation based expense .
Speaker #2: percentage of As a G&A expenses were 11% , which represents sales , a 230 basis point decline versus the prior year GAAP loss for the net was $2.5 million , compared to GAAP net of quarter $2.4 million in the year prior .
David Black: GAAP net loss for the quarter was $2.5 million, compared to GAAP net income of $2.4 million in the prior year. Adjusted EBITDA for the quarter decreased 52.5% to $8 million, and adjusted EBITDA margin decreased to 4.3% from 8.4% in the prior year. Non-GAAP adjusted net loss per share was $0.02, compared to adjusted net income of $0.32 per share in the prior year. This is calculated using a normalized C Corp tax rate of 24.5% and a basic weighted average share count of approximately 19.1 million shares. For a reconciliation of GAAP metrics to adjusted EBITDA and adjusted net loss income per share, please see the tables in our earnings release. Turning our attention to cash flow.
David Black: GAAP net loss for the quarter was $2.5 million, compared to GAAP net income of $2.4 million in the prior year. Adjusted EBITDA for the quarter decreased 52.5% to $8 million, and adjusted EBITDA margin decreased to 4.3% from 8.4% in the prior year. Non-GAAP adjusted net loss per share was $0.02, compared to adjusted net income of $0.32 per share in the prior year. This is calculated using a normalized C Corp tax rate of 24.5% and a basic weighted average share count of approximately 19.1 million shares. For a reconciliation of GAAP metrics to adjusted EBITDA and adjusted net loss income per share, please see the tables in our earnings release. Turning our attention to cash flow.
Speaker #2: Adjusted EBITDA for the quarter decreased 52.5% to $8 million, and adjusted EBITDA margin decreased to 4.3% from 8.4% in the prior year.
Speaker #2: non-GAAP adjusted net loss per share was $0.02 compared to adjusted income of net prior $0.32 per share in the . This is calculated using a normalized year c-corp tax of 24.5% and a basic weighted average share count of rate approximately 19.1 million shares for a GAAP reconciliation of metrics to EBITDA and adjusted net loss adjusted per share , income please in our see the tables earnings release our .
David Black: We generated $8.4 million of free cash flow during Q2, inclusive of $4.4 million of capital expenditures. During the quarter, we expanded our share repurchase program to $70 million, reflecting our board's confidence in our long-term strategy, strong financial position, and commitment to disciplined capital allocation. Consistent with that approach, we completed $20.8 million of share repurchases, representing 751,000 shares repurchased during the quarter, taking advantage of what we viewed as an attractive market conditions. We believe this was prudent use of capital alongside our ongoing investments in the business. Looking ahead, we will continue to be thoughtful and opportunistic in our capital deployment, balancing investments for growth with actions that prioritize shareholder value. Turning to our outlook for the full fiscal year. Our markets are performing as expected, and our view has not changed.
David Black: We generated $8.4 million of free cash flow during Q2, inclusive of $4.4 million of capital expenditures. During the quarter, we expanded our share repurchase program to $70 million, reflecting our board's confidence in our long-term strategy, strong financial position, and commitment to disciplined capital allocation. Consistent with that approach, we completed $20.8 million of share repurchases, representing 751,000 shares repurchased during the quarter, taking advantage of what we viewed as an attractive market conditions. We believe this was prudent use of capital alongside our ongoing investments in the business. Looking ahead, we will continue to be thoughtful and opportunistic in our capital deployment, balancing investments for growth with actions that prioritize shareholder value. Turning to our outlook for the full fiscal year. Our markets are performing as expected, and our view has not changed.
Speaker #2: cash Turning we generated attention to $8.4 million of free cash flow during Q2 , inclusive of $4.4 million of capital expenditures . flow , During the quarter , we our share repurchase to $70 million , program reflecting our confidence in our long term strategy , strong financial position , and commitment to disciplined capital .
Speaker #2: Consistent with that approach , we allocation completed $20.8 million of share repurchases , representing 751,000 shares repurchased quarter during the . Taking advantage of what we viewed as an attractive market , conditions .
Speaker #2: believe We this was capital alongside our ongoing investments in the prudent use of business . Looking ahead , we will be thoughtful and opportunistic in our capital continue to deployment , investments for growth with actions that prioritize shareholder value .
