Malibu Boats shares slide on Q2 earnings miss, margin collapse
Gross margin plunged 540 basis points as recreational boatmaker lowers full-year guidance
Malibu Boats shares fell sharply in Thursday trading after the recreational boatmaker reported weaker-than-expected second quarter results, with gross margins deteriorating dramatically and management forecasting flat to declining sales for fiscal 2026.
The Tennessee-based company, which manufactures high-performance boats under the Malibu and Axis brands, reported net sales of $188.6 million for the quarter ended December 31, a 5.8% decline from the prior year. Adjusted EBITDA plummeted 52.5% to $8.0 million, while gross margins collapsed to 13.3% from 18.7% in the year-ago quarter—a 540 basis point deterioration that shocked investors.
Unit volumes dropped 9.5% to 1,106 boats, reflecting softer demand in the recreational marine sector as consumers remain cautious amid economic uncertainty. The company reported a GAAP net loss of $0.13 per share, with adjusted net loss per share of $0.02.
Perhaps more concerning to investors was management's full-year guidance, which calls for fiscal 2026 net sales to be flat to down mid-single digits year-over-year. Adjusted EBITDA margin is expected to range between 8% and 9%, suggesting profitability pressures will persist through the remainder of the fiscal year.
The disappointing results stand in contrast to Malibu Boats' recent performance trajectory. Just one quarter earlier, the company had reported 13.5% year-over-year revenue growth with boat sales rising 10.3% to 1,129 units, exceeding analyst expectations at the time. The sharp reversal highlights the volatility in the recreational boating market, which has been experiencing headwinds following pandemic-era demand surges.
The broader recreational boating industry is expected to see new powerboat unit sales remain flat or slightly up in 2026 after an estimated 8% to 10% decline in 2025, according to the National Marine Manufacturers Association. Industry analysts note that consumers are increasingly focused on entry-level and value segments, which may pressure premium manufacturers like Malibu Boats.
Larger competitor Brunswick Corporation, which operates a more diversified marine portfolio, reported consolidated net sales increasing 15.5% year-over-year to $1.33 billion in its fourth quarter, projecting continued growth for 2026 with net sales expected between $5.6 billion and $5.8 billion. Brunswick's Mercury Marine division commands over 40% share in the global marine engine market, providing scale advantages that smaller pure-play boatmakers lack.
Malibu Boats, which maintains top market share in the U.S. performance sport boat segment, has been introducing new models to stimulate demand. The company recently unveiled eleven new models for Model Year 2026, though it remains unclear whether these product refreshments will be sufficient to counteract broader market softness.
Some analysts point out that Malibu Boats' focus on premium performance boats leaves it more exposed to discretionary spending cuts than competitors with broader product portfolios. The 540 basis point gross margin decline suggests the company may be offering discounts to move inventory, a strategy that could pressure profitability if demand remains subdued.
On a positive note, the company generated free cash flow during the quarter and completed $21 million in share repurchases, demonstrating management's confidence in the business despite near-term challenges. The company currently trades at approximately $34.60 per share, with a market capitalization of roughly $625 million.
Looking ahead, investors will be watching whether Malibu Boats can stabilize margins and unit volumes in the second half of fiscal 2026. The company's ability to execute on new model launches while maintaining pricing discipline in a competitive environment will be critical to reversing the recent earnings decline. Management is scheduled to host an earnings call Thursday morning, where analysts are expected to press for details on the gross margin deterioration and demand trends across different price segments.