10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2018

Commission file number: 001-36290

MALIBU BOATS, INC.

(Exact Name of Registrant as specified in its charter)

Delaware	5075 Kimberly Way Loudon, Tennessee 37774	46-4024640
(State or other jurisdiction of incorporation or organization)	(Address of principal executive offices, including zip code)	(I.R.S. Employer Identification No.)
	(865) 458-5478
	(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	¨	Accelerated filer	þ
Non-accelerated filer	¨	Smaller reporting company	¨
Emerging growth company	þ
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. þ
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨ No þ

Class A Common Stock, par value $0.01, outstanding as of February 5, 2019:	20,836,597	shares
Class B Common Stock, par value $0.01, outstanding as of February 5, 2019:	16	shares

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TABLE OF CONTENTS

		Page
PART I	FINANCIAL INFORMATION	2
Item 1.	Financial Statements	2
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)	2
	Condensed Consolidated Balance Sheets (Unaudited)	3
	Condensed Consolidated Statements of Stockholders' Equity (Unaudited)	4
	Condensed Consolidated Statements of Cash Flows (Unaudited)	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 4.	Controls and Procedures	43
PART II	OTHER INFORMATION	44
Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 3.	Defaults Upon Senior Securities	44
Item 4.	Mine Safety Disclosures	44
Item 5.	Other Information	44
Item 6.	Exhibits	45
SIGNATURES		46

1

Part I - Financial Information

Item 1. Financial Statements

MALIBU BOATS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)

(In thousands, except share and per share data)

	Three Months Ended December 31,						Six Months Ended December 31,
	2018			2017			2018			2017
Net sales	165,793			$	114,373		$	289,276		$	217,914
Cost of sales	127,478			86,857			220,460			167,475
Gross profit	38,315			27,516			68,816			50,439
Operating expenses:
Selling and marketing	4,601			3,122			8,099			6,711
General and administrative	11,232			7,435			20,203			14,509
Amortization	1,538			1,304			2,818			2,612
Operating income	20,944			15,655			37,696			26,607
Other (income) expense, net:
Other income, net	(17		)	(30,333		)	(34		)	(27,736		)
Interest expense	1,844			1,014			3,015			3,213
Other (income) expense, net	1,827			(29,319		)	2,981			(24,523		)
Income before provision for income taxes	19,117			44,974			34,715			51,130
Provision for income taxes	4,119			50,558			7,702			50,300
Net income (loss)	14,998			(5,584		)	27,013			830
Net income attributable to non-controlling interest	741			799			1,458			1,328
Net income (loss) attributable to Malibu Boats, Inc.	$	14,257		$	(6,383	)	$	25,555		$	(498	)
Comprehensive income (loss):
Net income (loss)	$	14,998		$	(5,584	)	$	27,013		$	830
Other comprehensive income (loss), net of tax:
Change in cumulative translation adjustment	(367		)	(66		)	(771		)	234
Other comprehensive income (loss), net of tax	(367		)	(66		)	(771		)	234
Comprehensive income (loss), net of tax	14,631			(5,650		)	26,242			1,064
Less: comprehensive income attributable to non-controlling interest, net of tax	723			806			1,416			1,360
Comprehensive income (loss) attributable to Malibu Boats, Inc., net of tax	$	13,908		$	(6,456	)	$	24,826		$	(296	)
Weighted average shares outstanding used in computing net income (loss) per share:
Basic	20,875,243			20,429,627			20,758,095			19,804,192
Diluted	20,990,313			20,429,627			20,883,868			19,804,192
Net income (loss) available to Class A Common Stock per share:
Basic	$	0.68		$	(0.31	)	$	1.23		$	(0.03	)
Diluted	$	0.68		$	(0.31	)	$	1.22		$	(0.03	)

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements (Unaudited).

