Earnings Call Transcript - MBUU Q2 2022

Operator, Operator

Good morning, and welcome to Malibu Boats Conference Call to discuss Second Quarter Fiscal Year 2022 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 part is not permitted without written authorization from Malibu Boats. And as a reminder, today's call is being recorded. On the call today from management, are Mr. Jack Springer, Chief Executive Officer, Mr. Wayne Wilson, Chief Financial Officer, and Mr. Ritchie Anderson, Chief Operating Officer. I will now turn the call over to Mr. Wilson to get started. Please go ahead, sir.

Wayne Wilson, CFO

Thank you and good morning, everyone. On the call, Jack will provide commentary on the business, and I will discuss our fiscal second quarter 2022 financials. We will then open the call for questions. A press release covering the company’s fiscal second-quarter 2022 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, 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 our SEC 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 non-GAAP financial measures to GAAP financial measures are included in our earnings release. I will now turn the call over to Jack Springer.

Jack Springer, CEO

Thank you, Wayne, and thank you all for joining the call. We again delivered a tremendous quarter exceeding expectations across the board, as demand for our boats remained off the charts and showed no signs of slowing. While supply chain pressures have persisted during the quarter, our unmatched operational capabilities, our dedicated team, and industry-leading brands continue to pave the way for another history-making year. We pride ourselves on providing the highest quality, most innovative boats to our loyal customer base, and are excited to continue and hopefully increase our pace of production as we push through the second half of FY2022. For the second fiscal quarter, we posted record net sales increasing nearly 35% to $264 million over the prior year, with adjusted EBITDA growing 23% to $48 million, and net income growing 40% to $31 million. Our margins during the quarter proved resilient in light of the lingering supply chain issues, associated labor costs and material pricing pressures. For the second quarter, gross margin declined 120 basis points to 24.1%, while adjusted EBITDA margin declined by 180 basis points to 18.2% during the quarter. We were able to offset many supply chain, labor, and material pricing headwinds through improved volumes and unpredictably strong ASPs across all of our brands, which is a further testament to the insatiable demand for our boats, helping solidify yet another record-setting quarter. As our pricing surcharge becomes prevalent in all boats in January, margins will be further stabilized for the second half of the year. As I mentioned, demand continued at a prolific pace as the thirst for our feature-rich, larger boats remains incredibly strong, even during what is historically a slower season in October through December. Demand has been broad-based across all brands and all models. This has been underscored by dealer reports, our year-end sales event for Malibu - Axis, and the excellent performance at recent boat shows. During the Malibu - Axis year-end sales event, we nearly doubled our sales versus fiscal year 2020, resulting in the second largest number of orders ever for this event. This year was behind only last year when consumers knew all boat shows were being canceled. Malibu's success was realized despite higher ASPs; limited promotions being the reality. Importantly, as boat shows return this year, we have maintained the torrid pace of customer orders. In addition, the demand for all brands at boat shows is white-hot. Fort Lauderdale was at a record pace of boat sales for many brands, including our Pursuit, Cobalt, and Cobia brands. At the Denver Boat Show in January, we set records for the Malibu and Axis brands, and in Portland, our dealers met their plan sales target. The Minnesota Show held a couple of weeks ago also experienced very strong sales for that show for Malibu, Axis, and Cobalt. Since Fort Lauderdale, there have been some small saltwater boat shows. In each one, the Pursuit and Maverick brands have had sales performance much better than in previous years. As we head down