Malibu Boats Q3 2025 Earnings Report

Malibu Boats EPS Results

• Actual EPS: $0.72
• Consensus EPS: $0.66
• Beat/Miss: Beat by +$0.06
• One Year Ago EPS: $0.63

Malibu Boats Revenue Results

• Actual Revenue: $228.66 million
• Expected Revenue: $226.44 million
• Beat/Miss: Beat by +$2.22 million
• YoY Revenue Growth: +12.40%

Malibu Boats Announcement Details

• Quarter: Q3 2025
• Date: 5/8/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, May 8, 2025
• Conference Call Time: 8:30AM ET

Malibu Boats (NASDAQ:MBUU) designs, engineers, manufactures, markets, and sells a range of recreational powerboats. It operates through three segments: Malibu, Saltwater Fishing, and Cobalt. The company provides performance sport boats, and sterndrive and outboard boats under the Malibu, Axis, Pursuit, Maverick, Cobia, Pathfinder, Hewes, and Cobalt brands. Its products are used for a range of recreational boating activities, including water sports, such as water skiing, wakeboarding, and wake surfing; and general recreational boating and fishing. The company sells its products through independent dealers in North America, Europe, Asia, the Middle East, South America, South Africa, and Australia/New Zealand. Malibu Boats, Inc. was founded in 1982 and is based in Loudon, Tennessee.

Malibu Boats Q3 2025 Earnings Call Transcript

Key Takeaways

• Malibu Boats delivered 12.4% net sales growth to $228.7 million in Q3, with unit volume up 12.8%, adjusted EBITDA margin expanding 40 bps to 12.4%, GAAP net income up 119%, and over $15 million in operating cash flow.
• The company revised full-year guidance, now expecting net sales down 3% to 5% and adjusted EBITDA margins of 9–10%, prioritizing long-term dealer and brand health amid weaker retail demand.
• Innovation and premium positioning drove ASP gains and market share, with nearly 40% of Malibu and Cobalt boat show sales from new models and a 380 bps share gain at the Rowan facility for Cobalt production.
• Dealer inventories are at healthy, below-last-year levels, and Malibu Boats is actively calibrating production to real-time retail dynamics, targeting inventory weeks in the mid-teens by June.
• Tariffs are not expected to materially impact FY25 costs, as the company will leverage its vertically integrated U.S. manufacturing and supply chain initiatives to mitigate potential increases.

Presentation

[Operator]

Good morning and welcome to Malibu Boats Conference Call to discuss Third Quarter Fiscal Year twenty twenty five 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.

[Operator]

On the call today from management are Mr. Steve Minetto, Chief Executive Officer and Mr. Bruce Beckman, Chief Financial Officer. I will now turn the call over to Mr. Beckman to get it started.

[Operator]

Please go ahead, sir.

[Bruce Beckman, Chief Financial Officer at Malibu Boats]

Thank you, and good morning, everyone. Joining me on today's call is our CEO, Steve Minero. On the call, Steve will provide commentary on the business, and I will discuss our third quarter of fiscal year twenty twenty five financials. We will then open up the call for questions. A press release covering the company's fiscal third quarter twenty twenty five results was issued today, and a copy of that press release can be found in the Investor Relations section of the company's website.

[Bruce Beckman, Chief Financial Officer at Malibu Boats]

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 that might affect future results are discussed in our filings with the SEC, and we encourage you to review these filings for a more detailed description 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 fully distributed net income and adjusted fully distributed net income per share. Reconciliations of these GAAP financial measures to non GAAP financial measures are included in our earnings release.

[Bruce Beckman, Chief Financial Officer at Malibu Boats]

Finally, during today's prepared remarks, comparisons are to Q3 of fiscal twenty twenty four unless otherwise noted. I will now turn the call over to Steve.

[Steve Menneto, CEO & President at Malibu Boats]

Thank you, Bruce, and thank you all for joining today's call. Our results this quarter demonstrate solid execution in an environment that remains challenging. Both Q3 sales and adjusted EBITDA margins finished above our guidance expectations for the quarter.

[Steve Menneto, CEO & President at Malibu Boats]

We are successfully navigating continued industry softness. Our premium brands and feature rich offerings continue to resonate with customers as evidenced by our mix driven ASP increases in all segments. And as expected, we returned to growth in the third quarter, both sequentially and versus the prior year. It is worth remembering that we were among the first in the industry to reduce our production levels in response to the elevated dealer inventories. As a result, year over year comparison in the second half are less challenging than they were in the first half.