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MALIBU BOATS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Unaudited)

(In thousands, except share data)

	December 31, 2018			June 30, 2018
Assets
Current assets
Cash	$	23,903		$	61,623
Trade receivables, net	13,545			24,625
Inventories, net	68,465			44,268
Prepaid expenses and other current assets	5,979			3,298
Income tax receivable	1,363			100
Total current assets	113,255			133,914
Property, plant and equipment, net	60,193			40,845
Goodwill	51,410			32,230
Other intangible assets, net	149,206			94,221
Deferred tax assets	64,566			64,105
Other assets	313			453
Total assets	$	438,943		$	365,768
Liabilities
Current liabilities
Accounts payable	$	25,996		$	24,349
Accrued expenses	43,058			35,685
Income taxes and tax distribution payable	335			1,420
Payable pursuant to tax receivable agreement, current portion	3,932			3,932
Total current liabilities	73,321			65,386
Deferred tax liabilities	270			341
Payable pursuant to tax receivable agreement, less current portion	53,667			51,114
Long-term debt	143,676			108,487
Other long-term liabilities	704			569
Total liabilities	271,638			225,897
Commitments and contingencies (See Note 15)
Stockholders' Equity
Class A Common Stock, par value $0.01 per share, 100,000,000 shares authorized; 20,836,429 shares issued and outstanding as of December 31, 2018; 20,555,348 issued and outstanding as of June 30, 2018	207			204
Class B Common Stock, par value $0.01 per share, 25,000,000 shares authorized; 16 shares issued and outstanding as of December 31, 2018; 17 shares issued and outstanding as of June 30, 2018	—			—
Preferred Stock, par value $0.01 per share; 25,000,000 shares authorized; no shares issued and outstanding as of December 31, 2018 and June 30, 2018	—			—
Additional paid in capital	111,347			108,360
Accumulated other comprehensive loss	(2,755		)	(1,984		)
Accumulated earnings	53,346			27,789
Total stockholders' equity attributable to Malibu Boats, Inc.	162,145			134,369
Non-controlling interest	5,160			5,502
Total stockholders’ equity	167,305			139,871
Total liabilities and stockholders' equity	$	438,943		$	365,768

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements (Unaudited).

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MALIBU BOATS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders' Equity (Unaudited)

(In thousands, except number of Class B shares)

	Class A Common Stock			Class B Common Stock				Additional Paid In Capital			Accumulated Other Comprehensive Loss			Accumulated Earnings		Non-controlling Interest in LLC			Total Stockholders' Equity
	Shares	Amount		Shares		Amount
Balance at June 30, 2018	20,555	$	204	17		$	—	$	108,360		$	(1,984	)	$	27,789	$	5,502		$	139,871
Net income	—	—		—		—		—			—			25,555		1,458			27,013
Stock based compensation, net of withholding taxes on vested equity awards	53	1		—		—		(62		)	—			—		—			(61		)
Issuances of equity for services	—	—		—		—		668			—			—		—			668
Issuance of equity for exercise of options	29	—		—		—		749											749
Increase in payable pursuant to the tax receivable agreement	—	—		—		—		(2,553		)	—			—		—			(2,553		)
Increase in deferred tax asset from step-up in tax basis	—	—		—		—		3,138			—			—		—			3,138
Exchange of LLC Units for Class A Common Stock	199	2		—		—		1,047			—			—		(1,047		)	2
Cancellation of Class B Common Stock	—	—		(1	)	—		—			—			—		—			—
Distributions to LLC Unit holders	—	—		—		—		—			—			2		(718		)	(716		)
Foreign currency translation adjustment	—	—		—		—		—			(771		)	—		(35		)	(806		)
Balance at December 31, 2018	20,836	$	207	16		$	—	$	111,347		$	(2,755	)	$	53,346	$	5,160		$	167,305

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements (Unaudited).

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MALIBU BOATS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

