Disclosures

Malibu Boats, Inc.

I, Jimmy Baker , certify that this report reflects my personal beliefs about this company and that no portion of my compensation was, is or will be directly or indirectly related to the specific recommendations or views discussed in this report.

Disclosure

  • B. Riley & Co., LLC does and seeks to do business with companies covered in its research reports.
  • A portion of this analyst’s compensation is based on the sales, trading and investment banking activities of B. Riley & Co., LLC.
  • B. Riley & Co., LLC makes a market in the securities of the company covered in this report.
  • This report may be distributed by FBR Capital Markets & Co., an affiliate of B. Riley & Co., LLC and as such constitutes third party research. For additional information, please visit http://www.fbr.com/disclosures.
Disclosure Chart

Ratings Distribution as of June 23, 2017 % with Investment Banking Relationships
Rating Number of Companies Percent of Total
Buy 148 73.3%
Neutral 53 26.2%
Sell 1 0.5%
Total 202 100%
Ratings Distribution as of October 4, 2016 % with Investment Banking Relationships
Rating Number of Companies Percent of Total
Buy 21 95.5%
Neutral 1 4.5%
Sell 0 0.0%
Total 22 100%

Explanation of B. Riley & Co. LLC's Rating System

  • Buy: We generally expect "Buy" rated stocks to materially outperform both the S&P 500 and Russell 2000 as well as other stocks in their sector. Further, we believe that the potential reward relative to the potential risk is particularly attractive.
  • Neutral: We generally believe "Neutral" rated stocks will perform roughly in line with the S&P 500 and Russell 2000 over the intermediate and long term.
  • Sell: We generally expect "Sell" rated stocks to materially underperform both the S&P 500 and Russell 2000 as well as other stocks in their sector. Further, we believe that the potential reward relative to the potential risk is particularly unattractive.

Risks and Considerations

  • Commodity Costs - Should commodity prices for the Company's resources increase, the Company's operating margins could be harmed.
  • Competition - The industry is highly competitive and many of the Company's competitors have greater resources.
  • Cyclical Nature of the Company's Business - Revenue from the Company's businesses have historically correlated positively with both US and world GDP. A cyclical downturn in GDP growth domestically and/or abroad may lead to a material deterioration in the Company's results.
  • Discretionary Spending - The products the Company sells are largely discretionary in nature and any slowdown in consumer spending would have an unfavorable impact on the Company.
  • Economy - Macro-economic issues such as increasing oil and gas prices and a possible drop in consumer spending could have a negative impact on the Company's business.
  • Growth Plan - There are many factors that may impact the company's ability to achieve its stated growth objectives.
  • Loss of Key Personnel - In our opinion, the current management team will be instrumental in executing the Company's growth strategy. The resignation of a key member of management would have a negative impact on the Company.
  • Manufacturer/Supplier Dependency - The Company relies on a few key manufacturers/suppliers. This lack of diversification could create interruptions in the Company's supply of products and a corresponding loss of revenues.
  • Pricing Pressure - The Company's business could be affected by pricing pressure within the market.
  • Weather - The weather can significantly impact the Company's results.
  • General Industry - The Company could miss our estimates and/or their financial guidance.
  • Further Potential Risks - See the Company's SEC filings, particularly its 10-K filing, for a discussion of further potential risks.

Additional Risks and Considerations

    • Financial Market Volatility - Should the stock market weaken materially, it could destroy enough wealth to pressure demand.
    • Promotion Activity - Slowdown in unit demand could increase promotional activity.
    • Interest Rates - A sharp rise in interest rates without a commensurate improvement in consumer demand could pressure sales.
    • International Demand - Canada in particular could present risk to the downside.
    • Increased Competition from Sterndrive OEMs - It's possible sterndrive OEMs could attempt to enter the Performance Sport Boat segment and/or further evolve product to address wakesurfing.
    • Dealer Health - The company is subject inventory repurchase agreement.
    • Sector Rotation - Group could remain out of favor longer than we imagine, resulting in lower valuations than we forecast.
    • Election Cycle - Political rhetoric could negatively impact consumer sentiment, especially the wealthy.