[Steve Menneto, CEO & President at Malibu Boats]

Turning first to the selling season. Our overall dealer inventories entering the season are healthy, aligned with historical levels and well below where they were a year ago. The retail environment remains challenging as elevated interest rates and ongoing macro uncertainty continue to weigh heavily on the consumer sentiment and discretionary spending, prompting buyers to be more cautious and deliberate in their purchase decisions. We remain actively engaged with our dealer network, continuously calibrating our strategies to closely align production levels with real time retail dynamics, and we are committed to ensuring dealer inventories remain healthy and appropriately balanced. While our overall boat show performance was mixed, we observed pockets of strength, notably with our Pursuit brand.

[Steve Menneto, CEO & President at Malibu Boats]

We also remain incredibly proud that our Pursuit once again received the prestigious Marine Industry Customer Satisfaction Award from NMMA, underscoring our ongoing commitment to delivering exceptional customer experiences. Additionally, our Cobalt brand keeps delivering impressive results. We continue to see persistent demand from cash buyers who appreciate our premium feature rich boats. Supported by our decision to invest in expanding capacity at our Rowan facility, we have realized a gain of three eighty basis points of market share in the cobalt models produced there. Innovation remains absolutely critical to our long term strategy.

[Steve Menneto, CEO & President at Malibu Boats]

And I want to emphasize that we are keeping our hand firmly on the throttle for our new product development, even during these challenging market conditions. Our ability to introduce compelling and differentiated new products is truly a cornerstone of our competitive advantage. This ongoing innovation resonates strongly in the marketplace, driving substantial customer engagement and enthusiasm. The performance of our newly introduced models at the boat shows provide strong evidence that our strategy is working. Nearly 40% of our Malibu boat show unit sales were driven by two premium models introduced this year, the M230 and the 25 LSV.

[Steve Menneto, CEO & President at Malibu Boats]

A similar percentage of Covia boat show unit sales were driven by the all new Covia two sixty five and two eighty five center console models. We look forward to sharing the exciting innovation we have planned for the 2026 model year in the next future in the near future. As we all are aware, tariffs have reemerged as a prominent topic within our industry. As we have stated previously, we do not expect tariffs to have a meaningful impact on our fiscal twenty twenty five cost structure. We will remain proactive in mitigating impacts through our strategic supply chain management initiatives to balance any tariff related price increases to our customers.

[Steve Menneto, CEO & President at Malibu Boats]

Additionally, we will continue to leverage our robust vertically integrated U. S. Manufacturing capabilities, which provide a meaningful advantage in managing supply chain risks and gives us direct control over tariff mitigation strategies. We remain agile and fully prepared to adopt swiftly if tariffs or other cost pressures escalate. Looking ahead, we remain confident in our balanced approach emphasizing dealer health, operational excellence and continued innovation.

[Steve Menneto, CEO & President at Malibu Boats]

We have purposely built an agile and resilient operating model. Backed by our strong balance sheet and robust cash flow generation, allowing us to strategically navigate current market conditions. Our diverse brand portfolio combined with our premium market position significantly enhances our capability to capture demand when the market returns to growth. We remain prepared to quickly adapt to changing market dynamics, including tariffs, supply chain development or cost pressures bolstered by our proven ability to effectively manage uncertainty. Finally, I want to sincerely thank our dedicated team and our dealer partners for their exceptional efforts, adaptability and resilience.

[Steve Menneto, CEO & President at Malibu Boats]

Your commitment reinforces my confidence in our trajectory and positions us strongly for future growth. With that, I'll turn it back to Bruce to discuss our financial results in more detail.

[Bruce Beckman, Chief Financial Officer at Malibu Boats]

Thanks, Steve. As mentioned earlier, we returned to growth during the third quarter with results above our expectations. Net sales increased 12.4% to $228,700,000 and unit volume increased 12.8% to fourteen thirty one units. The increase in net sales was driven primarily by increased unit volumes in the Malibu segment, a favorable model mix across all segments and inflation driven year over year price increases, which were partially offset by decreased unit volumes in the Cobalt and Saltwater Fishing segments and an unfavorable segment mix. The Malibu and Axis brands represented approximately 52% of unit sales, saltwater fishing represented 22.8%, and Cobalt made up the remaining 25.2%.