David Black: We continue to anchor our outlook with the expectation that our markets will decline in the range of mid to high single digits for our fiscal year. With that said, for the full fiscal year, we expect sales to be flat to down mid-single digits year-over-year. For Q3, we expect net sales to be in the range of $198 million to $202 million. We anticipate consolidated Adjusted EBITDA margin for the full fiscal year to be in the range of 8% to 9%. As we mentioned last quarter, this guidance incorporates a modest direct impact to our fiscal 2026 cost structure due to tariffs, which we continue to estimate between 1.5% and 3% of cost of sales, assuming the current tariff rates. For Q3, we expect Adjusted EBITDA margins of approximately 8.5%.
David Black: We continue to anchor our outlook with the expectation that our markets will decline in the range of mid to high single digits for our fiscal year. With that said, for the full fiscal year, we expect sales to be flat to down mid-single digits year-over-year. For Q3, we expect net sales to be in the range of $198 million to $202 million. We anticipate consolidated Adjusted EBITDA margin for the full fiscal year to be in the range of 8% to 9%. As we mentioned last quarter, this guidance incorporates a modest direct impact to our fiscal 2026 cost structure due to tariffs, which we continue to estimate between 1.5% and 3% of cost of sales, assuming the current tariff rates. For Q3, we expect Adjusted EBITDA margins of approximately 8.5%.
Speaker #2: mid to high single digits for our fiscal that said , for the full fiscal . With to be flat to down mid-single year , we year over digits year .
Speaker #2: Q3 , we For expect net sales to be in the range of 198 million to 202 million . We anticipate consolidated adjusted EBITDA margin for the full fiscal year to be in the range of 8% to 9% , as we mentioned last quarter , this guidance incorporates a modest direct impact to our fiscal 2026 cost structure due to tariffs , which we continue to estimate between 1.5% and 3% of cost of sales .
Speaker #2: Assuming tariff rates for Q3, we expect adjusted EBITDA margins of approximately 8.5% to close. We have delivered year-to-date results consistent with our expectations.
David Black: To close, we have delivered year-to-date results consistent with our expectations. Retail trends are tracking with our outlook for the year, and with dealer inventories in a healthy position, we are well positioned to execute through the back half of the fiscal year. We are closely monitoring market conditions, and if demand improves, we have the capacity and operational flexibility to scale production in line with retail. In the meantime, our business model remains resilient, and we continue to generate positive free cash flow despite a softer market. Our focus remains on disciplined execution, operational excellence, and the prudent deployment of capital to drive long-term value for our shareholders. With that, I'd like to open the call up for questions.
David Black: To close, we have delivered year-to-date results consistent with our expectations. Retail trends are tracking with our outlook for the year, and with dealer inventories in a healthy position, we are well positioned to execute through the back half of the fiscal year. We are closely monitoring market conditions, and if demand improves, we have the capacity and operational flexibility to scale production in line with retail. In the meantime, our business model remains resilient, and we continue to generate positive free cash flow despite a softer market. Our focus remains on disciplined execution, operational excellence, and the prudent deployment of capital to drive long-term value for our shareholders. With that, I'd like to open the call up for questions.
Speaker #2: Retail trends are tracking with the outlook for year and with dealer our inventories in a healthy we are position , well to execute of the back half fiscal year .
Speaker #2: We are closely monitoring market conditions, and if demand improves, we have the capacity and flexibility to scale operationally in line with retail. In the meantime, our model remains resilient, and we continue to generate positive free flow despite a softer cash market.
Speaker #2: Our remains on execution , operational excellence and the prudent of capital to drive deployment value for long term our With that , shareholders .
Speaker #2: I'd like to open the call up for questions.
Operator: As a reminder, to ask a question, you will need to press star 1 on your touchtone telephone. If your question has been answered or you wish to withdraw your question, please press the star 2 keys. Please stand by while we compile the Q&A roster. The first question comes from Joe Altobello with Raymond James. Please go ahead.
Operator: As a reminder, to ask a question, you will need to press star 1 on your touchtone telephone. If your question has been answered or you wish to withdraw your question, please press the star 2 keys. Please stand by while we compile the Q&A roster. The first question comes from Joe Altobello with Raymond James. Please go ahead.
Speaker #3: As a reminder to ask a question , you will need to press touch tone telephone star . If your question has been answered or you wish to one on your withdraw your question , please press the star .
Speaker #3: Two keys . stand by while we compile the Q&A roster Please . The first question comes from Joe with Raymond Altobello James . Please go ahead .