to Miami next week, we expect this momentum will continue. Our dealers have also remained agile in this ever-evolving environment. Orders have held extremely well as customers look past price increases to maintain their slot for a new boat, with long lead times playing a heavy factor in the decision-making process. There's also a recognition that we're now in an inflationary environment that extends to all types of products, and it will likely continue. Therefore, the best prices are now to buy a boat. Our new model year 2022 product lineup is once again underscoring what Malibu's known for; quality and innovation. We are seeing exceptional broad-based demand, and while new product is highly sought after, the environment has placed abnormal demand on every boat that we sell. For Malibu and Axis, customers have responded overwhelmingly to our exciting new products with the all-new Malibu Wakesetter 25 LSV and the brand-new Malibu Wakesetter 21 LX, as well as the Axis T220 and T250 all past the point of being able to build through demand. At Cobalt, with the rollout of the R4 variants of boats in the first half, we have nine new boats in the 23-foot to 28-foot segment in just 15 months, completely transforming the R-Series lineup. At Miami, we will introduce a new 30-plus foot boat in both the sterndrive and outboard variants. Everyone who has been on and experienced these new boats has marveled at the space and the performance of these new models. Pursuit continues her consistent pace of product development. The brand new S358 debuted in November and will be in the water for consumers to experience in Miami. There will also be a new offshore model that will be brought to market in late March. Maverick is now on a pace to begin introducing new models in early fiscal year 2023. Similar to Cobalt, there's an opportunity to replace outdated products, and like Pursuit, there are product white spaces we will fill and drive additional growth. There has not been a meaningful build of channel inventory over the last quarter, and given the demand for all of our brands, most of our production in the second half will be for retail-sold orders. It will be in fiscal year 2023 before we begin to see any build of channel inventory, and well into fiscal year 2024 before channel inventories can begin to normalize. Malibu has also stayed ahead of the curve on inflationary pressures. In October 2021, we announced the implementation of price surcharges to help offset rising costs and maintain our healthy margin profile. These price increases began to take effect on a limited basis in December, and have shown no impact on the resilient demand across our full product suite. The supply chain continues to be the limiting factor on production. Based on our estimates, we could easily build at least 20% more boats in every brand. When you layer lack of component availability with an amplified labor shortage as suppliers cope with the flu season and the spread of Omicron, production volumes continue to be limited during the second quarter as most manufacturers reduce counts to meet the availability of parts. The shortage of parts needed to build new boats is highly unpredictable as supplier issues tend to vary on a weekly basis. It is important to note these lower production levels are solely due to these supply chain issues, and our brands remain in a position to flip the switch and increase production capabilities as the environment begins to normalize. Frankly, the challenges we are facing are a little like a golf ball hitting a pebble on the way to the cup. It is frustrating because of the opportunity for that hole, but it is temporary and doesn't affect the long-term opportunity or results. We remain focused with the proper grip and tension on the putter as we leverage our operational prowess across the full product life cycle, while persistently looking for ways to predict our margin profile during these volatile times. Our initiatives are solidly focused on providing customers with the best boats in the market while maintaining a strong value proposition for our shareholders. While we can't predict when the supply chain will improve, rest assured that as things normalize, we have the team in place to remain ahead of the game. Vertical integration has always