[Bruce Beckman, Chief Financial Officer at Malibu Boats]

Consolidated net sales per unit decreased 0.3% to $159,792 per unit, primarily driven by an unfavorable segment mix, partially offset by a favorable model mix in all segments and inflation driven year over year price increases. Gross profit increased 13.4% to $45,700,000 and gross margin as a percentage of sales increased 20 basis points to 20%. The increased gross margin was driven primarily by fixed cost leveraging and strong operational performance at our factories. Selling and marketing expenses increased 4.3%. The increase was driven primarily by higher event marketing activities.

[Bruce Beckman, Chief Financial Officer at Malibu Boats]

As a percentage of sales, selling and marketing expenses decreased by 20 basis points to 3%. General and administrative expenses increased 6.7% or $1,200,000 The increase was driven primarily by legal and professional fees. As a percentage of sales, G and A expenses were 8.7. This represents a significant sequential improvement with expenses normalizing as expected. Q3 GAAP net income increased 119.4% to $13,200,000 Q3 adjusted EBITDA increased 16% to $28,300,000 and Q3 adjusted EBITDA margin increased 40 basis points to 12.4%.

[Bruce Beckman, Chief Financial Officer at Malibu Boats]

Non GAAP adjusted fully distributed net income per share increased 14.3% to $0.72 per share. This is calculated using a normalized C Corp tax rate of 24.5% and a fully distributed weighted average share approximately 20,100,000.0 shares. For a reconciliation of GAAP metrics to adjusted EBITDA and adjusted fully distributed net income per share, please see the tables in our earnings release. We continue to demonstrate the resilience of our business model, generating over $15,000,000 in cash from operations during the quarter. Capital expenditures totaled $6,700,000 and we repurchased 10,000,000 of stock in the quarter.

[Bruce Beckman, Chief Financial Officer at Malibu Boats]

Looking ahead, we are tightening our expectations for CapEx to $25,000,000 to $30,000,000 and we intend to modestly reduce the pace of share repurchases relative to the $10,000,000 executed this quarter. We view these as prudent adjustments to our plans given the increased macroeconomic uncertainties. I would be remiss if I didn't highlight the strength of our financial position. We finished Q3 with over $39,000,000 of cash on hand and over $300,000,000 of untapped liquidity on our credit facility. We remain committed to our capital allocation priorities and are confident our resilient business model will enable us to navigate the uncertainty ahead.

[Bruce Beckman, Chief Financial Officer at Malibu Boats]

To recap, we feel good about our operational and financial performance in the third quarter. However, we have recalibrated our expectations for the upcoming selling season and now expect our retail markets to be down double digits for the full fiscal year. Accordingly, with our acute focus on dealer inventory levels, we are revising our full year guidance to reflect lower expected shipments. We now expect full year net sales of down 3% to down 5% and full year adjusted EBITDA margins of between 910%. Again, this updated outlook reflects our commitment to prioritizing long term dealer and brand health over short term volume.

[Bruce Beckman, Chief Financial Officer at Malibu Boats]

It is important to note that the implied Q4 sales and profitability levels are meaningfully above last year, largely due to the actions taken in the prior year, as Steve mentioned earlier. In summary, we continue to manage our business proactively during a period of considerable macroeconomic uncertainty. We do not expect tariffs to have a material cost structure impact for the remainder of fiscal twenty twenty five. We are deploying a multitude of tariff mitigation strategies in order to balance the need for associated price increases. We anticipate having much greater tariff visibility when we review our Q4 results.

[Bruce Beckman, Chief Financial Officer at Malibu Boats]

Our highly variable cost structure, strong balance sheet and resilient cash flow generation positions us well to navigate near term challenges, while maintaining our capital allocation priorities and investing strategically to drive long term growth and value creation. With that, I'd like to open up the call for questions.

[Operator]

We will now begin the question and answer session. The first question comes from Craig Kennison from Baird. Please go ahead.

[Craig Kennison, Director of Research Operations & Senior Research Analyst at Baird]

Hey, good morning. Thanks for taking my question. Wanted to start with inventory. What would the goal be by the June with respect to dealer inventory and maybe relative to last June?

[Bruce Beckman, Chief Financial Officer at Malibu Boats]

Yes. Well, dealer inventories typically come down quite a bit as we get through the selling season. Typically, the Q at the end of Q4, we're in the twenty to twenty five weeks typically is where we would typically be. We are expecting to bring our dealer inventories down this year in the mid teens percent. That's been a consistent goal for us throughout the entire year.

