Good morning, and welcome to the Malibu Boats conference call to discuss first-quarter fiscal 2026 results. Please be advised that the reproduction of this call in all or in part is not permitted without written authorization of Malibu Boats. And as a reminder, today's call is being recorded. On the call today from management are Mr. Steve Menneto, Chief Executive Officer; and Mr. Bruce Beckman, Chief Financial Officer. I will now turn the call over to Mr. Beckman to get it started. Please go ahead, sir.

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 first quarter of fiscal year 2026 financials. We will then open the call for questions. A press release covering the company's fiscal first 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. 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. 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, and adjusted net income per share. 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 Q1 of fiscal 2025, unless otherwise noted. I will now turn the call over to Steve.

Thank you, Bruce, and good morning, everyone. We're excited to be hosting today's call from the Fort Lauderdale International Boat Show as we officially kick off the boat show season. It's always energizing to be here alongside our dealers, customers, and partners, showcasing our newest models and celebrating innovation across our brands. Turning to our results for the first quarter. We delivered a solid start to the fiscal year with revenue growth above our expectations despite what remains a soft retail backdrop. Net sales increased approximately 13% year-over-year, and adjusted EBITDA margins were in line with the plan. These results underscore our ability to execute and outperform the market while maintaining discipline around dealer health and channel inventories. As expected, retail activities remain soft, and inventories entering the quarter were slightly elevated. We remain focused on working closely with our dealer partners to support rightsized inventory levels through targeted market-appropriate promotions. These programs are part of our normal seasonal activity and consistent with our approach of maintaining dealer health. That said, we feel very good about where we are positioned today. Our dealers are healthy, our brands are strong, and we have conviction in the mid-cycle outperformance opportunities. At our Investor Day, we also outlined our strategy to drive growth and long-term value creation through our build, innovate, and grow framework. This strategy builds on the foundation we have created as the leading premium fiberglass boat manufacturer and expands our capabilities beyond boat building into parts and accessories and marine services. Within Marine Services, we recently launched MBI Acceptance, a new financing partnership that extends our 360-degree marine ecosystem and provides an important tool to help drive retail at the dealer level. Early feedback from our financing partner has been extremely positive, describing MBI Acceptance as one of the strongest programs they have seen, noting exceptional dealer engagement and early success in the rollout. Dealer participation continues to build momentum, and we look forward to providing additional updates as we expand the program throughout the year. Turning to product innovation. Malibu's year 2026 is off to a great start. Dealer and customer feedback on our newest launches have been extremely encouraging. The new Kobia models continue to generate strong excitement and validate our investments in innovation within the saltwater segment. The Malibu 21 LX and the X-axis A200 were well received by both dealers and customers, offering accessible performance and versatility. Earlier this month, we introduced the Cobalt R31 outboard, delivering up to 800 horsepower and coastal-ready luxury. And debuting this week in Fort Lauderdale is the all-new Pathfinder 2600, which delivers both hardcourt fishability and family-ready functionality. I'd also like to take a moment to recognize Pursuit for being honored with the National Boating Safety Award in the Marine Manufacturers category from the STO Foundation. Selected out of the hundreds of boat manufacturers across the country, this recognition underscores Pursuit's leadership in owner education and safety through its Confidence on the Water program, a partnership with the Chapman School of Seamanship. That provides hands-on training for new owners. It's a great example of how our brands not only innovate in design and performance, but also lead the industry in promoting safe, confident boating experiences. Overall, we are encouraged by the excitement surrounding our new model year lineup and the steps we are taking to drive retail activity and improve the customer experience. At our recent dealer meetings, the energy and optimism among our partners is clear. Even as retail remains soft, our dealers are energized by our innovation, both in products and in retail tools. They see the strength of our brand, the quality of our products, and the value of our partnership as key advantages that will drive success as market conditions improve. Looking ahead, we will continue to remain realistic about the broader marine environment. While we have yet to see a clear inflection signaling a broader market recovery, our focus remains unchanged: protect dealer health, manage production with precision, and continue to push the pace of innovation and execute on our strategic growth priorities outlined at our Investor Day last month. We are maintaining our full-year guidance and remain confident in our ability to outperform the market while continuing to build for the next up cycle. With that, I'll turn the call over to Bruce for the detailed review of our financial results.