[Analyst]: Hey, good morning. This is Martin on for Joe. I was wondering if you can quantify how much the higher boat show expenses weighed on EBITDA margin, whether that's year-over-year or quarter-over-quarter.
Operator: Hey, good morning. This is Martin on for Joe. I was wondering if you can quantify how much the higher boat show expenses weighed on EBITDA margin, whether that's year-over-year or quarter-over-quarter.
Speaker #4: morning . Hey . Good Martin on for Joe . I was wondering if you can quantify how much the higher boat show expenses .
Speaker #4: Wait on EBITDA margin , whether that's year over year or quarter over quarter
David Black: Yeah, when we think about the year-over-year promo related to unit sales event, and, you know, kind of the normal cadence, you know, for Q2, it's about 50 BPS, of, you know, cost pressure that we saw for the quarter.
David Black: Yeah, when we think about the year-over-year promo related to unit sales event, and, you know, kind of the normal cadence, you know, for Q2, it's about 50 BPS, of, you know, cost pressure that we saw for the quarter.
Speaker #4: ?
Speaker #2: about the year over Yeah . promo When we think urine sales and , event kind of the normal cadence , you know , for Q2 , it's about 50 Bips of you know , cost pressure that we saw for the quarter .
[Analyst]: Right. That's, that's really helpful. And Evan, you kind of mentioned a little bit about inventories. It sounds like the industry has a little bit of an overhang, but you're a little bit better off. Can we get an idea about the delta between your inventories and kind of what's going on in the industry?
David Black: Right. That's, that's really helpful. And Evan, you kind of mentioned a little bit about inventories. It sounds like the industry has a little bit of an overhang, but you're a little bit better off. Can we get an idea about the delta between your inventories and kind of what's going on in the industry?
Speaker #4: think Right . I that's helpful . And , you know , you kind of mentioned about inventories . It sounds like the industry will have a but a you're little bit off .
Speaker #4: Can we get an idea about the delta between your inventories and kind of on in the what's going, a little bit of an update?
David Black: Yeah, I think the industry as a whole is in a healthy position. There are pockets, as usual, of kind of elevated weeks on hand, but from our perspective, we've done the, you know, the appropriate thing to address those, and we feel good about kind of where our weeks on hand are from a historical perspective.
David Black: Yeah, I think the industry as a whole is in a healthy position. There are pockets, as usual, of kind of elevated weeks on hand, but from our perspective, we've done the, you know, the appropriate thing to address those, and we feel good about kind of where our weeks on hand are from a historical perspective.
Speaker #2: the I think a whole industry as is in Yeah , position .
Speaker #2: the I think a whole industry as overhang , usual , pockets , as There are of kind of elevated hand . But from our weeks on industry perspective , done the , you know , appropriate thing to , to the address those .
Speaker #2: And we feel good about kind of where our weeks are from, on hand, a historical perspective.
[Analyst]: Great. Thank you, and best of luck.
David Black: Great. Thank you, and best of luck.
Speaker #4: Great . Thank you and best of luck .
David Black: Thanks.
David Black: Thanks.
Speaker #2: Thanks .
Operator: The next question comes from Mike Albanese with Benchmark. Please go ahead.
Operator: The next question comes from Mike Albanese with Benchmark. Please go ahead.
Speaker #3: The next from Mike comes with Please go benchmark . ahead .
Michael Albanese: Yeah, thank you. Good morning, guys.
Michael Albanese: Yeah, thank you. Good morning, guys.
David Black: Hey, Mike.
David Black: Hey, Mike.
Speaker #5: Thank you . Good morning guys Yeah . .
Michael Albanese: Just was wondering if you could maybe elaborate? I know it's early, but, you know, I believe you wanted to get the MBI Acceptance program rolled out for the boat shows. Could you just talk about any incremental lift you're getting there, or whether you're seeing that translate to improved conversion, or is it just too early to tell?
Michael Albanese: Just was wondering if you could maybe elaborate? I know it's early, but, you know, I believe you wanted to get the MBI Acceptance program rolled out for the boat shows. Could you just talk about any incremental lift you're getting there, or whether you're seeing that translate to improved conversion, or is it just too early to tell?
Speaker #5: , just was wondering if you could . maybe elaborate . I
Speaker #5: but , you know , early , you wanted to get the MBI program acceptance for the boat shows . Could you just talk about incremental any lift you're getting there , or whether seeing you're translate to improved conversion ?