been a competitive advantage for Malibu. And in a volatile macroeconomic environment, it has only highlighted our operational resiliency. We have a long track record of advancing our vertical integration efforts from towers, to trailers, to engines, to floors, and I am pleased to announce our latest acquisition, which also fits into our vertical integration foundation. On February 1, Malibu acquired the marine assets of a company called Amtech. We acquired these assets under a new subsidiary, Malibu Electronics, LLC. Amtech has been a key supplier of complex wiring harnesses for our Malibu brands for years, and is one of several suppliers we use. Wiring harnesses have been a significant primary supply constraint over the past 9 months, and we saw a clear opportunity to bring this capability into our vertical integration fold. As we bring this Alabama-based manufacturing operation in-house, we will be better positioned to control our own destiny and alleviate supply constraints in the near term and provide a runway for growth for all of our brands longer-term. The assets included a 130,000-plus square foot manufacturing facility that historically had approximately 50% of its production devoted to customers in non-marine segments. We will continue full operations in Alabama. But there will be no external sales opening capacity for all of our brands. As a result, this transaction solves a problem immediately for Malibu by being able to provide the volume of harnesses that Malibu needs. This improvement will alleviate constraints in other suppliers shared between our brands and ultimately enhance our ability to produce more units across all of our brands. In addition to improving our vertical integration, we remain on pace to further enhance our production capacity through the Maverick Plant 2 expansion that doubles the production footprint of that plant. It is on schedule and we expect to start seeing results soon as we begin to bring boats to market from that facility during the second half of fiscal year 2022. This expansion will allow us to build more boats, larger boats, and increase the margin profile of the boats that are built at Maverick now and into the future. Many people just don't see the immense opportunity and almost perfect setup for Malibu. Never have I seen a company so well-positioned for success, regardless of what may come. The historically low channel inventories dictate that we have a long runway of solid production opportunity despite any economic environment. As the supply chain improves with the demand that we have, we are positioned to absolutely grow production and profitability significantly. The lack of channel inventory also greatly softens any deteriorating economic environment, as we have a solid 2-plus years to get channel inventory back to where it should be. We are in a most enviable position that dictates solid substantial performance over a multiyear period of time. In the short-term or long-term, Malibu remains incredibly well-positioned despite supply chain challenges and inflationary pressures that are impacting the industry. We strongly believe there's no better team to execute on our strategic priorities than our tried-and-true Malibu family. Our team's operational capabilities, hard work, and commitment to quality is what makes us truly unique. Fiscal year 2022 is positioned to be another incredible year in Malibu's 40-year history with record revenue and record earnings. As we set ourselves on the second half of the year, Malibu remains in a unique and enviable position to dominate the marketplace. By developing our cross-brand vertical integration, we are confident in our ability to generate new synergies across our powerhouse brands in fiscal year 2022 and beyond. We will continue to drive innovation and be the first-to-market with compelling new products and features. We are optimistic about our future and furthermore, we are immensely proud of our Malibu brands as they continue to navigate this volatile and unprecedented environment. We will continue to support our absolute outperformance in the industry and ultimately create greater shareholder value for all of our investors. With that, I will now turn the call over to Wayne to take you through our financial performance in more detail.