[Bruce Beckman, Chief Financial Officer at Malibu Boats]

We started talking about that at the very beginning of the fiscal year. And we would that will put us below where we were last year certainly. And the dealers are telling us that's where they want to take it. They want to take their inventories below historical levels. Are also looking at the same macroeconomic uncertainty that we're looking at.

[Craig Kennison, Director of Research Operations & Senior Research Analyst at Baird]

Thanks. I appreciate that. And then with respect to, I guess, the Malibu customer or the customer of your boats, do you have any insights into the behavior of that customer? How is the repeat buyer doing? How are your first time buyers doing?

[Craig Kennison, Director of Research Operations & Senior Research Analyst at Baird]

I'm just looking for a profile of who's in the market today and how that has changed.

[Steve Menneto, CEO & President at Malibu Boats]

Yeah. Craig, we're seeing retail as what we expected. As you see the ramp, we're seeing some of the repeat buyers returning to the marketplace, particularly the cash repeat buyers. New buyers are still a small percentage of our overall retail. We've seen the normal seasonality ramp as you would expect.

[Steve Menneto, CEO & President at Malibu Boats]

But as Bruce said, with the economic uncertainty, we haven't seen it come back in full force like as expectations were a couple of quarters ago.

[Bruce Beckman, Chief Financial Officer at Malibu Boats]

Yes. If I may add too, Craig. I mean, we have we continue to look at the data around percent of

[Bruce Beckman, Chief Financial Officer at Malibu Boats]

our sales that are going to first time buyers. And we've seen that kind of hold pretty steady over time. There was questions, I think, of would that drop after we exited the COVID period, and we just haven't seen that. So that's been a positive.

[Craig Kennison, Director of Research Operations & Senior Research Analyst at Baird]

That's helpful. Thank you.

[Operator]

The next question comes from Eric Wold from Texas Capital Securities. Please go ahead.

[Eric Wold, Executive Director, Equity Research at Texas Capital Securities]

Hey, good morning guys. Thanks for taking my questions. I guess first off, you noted that obviously the boat show season was mixed, something you kind of said in the past. But I guess now that we're kind of firmly past it, what are you seeing with the competitor promotional activity, especially with those brands that you feel may not be in the best inventory position? And given kind of the state of the consumer, how much do you want to kind of chase deals against someone that's maybe overly competitive versus maybe letting some of those deals go?

[Steve Menneto, CEO & President at Malibu Boats]

I think two respects there is one is we've been really, as we stated earlier, helped by our new products. I mean, when you look at some of the new product innovations that were launched and some of the

[Steve Menneto, CEO & President at Malibu Boats]

new

[Steve Menneto, CEO & President at Malibu Boats]

products, those continue to do really well in the marketplace, gaining share, and we don't have to support those as strongly in the promo environment. For ours, we've been pretty consistent in our promo execution, and we're going to continue to do that and work with our dealers to make sure that we're competitive in the marketplace. But we haven't had to do anything elevated to be in our strong position.

[Bruce Beckman, Chief Financial Officer at Malibu Boats]

Yes, would just echo that. Our promotional levels have been pretty consistent year to date with where we were last year. And we'd expect them actually to be much less in our fourth quarter of this year than they certainly were a year ago, because a year ago, we were focused on getting our dealer inventories down. So I think in the overall market, you've seen various competitors address their inventory challenges. And to a certain extent, that's going to play out the way it's going to play out.

[Bruce Beckman, Chief Financial Officer at Malibu Boats]

You can't chase all of those deals. But we expect that the promotional environment will remain competitive, but will moderate as the industry kind of works through its challenges.

[Eric Wold, Executive Director, Equity Research at Texas Capital Securities]

Got it. And then just last question, kind of follow-up on the previous question on inventories and kind of you mentioned that your dealers are kind of comfortable with inventories being kind of where you want to place them and below last year. Any group of your dealers that you feel are maybe in a tough position, maybe struggling a little bit out there, anyone that you're worried about or you think that is the health pretty good across the board?

[Bruce Beckman, Chief Financial Officer at Malibu Boats]

Pretty good across the board. We monitor every brand and all the different regions of the country and so forth. And I think everybody's in pretty good shape and pretty consistent. The other thing we're always doing, Eric, is monitoring the overall health of the dealer network. And the dealer network from just an overall standpoint is pretty healthy.

[Bruce Beckman, Chief Financial Officer at Malibu Boats]

And we are always in conversations with our floor plan finance providers checking on that and are pretty happy with where the dealers are right now, particularly given the challenging market.

[Eric Wold, Executive Director, Equity Research at Texas Capital Securities]

Perfect. Thank you both.