Thanks, Steve. Our results in the first quarter were modestly above our expectations. Net sales increased 13.5% to $194.7 million, and unit volume increased 10.3% to 1,129 units. The increase in net sales was driven primarily by increased unit volumes in the Malibu segment, a favorable model mix in our Cobalt segment, and inflation-driven year-over-year price increases, 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 47.7% of unit sales. Saltwater Fishing represented 25.5% and Cobalt made up the remaining 26.8%. Consolidated net sales per unit increased 2.9% to $172,500 per unit, primarily driven 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 segment mix and increased dealer incentive costs in the Malibu segment. Gross profit decreased 1% to $27.9 million, and gross margin as a percent of sales was 14.3%. This represents a decrease of 210 basis points compared to the prior year period. The decrease in gross margin was driven primarily by higher unit labor and material costs and increased dealer incentive costs in the Malibu segment. Selling and marketing expenses increased $1.4 million in the first quarter. The increase was driven primarily by an increase in marketing event costs. As a percentage of sales, selling and marketing expenses increased 40 basis points to 3.2%. General and administrative expenses decreased 23.8% or $6.5 million. The decrease was driven primarily by a more favorable year-over-year comparison due to a $3.5 million legal settlement in the prior year, along with good corporate expense management. As a percentage of sales, G&A expenses were 10.7%. GAAP net loss for the quarter decreased 86.2% versus the prior year to a loss of $700,000. Adjusted EBITDA for the quarter increased 19.1% to $11.8 million, and adjusted EBITDA margin increased to 6.1% from 5.8% in the prior year. Q1 non-GAAP adjusted net income per share was $0.15, up $0.08 from prior year. This is calculated using a normalized C-Corp tax rate of 24.5% and a basic distributed weighted average share count of approximately 19.3 million shares. For a reconciliation of GAAP metrics to adjusted EBITDA and adjusted net income per share, please see the tables in our earnings release. Turning our attention to cash flow. We generated $2.5 million of free cash flow during Q1, inclusive of $4.3 million of capital expenditures. It is worth noting that Q1 is typically a challenging cash flow quarter, and we are encouraged by the positive start to the year. As stated at our Investor Day last month, we look to maintain a prudent approach to our capital deployment. And with our capacity expansions behind us, we anticipate strong free cash flow generation as the industry returns to mid-cycle levels. Turning our attention to the full year. Our view of the market has not changed. We continue to anchor our outlook with the expectation that our markets will decline in the range of mid- to high single digits for the year, with a continuation of the high single-digit to low double-digit decline through the second quarter. With that said, we are keeping our fiscal year 2026 outlook unchanged. For the full fiscal year, we continue to expect sales to be flat to down mid-single-digit percentage points. For Q2, we expect sales between $175 million to $185 million. We anticipate consolidated adjusted EBITDA margin for the full year ranging from 8% to 9%. For Q2, we expect adjusted EBITDA margins ranging from 3% to 5%. This guidance incorporates a modest direct impact to our fiscal 2026 cost structure due to tariffs, which we continue to estimate between 1.5% to 3% of cost of sales, assuming current tariff rates. We will continue to proactively mitigate impacts through our strategic supply chain management initiatives and vertical integration capabilities, which will help us minimize associated price increases. To close, we are off to a solid start with results that modestly exceeded expectations, reflecting disciplined execution and operating focus. Our strong balance sheet, operational excellence, and resilient business model give us the flexibility to scale production with retail and leverage our capacity we have put in place. Looking ahead, we are confident in our ability to deliver on our strategic objectives, outpace the market, and deploy capital prudently to drive long-term value. With that, I'd like to open up the call for questions.

The first question is from Joe Altobello at Raymond James.

This is Martin on for Joe. Congrats on the quarter. I just wanted to quickly touch on interest rates. Have you seen them sort of come down from consumers? And is this having an effect, whether it's getting people to go ahead and buy, or is it affecting mix in any way?

Well, when you look at the rate cut of yesterday, I think where we see it show up is a few places. One is, first, consumer sentiment, right? I think it's just better for consumers to see those rates come down. They're still down about 100 basis points from the peak COVID, but they're not down to where they used to be prior. So that helps consumer sentiment. Where we see it show up, though, the dealer floor plan costs will come down because it's tied to SOFR. So they'll see an immediate cost there. So the consumer gets encouraged, the dealer gets encouraged. But when you're looking at what will it do to retail finance rates, that will take a little bit of time to manifest itself into the marketplace.