Wayne Wilson, CFO

Thanks, Jack. In the second Quarter, net sales increased 34.9% to $263.9 million and unit volume increased 19% to a record 2,073 boats. The increase in net sales was driven primarily by increased unit volumes due to the acquisition of Maverick Boat Group and a favorable model mix across our brands. The Malibu and Axis brands represented approximately 56.9% of unit sales, or 1,179 boats. Saltwater Fishing represented 22.6% or 469 boats. And Cobalt made up the remaining 20.5% or 425 boats. Consolidated net sales per unit increased 13.3% to approximately $127,300 per unit, primarily driven by year-over-year price increases and a greater mix of larger boats for our Malibu and Cobalt segments. Gross profit increased 28.4% to $63.6 million, and gross margin was 24.1%. This compares to a gross margin of 25.3% in the prior year period. The decline in gross margin was driven by the inclusion of Maverick. Selling and marketing expenses increased 41.4% or $1.7 million in the second quarter as a percentage of sales, selling, and marketing expenses increased slightly by 10 basis points over the prior year period. The increase was driven primarily by incremental costs associated with the Maverick acquisition, compensation personnel-related expenses, and promotional events that have since resumed after being suspended due to the COVID-19 in the prior year period. General and administrative expenses increased 6.3% or $1 million in the second quarter. The increase was driven primarily by an uptick in compensation personnel-related expenses, IT infrastructure expenses, and incremental G&A expenses due to the acquisition of Maverick. As a percentage of sales, G&A expenses, excluding amortization, decreased 160 basis points to 6.1%, compared to 7.7% for the prior-year period. Net income for the quarter increased 39.9% to a record $31 million. Adjusted EBITDA for the quarter increased 23% to a record $48.1 million, and adjusted EBITDA margin decreased 180 basis points to 18.2%. Non-GAAP adjusted fully distributed net income per share increased 23% to $1.50 per share. This is calculated using a normalized C Corp tax rate of 23.8%, and a fully distributed, weighted average share count of approximately 21.7 million shares. For a reconciliation of adjusted EBITDA and adjusted fully distributed net income per share to GAAP metrics, please see the table in our earnings release. In addition to strong operating performance, as always, we have looked to and successfully deployed our capital opportunistically in recent months. Our acquisition of the marine assets of Amtech enhances our vertical integration strategy, and while modest in size, positions us to increase production by taking greater control of our supply chain. In addition, given the strength of our business, we opportunistically repurchased $5.2 million of the company's shares during the fiscal second quarter under our existing $70 million share repurchase program. As Jack mentioned earlier, we maintained our momentum throughout the first half of fiscal year 2022 and exceeded expectations despite continued headwinds from a volatile supply chain and inflationary environment. Consumer demand was unfazed and marched forward at a robust pace, helping to drive ASPs to unforeseen levels. Malibu remains incredibly well-positioned to capitalize on this robust demand environment while maintaining our strong growth and margin profile despite ongoing macro challenges. Based on our current operating plan, our expectations for fiscal year 2022 are as follows. We anticipate revenue to grow in the 22% to 24% range year-over-year, with growth accelerating slightly from Q3 to Q4. Consolidated adjusted EBITDA margin is expected to exceed 19.5%. In Q3, adjusted EBITDA margins should be approximately 20%. Malibu is undoubtedly the industry leader, blazing the trail and consistently outperforming against our peers over the long term. We've continued to invest to drive growth into the future. And with the Maverick Plant 2 expansion opening, our harness vertical integration, or simply the robust wholesale restocking tailwind, we believe our prospects are bright. We are incredibly well-positioned to capture robust growth opportunities as demand for our larger, feature-rich boats continues at a record-setting pace. We look forward to continuing to deliver even greater value to our stakeholders in fiscal year 2022 and beyond. With that, I'd like to open the call up for questions.

Operator, Operator

Please stand by while we compile the Q&A roster. Our first question comes from Joe Altobello with Raymond James. Your line is open. Please go ahead.

Joe Altobello, Analyst

Thanks, everyone. Good morning. I have a couple of questions regarding the guidance. To start with the sales guidance, it hasn't changed much. It seems like you've maybe tightened it a bit toward the middle of your previous range. How are you viewing units and average selling prices in the second half of the year? In the last earnings call, you mentioned potentially reaching around 2,500 units per quarter. It appears that supply chain challenges might delay that. Could you help us understand how this will affect units and average selling prices in relation to the sales figure for the second half?

Wayne Wilson, CFO

Yeah, Joe, look, I think from the guide perspective, we're not really, from a unit volume perspective, moving much from what we said that 2,500-ish type number that's been thrown around on a quarterly basis. It's still the ballpark for the back-half. We talked about a little bit more acceleration on a year-over-year basis in the cadence for the revenue guide. And so what's that mean for the net sales per unit? There's not a big move in net sales per unit up that would draw down that volume number that we talked about previously.

Joe Altobello, Analyst

Okay. That's helpful. And maybe on the EBITDA margin line, sounds like things are getting a little bit better. Is that all the surcharge going into effect in the second half or fully into effect in the second half, or are there other items that are helping your margins?

Wayne Wilson, CFO

We're noticing some gradual impact from the surcharge, which affects Q3 and has a slightly larger effect on Q4, but this aligns with the costs coming in. Overall, our business is showing solid margins. The surcharge is not intended to enhance margins; rather, it's about the strong performance driven by increased volume year-over-year. Ultimately, our success is more about the overall business performance than the surcharge itself.

Jack Springer, CEO

The point I want to make is that the cost increases come first, followed by the surcharge. We are trying to catch up on that. To Wayne's point, it doesn't contribute to margin; rather, it's to maintain the margins at an appropriate level. In the second half, any improvement in margins will come from operations and an improving supply chain. We do see some signs of that supply chain improvement, so we hope to build a few more boats than we predicted last quarter.