	Six Months Ended December 31,
	2018			2017
Operating activities:
Net income	$	27,013		$	830
Adjustments to reconcile net income to net cash provided by operating activities:
Non-cash compensation expense	1,131			850
Non-cash compensation to directors	421			404
Depreciation and amortization	7,176			6,029
Amortization of deferred financing costs	189			1,046
Deferred income taxes	2,617			46,764
Adjustment to tax receivable agreement liability	—			(27,702		)
Other items, net	28			(208		)
Change in operating assets and liabilities, net of effects of acquisitions:
Trade receivables	11,231			1,315
Inventories	(16,073		)	(6,037		)
Prepaid expenses and other assets	(2,006		)	(512		)
Accounts payable	2,169			1,954
Income taxes receivable and payable	(2,112		)	65
Accrued expenses and other liabilities	3,828			2,227
Net cash provided by operating activities	35,612			27,025
Investing activities:
Purchases of property, plant and equipment	(6,837		)	(4,923		)
Payment for acquisition, net of cash acquired	(100,073		)	(125,552		)
Net cash used in investing activities	(106,910		)	(130,475		)
Financing activities:
Principal payments on long-term borrowings	—			(50,000		)
Proceeds from long-term borrowings	—			105,000
Proceeds from revolving credit facility	50,000			—
Payments on revolving credit facility	(15,000		)	—
Payment of deferred financing costs	—			(1,148		)
Proceeds from issuance of Class A Common Stock in offering, net of underwriting discounts	—			55,317
Payments of costs directly associated with offering	—			(650		)
Proceeds received from exercise of stock option	749			—
Cash paid for withholding taxes on vested restricted stock	(1,186		)	(543		)
Distributions to LLC Unit holders	(909		)	(636		)
Net cash provided by financing activities	33,654			107,340
Effect of exchange rate changes on cash	(76		)	19
Changes in cash	(37,720		)	3,909
Cash—Beginning of period	61,623			32,822
Cash—End of period	$	23,903		$	36,731
Supplemental cash flow information:
Cash paid for interest	$	2,361		$	861
Cash paid for income taxes	6,628			2,740
Non-cash investing and financing activities:
Establishment of deferred tax assets from step-up in tax basis	3,138			2,513
Establishment of amounts payable under tax receivable agreements	2,553			1,259
Exchange of LLC Units by LLC Unit holders for Class A common stock	1,047			738
Tax distributions payable to non-controlling LLC Unit holders	319			361
Capital expenditures in accounts payable	493			659

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements (Unaudited).

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MALIBU BOATS, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

(Dollars in thousands, except per unit and per share data)

1. Organization, Basis of Presentation, and Summary of Significant Accounting Policies

Organization

Malibu Boats, Inc. (together with its subsidiaries, the “Company” or "Malibu"), a Delaware corporation formed on November 1, 2013, is the sole managing member of Malibu Boats Holdings, LLC, a Delaware limited liability company (the "LLC"). The Company operates and controls all of the LLC's business and affairs and, therefore, pursuant to Financial Accounting Standards Board ("FASB") Accounting Standards Codification (“ASC”) Topic 810, Consolidation, consolidates the financial results of the LLC and its subsidiaries, and records a non-controlling interest for the economic interest in the Company held by the non-controlling holders of units in the LLC ("LLC Units"). Malibu Boats Holdings, LLC was formed in 2006 with Malibu's acquisition by an investor group, including affiliates of Black Canyon Capital LLC, Horizon Holdings, LLC and then-current management. The LLC, through its wholly owned subsidiary, Malibu Boats, LLC, is engaged in the design, engineering, manufacturing and marketing of innovative, high-quality, recreational powerboats that are sold through a world-wide network of independent dealers. On July 6, 2017, the Company acquired all the outstanding units of Cobalt Boats, LLC (“Cobalt”) further expanding the Company's product offering across a broader segment of the recreational boating industry including performance sport boats, sterndrive and outboard boats. As a result of the acquisition, the Company consolidates the financial results of Cobalt. On October 15, 2018, our subsidiary Malibu Boats, LLC, purchased the assets of Pursuit Boats ("Pursuit") from S2 Yachts, Inc., expanding the Company's product offering into the fiberglass outboard fishing boat market. As a result of the acquisition, the Company consolidates the financial results of Pursuit. Refer to Note 4. The Company reports its results of operations under four reportable segments: Malibu U.S., Malibu Australia, Cobalt and Pursuit, based on their boat manufacturing operations.

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim condensed financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and disclosures of results of operations, financial position and changes in cash flow in conformity with GAAP for complete financial statements. Such statements should be read in conjunction with the audited consolidated financial statements and notes thereto of Malibu Boats, Inc. and subsidiaries for the year ended June 30, 2018, included in the Company's Annual Report on Form 10-K. In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements reflect all adjustments considered necessary to present fairly the Company’s financial position at December 31, 2018, and the results of its operations for the three and six month periods ended December 31, 2018 and December 31, 2017, and its cash flows for the six month periods ended December 31, 2018 and December 31, 2017. Operating results for the three and six months ended December 31, 2018, are not necessarily indicative of the results that may be expected for the full year ending June 30, 2019. Units and shares are presented as whole numbers while all dollar amounts are presented in thousands, unless otherwise noted.

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include the operations and accounts of the Company and all subsidiaries thereof. All intercompany balances and transactions have been eliminated upon consolidation.