Speaker #5: it just too early to tell Mike Or is ?
Steve Menneto: It's early. No question, it's early. We just got out, you know, in our other brands. But we did see a couple of the boat shows, a higher take rate on our 3.99. So it's encouraging. You know, so not enough to make a trend and start reporting trends and so forth, but early, early, you know, feedback from our dealers was very positive from a driving traffic to the booths at the, the, boat shows, as well as it did help close handful.
Steven Menneto: It's early. No question, it's early. We just got out, you know, in our other brands. But we did see a couple of the boat shows, a higher take rate on our 3.99. So it's encouraging. You know, so not enough to make a trend and start reporting trends and so forth, but early, early, you know, feedback from our dealers was very positive from a driving traffic to the booths at the, the, boat shows, as well as it did help close handful.
Speaker #6: Its early , no question . It's early . We just got out , you know , in brands our other . But we did couple of boat see a shows , a higher take rate on our 3.99 .
Speaker #6: So it's you know . encouraging So not enough to make a start reporting trend and trends and so forth . But early early you know , feedback from our dealers was very positive from a traffic thriving to the at the booths boat shows , as well it did help close handful of .
Speaker #6: , as
Michael Albanese: Awesome. Thank you. And then if I could just kind of ask the same question regarding your initiatives on the centralized sourcing. You know, if you could just kind of elaborate on maybe any cost savings you're getting out of that thus far.
Michael Albanese: Awesome. Thank you. And then if I could just kind of ask the same question regarding your initiatives on the centralized sourcing. You know, if you could just kind of elaborate on maybe any cost savings you're getting out of that thus far.
Speaker #5: Thank you . Awesome . And then if I could just kind of ask the same regarding your question centralized initiatives on the sourcing , you know , if you kind of could just elaborate on maybe any cost savings you're getting out thus far .
David Black: Yeah, no, and if you look at our guide and what that implies from a margin growth on the back portion of the year, you know, the way we're thinking about that, you know, a big portion of that is going to come from the centralized sourcing efforts that we've undertaken, as you indicated. You know, we're starting to see that hit the PNL, and we expect that to continue on the back portion of the year. So we think there's a meaningful benefit to be seen as we move through the remainder of this fiscal year and then beyond.
David Black: Yeah, no, and if you look at our guide and what that implies from a margin growth on the back portion of the year, you know, the way we're thinking about that, you know, a big portion of that is going to come from the centralized sourcing efforts that we've undertaken, as you indicated. You know, we're starting to see that hit the PNL, and we expect that to continue on the back portion of the year. So we think there's a meaningful benefit to be seen as we move through the remainder of this fiscal year and then beyond.
Speaker #5: of that
Speaker #2: no . Yeah , you if you look at our guide and what that implies from a And if growth on the margin back year , you know , the way we're thinking about that , portion of the you know , a big portion of that is going to come from the centralized sourcing that we've you as you indicated , you know , we're starting to see that hit the PNL .
Speaker #2: expect And we that efforts to to the back So portion of so the year . continue on we think meaningful there's a to to be seen benefit as we move through the remainder of this fiscal then and beyond then .
Michael Albanese: Awesome. Thank you, guys.
Michael Albanese: Awesome. Thank you, guys.
Speaker #5: Awesome .
Speaker #5: .
Operator: The next question comes from Kevin Condon with Baird. Please go ahead.
Operator: The next question comes from Kevin Condon with Baird. Please go ahead.
Speaker #3: The guys question comes from Kevin with Condon Baird . Please go ahead .
[Analyst]: Hi, good morning, and thanks for taking my question as well. I wanted to ask if you've seen any shift or sensed any change in dealer sentiment amongst your dealer group, just as we get a few boat shows in 2026, and just any shift in terms of attitude towards taking on inventory ahead of the season?
Operator: Hi, good morning, and thanks for taking my question as well. I wanted to ask if you've seen any shift or sensed any change in dealer sentiment amongst your dealer group, just as we get a few boat shows in 2026, and just any shift in terms of attitude towards taking on inventory ahead of the season?
Speaker #7: Hi . year and Good morning and thanks for taking my question as well . I ask if you've any wanted to shift or since any in change dealer amongst sentiment your dealer group .
Speaker #7: Just as we get a few boat shows in in 2026 and just shift, in terms of attitude, towards taking on inventory ahead of the season.