And just quickly touching on higher dealer incentives. You mentioned it for Malibu brand. Is this just a clear inventory? And is this something that we can expect to kind of continue for the next couple of quarters?

I guess what I would say there is some of that is relating to the comparison period. So last year in the first quarter was a year of relatively light promotional activity in the Malibu segment. We were just coming off a very heavy promotional period in Q4 of 2024. And then yes, the overall industry, as you know, had a soft Q4, and we were no exception to that. So we started the year with a little bit higher inventory, and we did some promotional activity to help our dealers work through that in the first quarter. Going forward, we expect it to continue to be a competitive promotional environment, but not anything like we've seen here recently.

The question from an unidentified speaker.

This is Kevin for Craig. I wanted to follow up on inventory, specifically regarding your thoughts on it going forward. Traditionally, this is a seasonal low point. As you plan for next year, do you have any weeks-on-hand or turns metrics that you aim for? Also, can you share insights across your segments about whether the inventory situation is healthy everywhere or if there are specific areas where you see more potential for stocking dealers next year?

We are consistently engaging with our floor plan finance providers to monitor inventory levels and the overall health of our dealers. As I mentioned earlier, the industry started the year with slightly elevated dealer inventory, but it is not significantly out of range. We anticipate this will gradually decrease in the first half of the year. In terms of production levels and managing dealer inventory, we aim to align our approach with market expectations. For the second quarter and the latter half of the year, we expect the markets to decline, and we will adjust our production accordingly.

Could you provide some insight into the retail expectations? Is it accurate to say that the rate of decline will be relatively steady throughout the year? Given the seasonality of the business, do you foresee retail decreasing consistently each quarter, or might it be more pronounced in the first half with a potential increase in Q4? Any clarification on the expected trends for the year would be appreciated.

Certainly. What we mentioned in the previous call remains true today: we expect the first half of the year to experience a greater decline than the second half. For the entire year, we anticipate the market will decline in the mid- to high single digits. Specifically, we expect the first half to see a decline in the high single digits to low double digits, while the second half will decline at a slower rate. This trend aligns with what we have observed so far this year, and everything is unfolding as anticipated.

Yes. Mark, it allows us to continue focusing on driving our lean manufacturing, our quality, all the aspects we discussed at MBI Advantage, our central sourcing category management, and our go-to-market capabilities. As Bruce outlined, in terms of retail, we're fully taking advantage of this time to improve our business. As volumes return, we'll be excited and ready to keep moving forward.

The next question is from Anna Glaessgen, B. Riley.

I'd like to turn to the commentary on the second quarter margin. Just wondering the cost impacts being contemplated there? And anything to note, maybe show costs or things like that, that are being contemplated?

Yes. I mean what I would say is the midpoint of that guidance is below where our revenue was in Q1. So there's a modest amount of deleverage that you can expect, and that's embedded in that guidance. And then we're seeing normal expense phasing throughout the year. We are starting the boat show season, and some of those expenses do ramp up as we get into season.

Can you discuss the dealer inventories in the Salt Waterfish and Cobalt segments, and if we should expect to see a more balanced retail and wholesale situation throughout the year?

What I would say is overall, we still expect this to be a year of reduction in dealer inventories just overall, as we don't really see a massive difference, I would say, between our segments in terms of the market environment. We're expecting that our dealer inventories will come down in all segments.

The next question from Eric Wold, Texas Capital.

A couple of questions. I guess, I want to get back to the MBI acceptance and maybe see if you could dig in a little bit more on that. I know it's been only about a month or a little less than a month since you launched that with the Malibu brand. But maybe some initial read in terms of how fast that was able to be rolled out across the dealer network, maybe kind of how penetrated that is so far? Any initial thoughts in terms of maybe what you've seen has worked versus hasn't worked? Maybe any additional detail would be helpful.

We're really excited about the rollout. As you remember, we began the pilot in Malibu Axis, and we're seeing it work well there. Many of our dealers are signing up, which is encouraging. Our partners have expressed enthusiasm about the overall adoption from our dealer base, and they view this as a strength that will support retail boats. Although we're still in the early stages, we have noticed some positive trends. For example, we introduced a $499 promotional financing, and some previously dormant customers returned after our dealers reached out with the new offer, leading to some sales. While we're still gathering data and need to let the pilot fully develop, the transition from launch to now has been very promising and energizing for our dealers.