Joe Altobello, Analyst

Okay. Thank you, guys.

Operator, Operator

Thank you. Our next question comes from the line of Mike Swartz with Truist Securities. Your line is open. Please go ahead.

Mike Swartz, Analyst

Good morning, everyone. I have a quick clarification. You mentioned that a surcharge was implemented in December, and I assume we will start to see more benefits from that in the future. Since it's a surcharge, does that imply it could be removed at some point? I'm trying to grasp how that operates.

Jack Springer, CEO

So the way surcharges work, Mark, is that it can be rescinded, maintained, or you find its way into a price increase. It could be decreased from whatever it was to a lesser amount, or we could come back and increase the surcharge in the spring. So the reason we went this route was to be very flexible based on the environment. So we've really captured every conceivable event that could occur.

Joe Altobello, Analyst

Okay, great. Thanks, Jack. Just a second question on the Cobalt business. Just looking at production volume there. You're still well below where you were I think pre-COVID. So maybe talk about, has anything changed in that business? Or is this just a factor of mixing towards larger lower unit volume boats?

Jack Springer, CEO

I think you hit the nail on the head based on the environment. Number one; you look at the units; they have been impacted without a doubt by the supply chain. And absent the supply chain issues, there would have been more volume coming out of Cobalt. But secondly, as with ASPs that you've seen, we - the customers are buying larger boats. They are buying the more expensive boats. So that's why we see the revenue offset because of what's happened with the volume of boats at that higher level. And we have some boats that are coming out, frankly, in the second-half, I mentioned it, that are going to improve that even further.

Joe Altobello, Analyst

Okay. Great. Thanks, Jack.

Jack Springer, CEO

Sure.

Operator, Operator

Thank you. And our next question comes from the line of Jamie Katz with Morningstar. Your line is open. Please go ahead.

Jamie Katz, Analyst

Hi. Good morning. I just wanted to stay on Cobalt for a minute. I think Cobalt was called out as maybe more disproportionately impacted by supply chain issues in the commentary by segment. Is there something different in their supply chain that would impact them differently? And also, was there any impact this year from some of the recent storms across the Midwest or south Midwest, wherever Kansas is, that maybe constrained some production, which I know happened last year? Thanks.

Jack Springer, CEO

Yeah, I’ll answer the second question first. There really have not been any impacts from storms until last week when the storm went through Kansas last week. We did have some impact and a couple of short days, but nothing major. The thing that I would point to a little bit different on Cobalt is all of our brands use different products from potentially different suppliers. In the case of Cobalt, because of different power plants, we buy engines from multiple parties, and those parties have all struggled, frankly. Whether it'd be Yamaha, Mercury, or Volvo, they've all struggled in that basis. The other area is Cobalt is pretty dependent on a supplier related to windshields, and that windshield supplier has struggled greatly. COVID has impacted them, and so our hope is that they begin working out of that in this third quarter, and from a supply chain perspective, it will be better. What I'll point to is, and this is probably important to understand, our acquisition of Amtech will alleviate some of the burden from a wiring harness perspective on the existing suppliers. I think that we'll see very quickly the ability of Malibu Electronics to begin subsidizing the wiring harnesses for Cobalt so that we expect that supply chain issue for Cobalt to go away.

Jamie Katz, Analyst

That's really helpful. And then as you think about the new 30-foot boats that are coming out at Miami, is there a new customer segment you might be trying to target with this, or is it just sort of a customer-led initiative that consumers were looking for something in the size range? Thanks.

Jack Springer, CEO

It's not a new target. It is customer-led. So if we think about the products that exist today, you have an R33, an R35 that are a little bit older. You have an A29 that we came out with a couple of years ago. So there's a propagation that people were continuing to buy larger boats. They want the boats with more features and more ergonomics. And we believe that on this particular boat, both the stern drive version and the outboard version deliver that for that either next Cobalt customer or the Cobalt customer that's ready to purchase the next boat.