Pursuit Acquisition

On October 15, 2018, our subsidiary Malibu Boats, LLC, purchased the assets of Pursuit from S2 Yachts, Inc. for a purchase price of $100,073. Pursuit, located in Fort Pierce, Florida, is a leader in the saltwater outboard fishing boat market through its offering of 15 models of offshore, dual console and center console boats.

Recent Accounting Pronouncements

On July 1, 2018, the Company adopted the new accounting standard, ASC Topic 606, Revenue from Contracts with Customers, and all the related amendments (“ASC 606”) and applied the provisions of the standard to all contracts using the modified retrospective method. The cumulative effect of adopting the new revenue standard was immaterial and no adjustment has been recorded to the opening balance of retained earnings. Prior year information has not been restated and continues to be reported under the accounting standards in effect for those periods. Substantially all of the Company’s revenue continues to be recognized at a point in time when the product is either shipped or received from the Company's facilities and control of the

6

product is transferred to the customer.  New controls and processes designed to meet the requirements of the standard were implemented, and the required new disclosures are presented in Note 2. The adoption of ASC Topic 606 did not have a material impact on the amounts reported in the Company's unaudited condensed consolidated financial position, results of operations or cash flows.

In February 2016, the FASB issued Accounting Standards Update (ASU) 2016‑02, Leases (Topic 842).  The amendments in this update create ASC Topic 842, Leases, and supersede the requirements in ASC Topic 840, Leases.  ASC Topic 842 requires lessees to recognize on the balance sheet a right‑of‑use asset, representing its right to use the underlying asset for the lease term, and a lease liability for all leases with terms greater than 12 months. The guidance also requires qualitative and quantitative disclosures designed to assess the amount, timing, and uncertainty of cash flows arising from leases. The standard requires the use of a modified retrospective transition approach, which includes a number of optional practical expedients that entities may elect to apply. In June 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvement, which provides entities with an additional (optional) transition method to adopt the new lease standard.  Under this new transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The new leases standard is effective for fiscal years beginning after December 15, 2018. Early application is permitted. The Company is currently assessing the potential impact this guidance may have on its consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This guidance provides specific classification of how certain cash receipts and cash payments are presented in the statement of cash flows. The ASU was applied using a retrospective transition method. The adoption of this ASU on July 1, 2018 did not have a material impact on the Company's consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The guidance clarifies the definition of a business that provides a two-step analysis in the determination of whether an acquisition or derecognition is a business or an asset. The update removes the evaluation of whether a market participant could replace any missing elements and provides a framework to assist entities in evaluating whether both an input and a substantive process are present. This guidance will be applied on a prospective basis for transactions that occur after the effective date. The adoption of this ASU on July 1, 2018 did not have a material impact on the Company's consolidated financial statements.

There are no other new accounting pronouncements that are expected to have a significant impact on the Company's consolidated financial statements and related disclosures.

2. Revenue Recognition

The following table disaggregates the Company's revenue by major product type and geography:

	Three months ended December 31, 2018										Six months ended December 31, 2018
	Malibu US		Cobalt		Pursuit		Malibu Australia		Consolidated		Malibu US		Cobalt		Pursuit		Malibu Australia		Consolidated
Revenue by product:
Boat and trailer sales	$	81,028	$	45,360	$	29,852	$	6,850	$	163,090	$	147,108	$	92,799	$	29,852	$	12,681	$	282,440
Part and other sales	1,693		486		75		449		2,703		4,843		1,307		75		611		6,836
Total revenue	$	82,721	$	45,846	$	29,927	$	7,299	$	165,793	$	151,951	$	94,106	$	29,927	$	13,292	$	289,276
Revenue by geography:
North America	$	82,282	$	43,171	$	26,833	$	—	$	152,286	$	150,140	$	88,145	$	26,833	$	—	$	265,118
International	439		2,675		3,094		7,299		13,507		1,811		5,961		3,094		13,292		24,158
Total revenue	$	82,721	$	45,846	$	29,927	$	7,299	$	165,793	$	151,951	$	94,106	$	29,927	$	13,292	$	289,276

Boat and Trailer Sales

Consists of sales of boats and trailers to the Company's dealer network, net of sales returns, discounts, rebates and free flooring incentives. Boat and trailer sales also includes optional boat features. Sales returns consist of boats returned by dealers under our warranty program. Rebates, free flooring and discounts consists of incentives, including rebates, volume discounts and free flooring that the Company provides to its dealers based on sales of eligible products.