[Operator]

The next question comes from Michael Swartz from Truist. Please go ahead.

[Michael Swartz, Director & Equity Research at Truist Securities]

Hey guys, good morning. Good morning. Maybe to start just on the tariff side, I know that you have said that you don't expect any material impact in fiscal year twenty twenty five, which ends in a couple of months. But as we look out further afield, I mean, is there any way to think about your tariff risk? I don't know if you have much direct exposure from international sourcing.

[Michael Swartz, Director & Equity Research at Truist Securities]

But any way, any parameters you could give us on how to think about that as we think about fiscal year 'twenty six and beyond?

[Steve Menneto, CEO & President at Malibu Boats]

Well, tariffs in general, Michael, you said, the direct exposure is we're managing every day. Looking at what's changing. We're trying to make sure that we try to understand what the impacts are clearly. But really, what we're working on internally is how do we take those mitigation opportunities whether you're reshoring, buying ahead, all the different steps that you would take. And we have a team focused on

[Steve Menneto, CEO & President at Malibu Boats]

that.

[Bruce Beckman, Chief Financial Officer at Malibu Boats]

From a quantification standpoint, we source about 18% to 20% of our cost of sales from outside The US, which relative to others in the industry, think is less than the overall industry. But there certainly is some exposure there.

[Michael Swartz, Director & Equity Research at Truist Securities]

And are there any singular large sources within that 18% to 20%?

[Bruce Beckman, Chief Financial Officer at Malibu Boats]

No, mean, think it's distributed across a number of different categories. Some of them being pretty obvious like outboard engines and then there are others that are maybe less obvious, hinges and latches and electronics, those of that nature.

[Michael Swartz, Director & Equity Research at Truist Securities]

Okay. Okay. That's super helpful. Thank you for that. And then as we think about model year '26, and I don't expect you to give me your pricing numbers, but any sense of where you think maybe the industry is coming in based on your conversations with suppliers?

[Michael Swartz, Director & Equity Research at Truist Securities]

Any and I guess are you or anyone you're aware of moving model year '26 ahead by a month or two?

[Steve Menneto, CEO & President at Malibu Boats]

No, we're not aware of anybody moving model year 'twenty six ahead by a month or two. And no, we have not really seen anybody in the industry make a move in pricing at all. But I think we're kind of wait and see what are the impacts and how we're going to deal with them. So we still have Q4 to kind of figure that out.

[Bruce Beckman, Chief Financial Officer at Malibu Boats]

Yeah. I would just say that I think it's probably a normal inflation environment. And this is an industry that passes along cost increases. So I would expect, absent the tariff topic, that it would be a pretty normal year.

[Michael Swartz, Director & Equity Research at Truist Securities]

Okay, great. Thank you, guys.

[Operator]

The next question comes from Noah Katz from KeyBanc. Please go ahead.

[Ryan Williams, Senior Equity Research Associate at KeyBanc Capital Markets]

Hi, good morning. Thanks for taking my question. This is Ryan Williams on for Noah Zaskin. Maybe the first one, would just be helpful to hear kind of any additional color on how demand trended in the quarter. And then if there were kind of any meaningful step changes in April as well?

[Steve Menneto, CEO & President at Malibu Boats]

No, I think, Ryan, we said the demand in the quarter kind of had the seasonal ramp as you would expect, but did not have that robust punch that we were kind of hoping for a few quarters ago. So we say it's kind of the mixed results. It keeps kind of chugging along And we see the same thing in April. New products are doing well, and we're fortunate that we have quite a few new products in the marketplace.

[Ryan Williams, Senior Equity Research Associate at KeyBanc Capital Markets]

Thanks. That's really helpful. And maybe just another on I know we're in a fluid environment. And if things were to deteriorate, how are you thinking about what cost levers are available in the business?

[Bruce Beckman, Chief Financial Officer at Malibu Boats]

Well, I mean, we talk a lot about the highly variable nature of our cost structure, and we would definitely be relying on that. If we were to see a further downturn, our cost structure is 80% to 90% variable above the gross margin line. And then of course, we would look for opportunities to free up cash from the balance sheet as well to manage any downturn just like we've done previously. So we have a very resilient business model. We generate cash in all kinds of environments and we have a very strong balance sheet.

[Bruce Beckman, Chief Financial Officer at Malibu Boats]

So we feel as good as you can feel coming into what continues to be a challenging market environment.