Steve Menneto: You know, the feedback from the dealers has been, you know, been all along mixed retail. There have been shows that have been positive, other shows that have been a little weaker, but overall, it's been a positive trend. It has resulted in additional orders, of course, because we do sell some, you know, custom boats and so on. So, you know, again, we're, you know, we're happy about where the boat shows are going. It's meeting our expectations and, you know, we have a lot more in front of us, so more to come as we get through the early part of the season here and, you know, of course, Miami next week. So, we're encouraged and, you know, that's why, you know, like we talked about in our prepared remarks is, you know, we have our guidance unchanged.
Steven Menneto: You know, the feedback from the dealers has been, you know, been all along mixed retail. There have been shows that have been positive, other shows that have been a little weaker, but overall, it's been a positive trend. It has resulted in additional orders, of course, because we do sell some, you know, custom boats and so on. So, you know, again, we're, you know, we're happy about where the boat shows are going. It's meeting our expectations and, you know, we have a lot more in front of us, so more to come as we get through the early part of the season here and, you know, of course, Miami next week. So, we're encouraged and, you know, that's why, you know, like we talked about in our prepared remarks is, you know, we have our guidance unchanged.
Speaker #6: The any any the feedback from the dealers has been , we've saying all been along you know , mixed retail . There been have shows that positive .
Speaker #6: Other shows that that have been a but overall little weaker , it's positive trend . been a resulted in has additional orders , of in course , because we do sell some boats on .
Speaker #6: and so you know , So , again , we're we're we're about where the boat shows happy going . It's meeting our are expectations .
Speaker #6: And , you know , we have a lot more in front of us . more to So come as we get to the early part of the season you know , of here .
Speaker #6: course , Miami next week . So And , we're And you know , that's why , you encouraged . like we talked about our in know remarks is , you prepared know , we have our guidance unchanged .
[Analyst]: And then, apologies if this was a metric you gave last quarter or not, but in terms of the guide, is there a thought about keeping inventory flat or taking boats out of the channel just as you look like end of fiscal year to end of fiscal year?
Steven Menneto: And then, apologies if this was a metric you gave last quarter or not, but in terms of the guide, is there a thought about keeping inventory flat or taking boats out of the channel just as you look like end of fiscal year to end of fiscal year?
Speaker #7: then And apologies if this a was metric you gave last quarter or not . But in terms of the guide , is there a thought about keeping inventory flat or boats out taking of the just as you look like end of fiscal channel of fiscal year
David Black: Yeah, no, I think just given the fact that we expect the market to decline, you would expect there to be some level of destocking. That being said, you know, as we move through the back portion of the year, we expect that to stabilize. And to the extent that the market continues on that trend, from a positivity perspective, then we have the chance to begin, you know, matching retail with wholesale. But we do imply some level of destocking for this fiscal year.
David Black: Yeah, no, I think just given the fact that we expect the market to decline, you would expect there to be some level of destocking. That being said, you know, as we move through the back portion of the year, we expect that to stabilize. And to the extent that the market continues on that trend, from a positivity perspective, then we have the chance to begin, you know, matching retail with wholesale. But we do imply some level of destocking for this fiscal year.
Speaker #2: Yeah , no ,
Speaker #2: I think just that we given the fact ? expect the
Speaker #2: to decline , you market would expect there to be some level of destocking being said , you year to end know , as the as we move through the back portion of the year , we expect that to stabilize and to the that the market continues on that trend from a positive perspective to begin the chance retail with But but wholesale .
Speaker #2: we than we have do that some level of imply destocking for for this fiscal year .
[Analyst]: Thanks.
David Black: Thanks.
Speaker #7: Thanks .
Operator: The next question comes from Brandon Rolle with Loop Capital. Please go ahead.
Operator: The next question comes from Brandon Rolle with Loop Capital. Please go ahead.
Speaker #3: next The question comes from Brandon Raleigh Loop Capital . Please with go ahead .
[Analyst]: Good morning. Thank you for taking my question. Just on the higher labor costs, could you talk about your outlook for labor costs moving forward? And if you see if there's any material relief as well on that side. Thank you.
Operator: Good morning. Thank you for taking my question. Just on the higher labor costs, could you talk about your outlook for labor costs moving forward? And if you see if there's any material relief as well on that side. Thank you.
Speaker #8: morning . Thank Good you for taking my question . Just on the higher costs , labor could you talk about your labor outlook for costs moving forward ?