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Part and Other Sales

Consists primarily of parts and accessories sales, royalty income, and clothing sales. Parts and accessories sales include replacement and aftermarket boat parts and accessories sold to the Company's dealer network. Royalty income is earned from license agreements with various boat manufacturers, including Nautique, Chaparral, Mastercraft, and Tige related to the use of the Company's intellectual property.

3. Non-controlling Interest

The non-controlling interest on the unaudited condensed consolidated statement of operations and comprehensive income represents the portion of earnings attributable to the economic interest in the Company's subsidiary, Malibu Boats Holdings, LLC, held by the non-controlling LLC Unit holders. Non-controlling interest on the unaudited condensed consolidated balance sheets represents the portion of net assets of the Company attributable to the non-controlling LLC Unit holders, based on the portion of the LLC Units owned by such Unit holders. The ownership of Malibu Boats Holdings, LLC is summarized as follows:

	As of December 31, 2018			As of June 30, 2018
	Units	Ownership %		Units	Ownership %
Non-controlling LLC Unit holders ownership in Malibu Boats Holdings, LLC	844,652	3.9	%	1,043,186	4.8	%
Malibu Boats, Inc. ownership in Malibu Boats Holdings, LLC	20,836,429	96.1	%	20,555,348	95.2	%
	21,681,081	100.0	%	21,598,534	100.0	%

Issuance of Additional LLC Units

Under the first amended and restated limited liability agreement of the LLC, as amended (the "LLC Agreement"), the Company is required to cause the LLC to issue additional LLC Units to the Company when the Company issues additional shares of Class A Common Stock. Other than in connection with the issuance of Class A Common Stock in connection with an equity incentive program, the Company must contribute to the LLC net proceeds and property, if any, received by the Company with respect to the issuance of such additional shares of Class A Common Stock. The Company must cause the LLC to issue a number of LLC Units equal to the number of shares of Class A Common Stock issued such that, at all times, the number of LLC Units held by the Company equals the number of outstanding shares of Class A Common Stock. During the six months ended December 31, 2018, the Company caused the LLC to issue a total of 305,288 LLC Units to the Company in connection with (i) the Company's issuance of Class A Common Stock to a non-employee director for his services, (ii) the issuance of Class A Common Stock for the vesting of awards granted under the Malibu Boats, Inc. Long-Term Incentive Plan (the "Incentive Plan"), (iii) the issuance of Class A Common Stock to LLC Unit holders for exchange of their LLC Units, and (iv) the issuance of Class A Common Stock for the exercise of vested stock options granted under the Incentive Plan. During the six months ended December 31, 2018, 24,207 LLC Units were canceled in connection with the vesting of share-based equity awards to satisfy employee tax withholding requirements and the retirement of 24,207 treasury shares in accordance with the LLC Agreement.

Distributions and Other Payments to Non-controlling Unit Holders

Distributions for Taxes

As a limited liability company (treated as a partnership for income tax purposes), Malibu Boats Holdings, LLC does not incur significant federal, state or local income taxes, as these taxes are primarily the obligations of its members. As authorized by the LLC Agreement, the LLC is required to distribute cash, to the extent that the LLC has cash available, on a pro rata basis, to its members to the extent necessary to cover the members’ tax liabilities, if any, with respect to their share of LLC earnings. The LLC makes such tax distributions to its members based on an estimated tax rate and projections of taxable income. If the actual taxable income of the LLC multiplied by the estimated tax rate exceeds the tax distributions made in a calendar year, the LLC may make true-up distributions to its members, if cash or borrowings are available for such purposes. As of December 31, 2018 and June 30, 2018, tax distributions payable to non-controlling LLC Unit holders were $319 and $511, respectively. During the six months ended December 31, 2018 and 2017, tax distributions paid to the non-controlling LLC Unit holders were $909 and $602, respectively.

Other Distributions

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Pursuant to the LLC Agreement, the Company has the right to determine when distributions will be made to LLC members and the amount of any such distributions. If the Company authorizes a distribution, such distribution will be made to the members of the LLC (including the Company) pro rata in accordance with the percentages of their respective LLC units.

4. Acquisitions

Pursuit

On October 15, 2018, the Company completed its acquisition of the assets of Pursuit. The aggregate purchase price for the transaction was $100,073, funded with cash and borrowings under the Company's credit agreement. The aggregate purchase price was subject to certain adjustments, including customary adjustments for the amount of working capital in the business at the closing date. The Company accounted for the transaction in accordance with ASC 805, Business Combinations.