Jamie Katz, Analyst

Thank you.

Operator, Operator

Thank you. And our next question comes from the line of Fred Wightman with Wolfe Research. Your line is open. Please go ahead.

Fred Wightman, Analyst

Hey, guys. Good morning. Thanks for the question. Just to follow up on the EBITDA guidance. I think you guys were expecting a 300-basis point decline this quarter and you came in a little bit better than that. Are there some costs that sort of shifted from 2Q into the back half of the year, or is that just sort of lingering uncertainty about the supply chain, just sort of a modest tweak to the outlook there? Is there anything else that we should be expecting?

Wayne Wilson, CFO

Yes, it certainly came in better than expected. The timing of the price increases was not as swift as we had projected, and there are three main factors at play. First, the operations team has performed exceptionally well in a rapidly changing environment, optimizing efficiency. Second, there are costs we've anticipated, some of which have been deferred, and hiring has been challenging with a limited talent pool. I would rank operations as the most significant factor, followed by the impact of price increases on cost line items, and finally, some delays on the G&A side in realizing those costs.

Fred Wightman, Analyst

Okay, great. And then just high-level thoughts on the buyback here. I know you guys did $5 million in the quarter; I think that 70 million authorization expires in November of this year. But how are you thinking about leaning into that buyback just given more shares are trading, and also the offset there from an M&A perspective if you guys are still buying stuff? So what are the puts and takes?

Wayne Wilson, CFO

The stock weakened significantly in December but remains at what we consider an attractive valuation. We have not been consistently repurchasing shares without regard for valuation, and this approach has been our strategy for a long time and will continue to be. We spent only $5 million on buybacks this quarter, but we plan to maintain a similar approach moving forward. We are optimistic about the direction of our business, particularly regarding wholesale restocking and the duration of the associated benefits, along with our business margins and overall strength. Therefore, it shouldn't be surprising if we continue share repurchases even if the stock remains weak. We believe we have ample liquidity and debt capacity to support this. If a compelling M&A opportunity arises, we have not done anything that would prevent us from pursuing an attractive transaction if it becomes available.

Fred Wightman, Analyst

Great, thanks guys.

Operator, Operator

Thank you. And our next question comes from the line of Eric Wold with B. Riley Securities. Your line is open. Please go ahead.

Eric Wold, Analyst

Thanks. Good morning. So a couple of questions, follow-up to a prior question, I guess. If you think about the supply chain issues across all three brands, are you seeing a light at the tunnel in certain areas? Has the range of uncertainties and challenges described previously remained as wide as it has been, or has it somewhat narrowed in some of the areas that were uncertain before or not as uncertainty there had been?

Jack Springer, CEO

No, Eric, I think it has narrowed a little bit. I would point out that previously, the supply chain situation was uncertain, with responses like, 'We don't know when we're going to be able to get the product, we'll do the best that we can.' Now it's more reassuring, as we can say, 'We have some coming to you and we'll get back with you as soon as possible.' This shows a window of improvement, and it aligns with what we mentioned about two quarters ago—that we expect improvements in the second half of the year and that this trend will continue throughout 2022. We are definitely seeing improvement, which gives us confidence that we will be able to produce more than we originally projected in the second half.

Eric Wold, Analyst

Got it. And then I know that the price surcharges increases are kind of, you talked about the hope it's going to maintain margins given supply chain and efficiencies and input costs increase and whatnot. But assuming that the current trend towards larger, higher, more feature-rich, higher ASP boats moving into the order book continues. And some of those production and efficiencies, Wayne, in the coming quarters or so, if we think about that mix in the order, but holding at those higher levels, how would that translate into gross margins on the other side versus historical levels? If I asked that in a coherent way.