Speaker #8: if you see if And any there's material as well on that side ? Thank relief .
David Black: Yeah, I think, you know, we're always focused on operational effectiveness and excellence. And so, you know, we expect as we move through the remainder of the year, not only from a labor per unit cost, but from the centralized sourcing efforts that we talked about, we'll start seeing those benefits flow through and into margin, into those quarters.
David Black: Yeah, I think, you know, we're always focused on operational effectiveness and excellence. And so, you know, we expect as we move through the remainder of the year, not only from a labor per unit cost, but from the centralized sourcing efforts that we talked about, we'll start seeing those benefits flow through and into margin, into those quarters.
Speaker #2: Yeah , I think , you know , we're always focused on operational effectiveness and excellence . And so , we expect as we the remainder of the you know , move through year , not only from a labor per unit cost , centralized sourcing efforts that from the we talked about .
Speaker #2: We'll start seeing those benefits flow through into margin, into those quarters.
[Analyst]: ... Okay, great. And just on the competitive landscape, just in terms of the Ski/Wake category as a whole, are you seeing any bounce back for the category versus the broader industry? And, is there anything that you feel like you could do as an OEM to get people reinvigorated in the category? Thank you.
David Black: ... Okay, great. And just on the competitive landscape, just in terms of the Ski/Wake category as a whole, are you seeing any bounce back for the category versus the broader industry? And, is there anything that you feel like you could do as an OEM to get people reinvigorated in the category? Thank you.
Speaker #8: Okay , great . And just on the competitive , just landscape in terms of the ski category wake whole , seeing any bounce back as a for the category versus industry ?
Speaker #8: Is there anything that you feel like you could do OEM and get people more broadly reinvigorated in the category? Thank you.
Steve Menneto: We're seeing we're the same. And as far as what we can, you know, there is a lot of effort among, you know, what we're at Malibu Axis and then also our competitive groups that are, you know, on Ski/Wake, in segment. You know, we're all trying to continue to push, you know, the growth of the segment or get back to growth in the segment. And, you know, we'll continue those efforts and on our own end, as we work together in some of our, you know, some of our marine groups that we team up to do, you know, and execute those efforts.
Steven Menneto: We're seeing we're the same. And as far as what we can, you know, there is a lot of effort among, you know, what we're at Malibu Axis and then also our competitive groups that are, you know, on Ski/Wake, in segment. You know, we're all trying to continue to push, you know, the growth of the segment or get back to growth in the segment. And, you know, we'll continue those efforts and on our own end, as we work together in some of our, you know, some of our marine groups that we team up to do, you know, and execute those efforts.
Speaker #6: we're However , still seeing the same . And as what as far we , you know , there can of effort amongst what we're executing at Melville , Texas .
Speaker #6: And then also our competitive group as other , you know , on Wake in segment , you know , we're trying to all continue to push , you know , the segment or get back to growth in the segment .
Speaker #6: And , you know , we'll continue those . And on our efforts as we work together in some of our , you know , some of our marine groups that we that we team up to do , you know , and execute those efforts .
[Analyst]: Great. Thank you.
Steven Menneto: Great. Thank you.
Speaker #8: Great . Thank you .
Operator: The next question comes from Jamie Katz with Morningstar. Please go ahead.
Operator: The next question comes from Jamie Katz with Morningstar. Please go ahead.
Speaker #3: The question comes next from Jamie Morningstar. Go ahead.
Jaime Katz: Hi, good morning. I guess when I look at the Q3 EBITDA margin guidance of 8.5, you know, it looks like it implies the Q4 is going to have some pretty significant EBITDA margin expansion. And I understand that there are these sourcing, you know, benefits that you're getting and gains from MBI, maybe, that go into that. But what gives you guys, I guess, confidence that you can extract that much operating leverage out of the business when the industry is still sort of flattish?
Jaime Katz: Hi, good morning. I guess when I look at the Q3 EBITDA margin guidance of 8.5, you know, it looks like it implies the Q4 is going to have some pretty significant EBITDA margin expansion. And I understand that there are these sourcing, you know, benefits that you're getting and gains from MBI, maybe, that go into that. But what gives you guys, I guess, confidence that you can extract that much operating leverage out of the business when the industry is still sort of flattish?
Speaker #9: Hi . Good
Speaker #9: . I I look guess when at Katz with third quarter EBITDA margin guidance of eight and a half , you know , it looks like it implies the fourth quarter is going to pretty have some significant EBITDA margin expansion .