The total consideration given to the former owners of Pursuit has been allocated to the assets acquired and liabilities assumed based on estimates of fair value as of the date of the acquisition. The preliminary measurements of fair value were determined based upon estimates utilizing the assistance of third party valuation specialists, and are subject to change within the measurement period (up to one year from the acquisition date). The Company expects appraisals of tangible and intangible assets and working capital adjustments to be finalized during the second half of fiscal 2019.

The following table summarizes the preliminary purchase price allocation based on the estimated fair values of the assets acquired and liabilities of Pursuit assumed at the acquisition date:

Consideration:
Cash consideration paid	$	100,073
Recognized preliminary amounts of identifiable assets acquired and (liabilities assumed), at fair value:
Inventories	$	8,332
Other current assets	373
Property, plant and equipment	17,454
Identifiable intangible assets	57,900
Current liabilities	(3,488		)
Fair value of assets acquired and liabilities assumed	80,571
Goodwill	19,502
Total purchase price	$	100,073

The preliminary fair value estimates for the Company's identifiable intangible assets acquired as part of the acquisition are as follows:

	Estimates of Fair Value		Estimated Useful Life (in years)
Definite-lived intangibles:
Dealer relationships	$	25,400	20
Total definite-lived intangibles	25,400
Indefinite-lived intangible:
Trade name	32,500
Total intangible assets	$	57,900

The value allocated to inventories reflects the estimated fair value of the acquired inventory based on the expected sales price of the inventory, less an estimated cost to complete and a reasonable profit margin. The fair value of the identifiable intangible assets were determined based on the following approaches:

Dealer Relationships - The value associated with Pursuit's dealer relationships is attributed to its long standing dealer distribution network. The estimate of fair value assigned to this asset was determined using the income approach, which requires an estimate or forecast of the expected future cash flows from the dealer relationships through the application of the multi-period excess earnings approach. The estimated remaining useful life of dealer relationships is approximately twenty years.

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Trade Name - The value attributed to Pursuit's trade name was determined using a variation of the income approach called the relief from royalty method, which requires an estimate or forecast of the expected future cash flows. The trade name has an indefinite life.

The fair value of the definite-lived intangible assets are being amortized using the straight-line method to general and administrative expenses over their estimated useful lives. Indefinite-lived intangible assets are not amortized, but instead are evaluated for potential impairment on an annual basis in accordance with the provisions of ASC Topic 350, Intangibles—Goodwill and Other. The weighted average useful life of identifiable definite-lived intangible assets acquired was 20 years. Goodwill of $19,502 arising from the acquisition consists of expected synergies and cost savings as well as intangible assets that do not qualify for separate recognition. The indefinite-lived intangible asset and goodwill acquired are expected to be deductible for income tax purposes.

Acquisition-related costs of $2,809, which were incurred by the Company in the first half of fiscal year 2019 related to the Pursuit acquisition, were expensed in the period incurred, and are included in general and administrative expenses in the consolidated statement of operations and comprehensive income (loss) for the six months ended December 31, 2018.

Pro Forma Financial Information (unaudited):

The following unaudited pro forma consolidated results of operations for the three and six months ended December 31, 2018 and 2017, assumes that the acquisition of Pursuit occurred as of July 1, 2017. The unaudited pro forma financial information combines historical results of Malibu and Pursuit, with adjustments for depreciation and amortization attributable to preliminary fair value estimates on acquired tangible and intangible assets for the respective periods. Non-recurring pro forma adjustments associated with the fair value step up of inventory were included in the reported pro forma cost of sales and earnings. The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of fiscal year 2018 or the results that may occur in the future:

	Three Months Ended December 31,					Six Months Ended December 31,
	2018		2017			2018		2017
Net sales	$	172,219	$	143,689		$	330,918	$	275,300
Net income (loss)	15,553		(4,773		)	31,083		2,241
Net income (loss) attributable to Malibu Boats, Inc.	14,784		(5,633		)	29,394		796
Basic earnings (loss) per share	$	0.71	$	(0.28	)	$	1.42	$	0.04
Diluted earnings (loss) per share	$	0.70	$	(0.28	)	$	1.41	$	0.04

Cobalt

On July 6, 2017, the Company completed its acquisition of Cobalt. The aggregate purchase price for the transaction was$130,525, consisting of$129,525funded with cash and borrowings under the Company's credit agreement and$1,000in equity equal to39,262shares of the Company's Class A Common Stock based on a closing stock price of$25.47per share on June 27, 2017. The aggregate purchase price wassubject to certain adjustments, including customary adjustments for the amount of working capital in the business at the closing date and subject to adjustment for any judgment or settlement in connection with a pending litigation matter between Cobalt and Sea Ray Boats, Inc. and Brunswick Corporation. William Paxson St. Clair, Jr., a former owner of Cobalt, was appointed as a director to the Company's Board of Directors and as President of Cobalt. The Company accounted for the transaction in accordance with ASC 805,Business Combinations.