And the plan for the other brands is still unchanged, or the time frame of when that would roll out?

Correct. We'll continue to ensure our Q1 plan to roll it out to our other brands remains intact.

Can you provide an update on the level of discounting you're observing, both for your brands and those of your competitors? Additionally, when do you expect the discounting to begin to decrease in the market, considering the declining channel inventories and rates? When might we see discounting levels shift from where they are currently?

Yes. I guess what I would say, Eric, is certainly, it has cooled off from the period where there was considerable excess inventory in the industry. Yes. And so it has cooled off from that. But it remains competitive. I mean it is still a soft retail environment, and the brands and our dealers have to compete for deals. So as long as consumer sentiment is what it is, it probably will be a competitive environment, but not what it was.

The next question is from Noah Zatzkin, KeyBanc Capital Markets.

I guess, first, could you give any color on how you're thinking about ASPs across segments, maybe how model year '26 pricing plays into that, as well as mix would be helpful.

Yes. What I would say is modest year-over-year price increases. And then I would say the trend towards larger, more feature-rich boats will continue, maybe not at the pace that they have the last couple of years, but that macro trend is likely going to continue for the foreseeable future.

And maybe just kind of any updates on how you're thinking about M&A or greenfielding would be helpful.

Yes. M&A and greenfielding are integral to our capital deployment strategy. We have no updates to share in that regard. We are still exploring opportunities, and as we have mentioned, we are open for business. We will keep evaluating opportunities that align with our goals and deliver value to our shareholders.

The next question is from Jaime Katz, Morningstar.

I'm hoping you guys could help us think about what sort of top-line growth or perhaps declines we need to see to start to get a little bit of expense leverage to surface here, given that absorption should improve as improvements have been made to the manufacturing process. So do we need to just get to like low single-digit declines to start to see a little bit of improvement? Or does that have to turn positive again?

We are focused on maintaining effective expense management and ensuring our cost structure remains flexible to adapt to changing market conditions. I believe that a stabilization in market declines will certainly be beneficial. However, to truly achieve significant leverage, we need to see the markets begin to improve. We are prepared for this by pushing our innovation and performance initiatives. We are not simply waiting for the market to grow again, but for substantial volume leverage, a market recovery will likely be necessary.

And then as we look at the back half of this fiscal year, I'm trying to think of whether there might be a little bit of resilience in the gross margin line, given that I think we saw some tariffs already in the final quarter of fiscal 2025. So maybe a little bit of a discussion between the benefit or the lack of input or lack of impact to gross profit at sort of the end of the year this year versus last year? And then were there any like one-time items at the end of the year in G&A that might make the G&A ratio a little bit more competitive this year in the back half?

I don't recall if there were any comparison items from last year. That's likely not the case. We do anticipate that tariff pressures will increase, but we also expect our strategies to mitigate these tariffs to become effective as the year progresses. We are continually implementing initiatives to enhance margin performance, and we foresee higher margins in the second half reflected in our guidance. Gross margin will definitely be a key component of that overall picture.

The next question from Michael Albanese, Benchmark.

I want to explore consumer behavior in more detail. Are you noticing any changes in the mix between payment buyers and cash buyers? Also, although it's early, do you think MBI Acceptance provides you with additional insights into this?

I think 2 things, Mike, on that one. No change from what we were talking about earlier about where that cash buyer, payment buyer dynamic has landed over the last few quarters, and still seems to be persisting through this quarter. The MBI acceptance from a data point, it's early on. We're trying to see where that starts to feed us more information to be smarter about how we go to market with some of our tools. So we're just getting into mining some of the opportunities there. Nothing really to share yet, but that we will have a look into what the consumers' purchasing habits are and some of the data around that. So I think that will be later down the road, once you can get enough data in to create some trends, we'll get the advantage of that.

Yes. I would just add, Mike. I mean, as you know, the consumer finance rates tend to be tied to longer-term treasury markets, so not really the short-term interest rates. So while it will take a little while, I think, for the short-term cuts to work their way through to the consumer finance rates. And that's really probably what's going to be required to see a shift in that cash buyer to payment buyer ratio.

I'm not showing any further questions at this time. This concludes today's conference call. Thank you for participating. You may now disconnect your lines. Goodbye.

Thank you.