Speaker #9: And I understand that there are these sourcing benefits that you're gains from MBI . Maybe that go into that . But gives you what guys , I guess confidence that can extract that much you leverage out of the business when the industry is still sort of flattish ?
David Black: Yeah, Jamie. Hey, this is David. So, I think, you know, I break it into three different buckets from a lever perspective. So, you know, the biggest portion of that, we expect sequential growth on top line. And so as we move through Q3 and Q4, we expect to get fixed cost leverage, you know, benefit. And then the centralized sourcing, we've been working on that, you know, since Steve started here, and, you know, we're seeing some pretty significant benefits, but they haven't made their way into the P&L yet. And so we're working through that higher cost inventory, and we expect that to be a big driver in the back portion of the year. And then, obviously, you know, as inventory stabilize, we expect promotional dollars to decrease as well.
David Black: Yeah, Jamie. Hey, this is David. So, I think, you know, I break it into three different buckets from a lever perspective. So, you know, the biggest portion of that, we expect sequential growth on top line. And so as we move through Q3 and Q4, we expect to get fixed cost leverage, you know, benefit. And then the centralized sourcing, we've been working on that, you know, since Steve started here, and, you know, we're seeing some pretty significant benefits, but they haven't made their way into the P&L yet. And so we're working through that higher cost inventory, and we expect that to be a big driver in the back portion of the year. And then, obviously, you know, as inventory stabilize, we expect promotional dollars to decrease as well.
Speaker #2: Jamie . Hey , Yeah . David . So , so I think , this is you know , I break it into three different buckets from a from a lever perspective .
Speaker #2: So , you know , the biggest portion of that we expect sequential growth on top line . And so as we move through Q3 and Q4 , we expect to get fixed cost leverage .
Speaker #2: You benefit . And know , centralized sourcing we've been working on know , started here . And , You seeing some pretty significant that .
Speaker #2: benefits , haven't made their way into PNL yet . the And so we're working through that cost higher inventory . And we expect that to , to be a to big driver back portion of the year .
Speaker #2: then And obviously , you know , as inventory stabilize , we expect promotional dollars to to decrease as well . So I think those three things collectively together are the main drivers from from a margin growth a perspective , in the back portion of the year .
David Black: So I think those three things collectively together are the main drivers from a margin growth perspective in the back portion of the year.
David Black: So I think those three things collectively together are the main drivers from a margin growth perspective in the back portion of the year.
Jaime Katz: Yeah, I think it sounds like the promotions were not mentioned as problematic in the last quarter. So is there anything that you guys have seen in the cadence of promotions, that's noteworthy?
Jaime Katz: Yeah, I think it sounds like the promotions were not mentioned as problematic in the last quarter. So is there anything that you guys have seen in the cadence of promotions, that's noteworthy?
Speaker #10: Yeah, I think it.
Speaker #9: It sounds like the promotions were not mentioned as problematic in the last quarter. So, is there anything that you guys have seen in the cadence of promotions that's noteworthy?
David Black: No, I -- you know, actually, as we think about it, this is more of a return to normal. We had a more successful, you know, year-end sales event than what we were anticipating, and that kind of drove some of that promotional dollars. But as we move into the back portion of the year, you know, if you look back pre-pandemic, the cadence was always margin would grow over the back portion as long with top line. And so we expect that to return, as we move into kind of a more normalized environment.
David Black: No, I -- you know, actually, as we think about it, this is more of a return to normal. We had a more successful, you know, year-end sales event than what we were anticipating, and that kind of drove some of that promotional dollars. But as we move into the back portion of the year, you know, if you look back pre-pandemic, the cadence was always margin would grow over the back portion as long with top line. And so we expect that to return, as we move into kind of a more normalized environment.
Speaker #2: No . You know , actually , as we think about it , this is more of a return to normal . We had a more successful , you know , year in event than what we were anticipating .
Speaker #2: And that sales kind of drove some of that promotional portion of as we the back move into the know , if you look back year , you pre-pandemic , the cadence was always margin over the back would grow portion as as long , with long top line .
Speaker #2: And so we expect that to as we move return into kind of a more normalized environment .
Jaime Katz: Okay. And if I can ask one last one: Any initial thoughts on the tie-up that was announced this morning and how that impacts you guys competitively? And maybe why or why not that would be a good type of strategic effort for you guys to look for?