[Ryan Williams, Senior Equity Research Associate at KeyBanc Capital Markets]

Great. Thanks for taking my questions.

[Operator]

The next question comes from Mike Albanese from Benchmark. Please go ahead.

[Michael Albanese, Research Analyst at The Benchmark Company LLC]

Yes. Hey, good morning, guys.

[Steve Menneto, CEO & President at Malibu Boats]

Hey, Mike.

[Bruce Beckman, Chief Financial Officer at Malibu Boats]

Good morning.

[Michael Albanese, Research Analyst at The Benchmark Company LLC]

Thanks for taking my question. I think last quarter, you had called out some additional weakness maybe forming in the saltwater segment. Could you just comment on what you're seeing in that market specifically or any changes to, I guess, consumer behavior that kind of happened throughout the quarter?

[Bruce Beckman, Chief Financial Officer at Malibu Boats]

Yes. We saw an improvement, I would say, in the saltwater segment, particularly in Florida. I think in the last call, we talked about Florida being down around 20% in the second quarter. We saw that improve in the third quarter. We didn't see it bounce back to growth.

[Bruce Beckman, Chief Financial Officer at Malibu Boats]

I think it just kind of went back to the the overall trend in the market. So some improvement, but not a different trajectory entirely.

[Michael Albanese, Research Analyst at The Benchmark Company LLC]

Got it. That's helpful. So just really last quarter, I know you had called out Florida. Mean, safe to kind of say, as you're looking at it through this quarter here, you kind

[Michael Albanese, Research Analyst at The Benchmark Company LLC]

of got a return from that and kind of back to that normal trend, if

[Michael Albanese, Research Analyst at The Benchmark Company LLC]

you will, that you were thinking about maybe two quarters ago.

[Michael Swartz, Director & Equity Research at Truist Securities]

Yes. Okay.

[Michael Albanese, Research Analyst at The Benchmark Company LLC]

Awesome. Thank you.

[Craig Kennison, Director of Research Operations & Senior Research Analyst at Baird]

Yes.

[Operator]

And the next question comes from Jamie Katz from Morningstar. Please go ahead.

[Jaime Katz, Senior Equity Analyst at Morningstar]

Hey, good morning, guys. Just wanted to ask about the upcoming quarter. It looks like the third quarter was a little better than we expected and then you have adjusted EBITDA pushed down a little bit. So can you talk a little bit about what has changed since your last update in that cost structure that is just leading to that pressure? Thanks.

[Bruce Beckman, Chief Financial Officer at Malibu Boats]

Well, it's really the units. I mean, we've taken our expectations for units down because we've changed our view on the market. If you remember previously, we were saying that we were expecting to see a little bit of improvement in the market in the second half of the year from what trend we were experiencing in the first half of the year. And as we've kind of seen the market play out through the third quarter and then given what our dealers are telling us and just the general macroeconomic uncertainty, we're no longer expecting an improvement in the market. So therefore, we had to make an adjustment from our prior expectations in production levels and therefore, it impacts our overall financial projections for the year and for the quarter.

[Jaime Katz, Senior Equity Analyst at Morningstar]

Sure. And then as you think about capital allocation and share repurchases in the quarter ahead or the next fiscal year, If the environment stays this way, does it make more sense to have dry powder on the balance sheet just to navigate the environment? Or given the depressed level of shares, do you think it's maybe more prudent to continue down that share repurchase cycle that you've been on?

[Bruce Beckman, Chief Financial Officer at Malibu Boats]

What I would say just generally, we remain committed to our capital allocation priorities. And but we may have to modify our tactics from time to time just given the realities of the market. So I think that's what was behind the comments that I made in my prepared remarks that we're going to be modifying our level of share repurchases here in Q4. And then we still expect that we will be looking at share repurchases as part of our overall capital allocation strategy moving forward. And we're obviously looking to maximize shareholder value through the execution of those priorities.

[Jaime Katz, Senior Equity Analyst at Morningstar]

Thank you.

[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.

Participants

Executives

• Bruce Beckman, Chief Financial Officer
• Steve Menneto, CEO & President

Analysts

• Craig Kennison, Director of Research Operations & Senior Research Analyst at Baird
• Eric Wold, Executive Director, Equity Research at Texas Capital Securities
• Michael Swartz, Director & Equity Research at Truist Securities
• Ryan Williams, Senior Equity Research Associate at KeyBanc Capital Markets
• Michael Albanese, Research Analyst at The Benchmark Company LLC
• Jaime Katz, Senior Equity Analyst at Morningstar