Wayne Wilson, CFO

Yes. Look, I think if I understand your question correctly, look, is there a potential tailwind to the margin profile of the business if and what's that potentially look like if you can release one incremental volume, but also to the mix that you're seeing. Is that the question?

Eric Wold, Analyst

Yes. Yes. Yes, Wayne.

Wayne Wilson, CFO

Yes, that's a great question. Compared to last year when we discussed our guidance with minimal upside, we believe this year presents additional upside potential, especially in a more constrained environment. If our optimistic scenarios materialize, we might align more closely with our initial expectations from the start of the year, which were in the low 20% range. We expect a mix impact and additional volume beyond what's included in our guidance, likely resulting in adjusted EBITDA margins reaching the low 20s. However, we may not fully return to last year's 20.5% due to the impact of Maverick. Overall, we anticipate an increase year-over-year on a comparable basis.

Fred Wightman, Analyst

Helpful. Thanks, guys.

Operator, Operator

Our next question comes from Rudy Yang with Berenberg. You may proceed.

Rudy Yang, Analyst

Hey guys, thanks for taking my questions. Just wanted that clarification for me on the price surcharge. I guess, can you just clarify the expectation of when that will fully take effect, and just regarding the continued rollout of new models? Are there going to be planned price increases for those models, or is the surcharge you've announced going to represent all the price increases over the medium-term?

Jack Springer, CEO

The surcharge that has been implemented has already been accounted for in the new model, so there won't be an additional surcharge for them. We had a limited introduction in December. Regarding your question about when it will be fully implemented, we expect to see the complete effect starting this month in February, with less of an impact in January, but overall, the full price increase is already in place.

Rudy Yang, Analyst

Great. That's really helpful. And secondly, can you just comment to any stops on rising rates and any effect it could potentially have on your business this upcoming year? And I guess just as well as how you believe the industry as a whole has historically performed in a rising rate environment?

Wayne Wilson, CFO

Yes. For this fiscal year, I believe that rising interest rates will not significantly affect us. The demand for wholesale restocking is substantial, and we are also experiencing strong performance at retail. The recent increase in Fed rates may not influence retail consumers this year. We think that the financing sources maintain a decent net interest margin for retail financing products, which may absorb some of the initial rate hikes. Additionally, other aspects of retail financing could also mitigate the effects of these rate increases before they start to impact the interest rates that consumers pay for boats. Therefore, we do not anticipate any significant impact on our business this fiscal year or possibly even this calendar year due to these factors.

Rudy Yang, Analyst

Thanks so much.

Jack Springer, CEO

Thank you.

Operator, Operator

I'm showing no further questions at this time, and I would like to turn the conference back to Jack Springer for any further remarks.

Jack Springer, CEO

Thank you very much. We continue to capitalize on a scorching retail environment and unprecedented backlog, and we don't see any signs of it slowing. While we are limited in increasing production counts right now, every brand is well positioned to ramp up production once parts and systems are available from our suppliers. In the meantime, we're taking matters into our own hands to control what we can, which we highlight by our acquisition of Amtech. This acquisition further enhances our vertical integration strategy in the long term and addresses a supply chain challenge in the short term. Our strategic planning, operational excellence, and supply chain management continue to support our outperformance. Our teams continue to push boundaries through the introduction of new product models that exemplify innovation and luxury and draw customers into the Malibu, Cobalt, Pursuit, and Maverick lifestyles. Historically low channel inventories, unprecedented demand, and rising ASPs create a near-perfect setup that positions Malibu extremely well for multiple years of growth and increasing profitability. Our first-half results, yet again, demonstrate the inherent strength and capabilities of Malibu's brands. We remain confident in our ability to deliver value to our shareholders, and we are increasing our guidance for fiscal year 2022. As always, we thank you for your continued support and for joining us in our journey towards growth and continued excellence in fiscal year 2022. Have a fantastic day.

Operator, Operator

This concludes today's conference call. Thank you for participating. You may now disconnect.