Jaime Katz: Okay. And if I can ask one last one: Any initial thoughts on the tie-up that was announced this morning and how that impacts you guys competitively? And maybe why or why not that would be a good type of strategic effort for you guys to look for?
Speaker #10: Okay .
Speaker #9: And if I can ask one last one , any initial thoughts on tie up that was announced this morning and how that impacts you guys the competitively ?
Speaker #9: why or And maybe why not ? That be a good would of strategic effort for you type to to look for guys
David Black: Yeah.
David Black: Yeah.
Steve Menneto: Yeah, Jamie, go ahead, David.
Steven Menneto: Yeah, Jamie, go ahead, David.
Speaker #2: yeah . Yeah ,
Speaker #6: Jamie , know , go ahead .
David Black: No, as I say, yeah, I think from our perspective, we don't typically comment on competitors' strategic decisions.
David Black: No, as I say, yeah, I think from our perspective, we don't typically comment on competitors' strategic decisions.
Speaker #2: Yeah . I think from our we don't typically comment on competitor strategic decisions . perspective But from our perspective , you know we're going to
Jaime Katz: Right.
Jaime Katz: Right.
David Black: But from our perspective, you know, we're going to continue to focus on our capital allocation priorities and growing the business according to our strategic vision. So, you know, we look forward to the future under those pretenses.
David Black: But from our perspective, you know, we're going to continue to focus on our capital allocation priorities and growing the business according to our strategic vision. So, you know, we look forward to the future under those pretenses.
Speaker #2: focus on our capital allocation priorities and business according to our growing the strategic vision . And so , you know , we look forward to the future under those those pretenses
Jaime Katz: Thank you.
Jaime Katz: Thank you.
Speaker #2: .
Speaker #10: you Thank you
Speaker #10: .
Operator: The next question comes from Griffin Bryan with D.A. Davidson. Please go ahead.
Operator: The next question comes from Griffin Bryan with D.A. Davidson. Please go ahead.
Speaker #3: The question comes from Brian with D.A. Davidson. Please go ahead, Griffin.
[Analyst]: Yeah, thanks. Most of my questions have been answered already. I guess kind of piggybacking on the M&A front, can you just kind of give us an update on what, what your pipeline looks like and if you're seeing anything else out there in terms of potential deals that you look on, maybe some other boat segments that you might be trying to get into? Thanks.
Operator: Yeah, thanks. Most of my questions have been answered already. I guess kind of piggybacking on the M&A front, can you just kind of give us an update on what, what your pipeline looks like and if you're seeing anything else out there in terms of potential deals that you look on, maybe some other boat segments that you might be trying to get into? Thanks.
Speaker #11: Yeah . Thanks . Most of next been answered already . I guess kind of questions have on the my can you piggybacking give us an just kind of update on what your looks pipeline like ?
Speaker #11: And if you're else out seeing anything there in terms of potential deals that you look on , maybe some other segments that you might be trying to get into , thanks .
Steve Menneto: Yeah. I mean, go ahead, Steve. And what we're like... I'll just say we, the diligence we're doing, you know, and we talked about today, we'll continue to do that. And, we're looking for opportunities for our, you know, looking for those opportunities and working those opportunities and so forth. And if there's any future report, we'll definitely, we'll be there in the market. Thanks.
Steven Menneto: Yeah. I mean, go ahead, Steve. And what we're like... I'll just say we, the diligence we're doing, you know, and we talked about today, we'll continue to do that. And, we're looking for opportunities for our, you know, looking for those opportunities and working those opportunities and so forth. And if there's any future report, we'll definitely, we'll be there in the market. Thanks.
Speaker #2: Yeah .
Speaker #6: Yeah . I mean .
Speaker #2: Go Steve .
Speaker #6: And what are like all just say we
Speaker #6: . ahead , The diligence doing , you know , and we talked about today we'll continue that to do we'll look opportunities for for our .
Speaker #6: You know looking for those opportunities and working those opportunities and so forth . And anything in if there's future to the report , we'll definitely will be there in the market .
Speaker #6: Thanks .
Operator: I'm not showing any further questions at this time. This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: I'm not showing any further questions at this time. This concludes today's conference call. Thank you for participating. You may now disconnect.
Speaker #3: any I'm not showing further this questions at time . This concludes conference call . Thank you today's You may participating . for now disconnect .