The total consideration given to the former members of Cobalt has been allocated to the assets acquired and liabilities assumed based on estimates of fair value as of the date of the acquisition. The measurements of fair value were determined based upon estimates utilizing the assistance of third party valuation specialists.

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The following table summarizes the purchase price allocation based on the estimated fair values of the assets acquired and liabilities of Cobalt assumed at the acquisition date:

Consideration:
Cash consideration paid	$	129,525
Equity consideration paid	1,000
Fair value of total consideration transferred	$	130,525
Recognized amounts of identifiable assets acquired and (liabilities assumed), at fair value:
Cash	$	3,973
Accounts receivable	2,329
Inventories	14,343
Other current assets	363
Property, plant and equipment	12,934
Identifiable intangible assets	89,900
Current liabilities	(13,108		)
Fair value of assets acquired and liabilities assumed	110,734
Goodwill	19,791
Total purchase price	$	130,525

The fair value estimates for the Company's identifiable intangible assets acquired as part of the acquisition are as follows:

	Estimates of Fair Value		Estimated Useful Life (in years)
Definite-lived intangibles:
Dealer relationships	$	56,300	20
Patent	2,600		15
Total definite-lived intangibles	58,900
Indefinite-lived intangible:
Trade name	31,000
Total intangible assets	$	89,900

The value allocated to inventories reflects the estimated fair value of the acquired inventory based on the expected sales price of the inventory, less an estimated cost to complete and a reasonable profit margin. The fair value of the identifiable intangible assets were determined based on the following approaches:

Dealer Relationships - The value associated with Cobalt's dealer relationships is attributed to its long standing dealer distribution network. The estimate of fair value assigned to this asset was determined using the income approach, which requires an estimate or forecast of the expected future cash flows from the dealer relationships through the application of the multi-period excess earnings approach. The estimated remaining useful life of dealer relationships is approximately twenty years.

Patent - The value associated with the patented technology was based on financial projections and the patent's estimated remaining legal life of approximately fifteen years using a variation of the income approach called the royalty savings method.

Trade Name - The value attributed to Cobalt's trade name was determined using a variation of the income approach called the relief from royalty method, which requires an estimate or forecast of the expected future cash flows. The trade name has an indefinite life.

The fair value of the definite-lived intangible assets are being amortized using the straight-line method to general and administrative expenses over their estimated useful lives. Indefinite-lived intangible assets are not amortized, but instead are evaluated for potential impairment on an annual basis in accordance with the provisions of ASC Topic 350, Intangibles—Goodwill and Other. The weighted average useful life of identifiable definite-lived intangible assets acquired was 19.8 years. Goodwill of $19,791 arising from the acquisition consists of expected synergies and cost savings as well as intangible assets

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that do not qualify for separate recognition. The indefinite-lived intangible asset and goodwill acquired are deductible for income tax purposes.

Acquisition-related costs of $3,056, which were incurred by the Company in fiscal year 2018 related to the Cobalt acquisition, were expensed in the period incurred, and are included in general and administrative expenses in the consolidated statement of operations and comprehensive income for the fiscal year ended June 30, 2018.

Pro Forma Financial Information (unaudited):

The following unaudited pro forma consolidated results of operations for the three months and six months ended December 31, 2018 and 2017, assumes that the acquisition of Cobalt occurred as of July 1, 2016. The unaudited pro forma financial information combines historical results of Malibu and Cobalt, with adjustments for depreciation and amortization attributable to preliminary fair value estimates on acquired tangible and intangible assets for the respective periods. Non-recurring pro forma adjustments associated with the fair value step up of inventory were included in the reported pro forma cost of sales and earnings. The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of fiscal year 2017 or the results that may occur in the future:

	Three Months Ended December 31,					Six Months Ended December 31,
	2018		2017			2018		2017
Net sales	$	165,793	$	114,373		$	289,276	$	217,914
Net income (loss)	14,998		(6,271		)	27,013		496
Net income (loss) attributable to Malibu Boats, Inc.	14,257		(7,018		)	25,555		(805		)
Basic earnings (loss) per share	$	0.68	$	(0.34	)	$	1.23	$	(0.04	)
Diluted earnings (loss) per share	$	0.68	$	(0.34	)	$	1.22	$	(0.04	)

5. Inventories

Inventories, net consisted of the following:

	As of December 31, 2018		As of June 30, 2018
Raw materials	$	46,838	$	28,851
Work in progress	11,099		6,164
Finished goods	10,528		9,253
Total inventories	$	68,465	$	44,268

6. Property, Plant and Equipment

Property, plant and equipment, net consisted of the following:

	As of December 31, 2018			As of June 30, 2018
Land	$	2,194		$	634
Building and leasehold improvements	28,156			20,110
Machinery and equipment	42,177			32,471
Furniture and fixtures	5,828			4,667
Construction in process	5,552			5,636
	83,906			63,518
Less: Accumulated depreciation	(23,713		)	(22,673		)
Property, plant and equipment, net	$	60,193		$	40,845

During the first quarter of fiscal 2019 and the first quarter of fiscal 2018, the Company disposed of various molds for models not currently in production with zero net book value and historical costs of $3,285 and $2,122, respectively. Depreciation expense was $2,495 and $1,687 for the three months ended December 31, 2018 and 2017, and $4,358 and $3,417 for the six months ended December 31, 2018 and 2017, respectively, substantially all of which was recorded in cost of sales.

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7. Goodwill and Other Intangible Assets

Changes in the carrying amount of goodwill for the six months ended December 31, 2018 were as follows:

Goodwill as of June 30, 2018	$	32,230
Addition related to the acquisition of Pursuit	19,502
Effect of foreign currency changes on goodwill	(322		)
Goodwill as of December 31, 2018	$	51,410

The components of other intangible assets were as follows:

	As of December 31, 2018			As of June 30, 2018			Estimated Useful Life (in years)	Weighted Average Remaining Useful Life (in years)
Definite-lived intangibles:
Reacquired franchise rights	$	1,270		$	1,333		5	0.8
Dealer relationships	111,349			86,062			8-20	18.8
Patent	3,986			3,986			12-15	13.5
Trade name	24,667			24,667			15	2.7
Non-compete agreement	49			52			10	5.8
Backlog	88			93			0.3	0.0
Total	141,410			116,193
Less: Accumulated amortization	(55,704		)	(52,972		)
Total definite-lived intangible assets, net	85,706			63,221
Indefinite-lived intangible:
Trade name	63,500			31,000
Total other intangible assets, net	$	149,206		$	94,221

Amortization expense recognized on all amortizable intangibles was $1,538 and $1,304 for the three months ended December 31, 2018 and 2017, respectively and $2,818 and $2,612 for the six months ended December 31, 2018 and 2017.

The estimated future amortization of definite-lived intangible assets is as follows:

Fiscal years ending June 30:
	Remainder of 2019	$	3,138
	2020	6,137
	2021	6,058
	2022	4,557
	2023	4,420
	Thereafter	61,395
		$	85,706

8. Product Warranties

Effective for model year 2016, the Company began providing a limited warranty for a period up to five years for both Malibu and Axis brand boats. For model years prior to 2016, the Company provided a limited warranty for a period of up to three years and two years for its Malibu and Axis brands, respectively. For Cobalt boats, the Company provides a structural warranty of up to ten years which covers the hull, deck joints, bulkheads, floor, transom, stringers, and motor mount. In addition, the Company provides a five year bow-to-stern warranty on all components manufactured or purchased (excluding hull and deck structural components), including canvas and upholstery. For Pursuit boats, the Company provides a structural warranty of up to five years which covers structural defects in materials and workmanship on the deck and hull. Gelcoat is covered up to three years for Cobalt and one year for Malibu and Axis. In each of our brands, some materials, components or parts of the boat that are not covered by our limited product warranties are separately warranted by their manufacturers or suppliers. These other warranties include warranties covering engines and other components.

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The Company’s standard warranties require the Company or its dealers to repair or replace defective products during such warranty period at no cost to the consumer. The Company estimates the costs that may be incurred under its limited warranty and records a liability for such costs at the time the product revenue is recognized. Factors that affect the Company’s warranty liability include the number of units sold, historical and anticipated rates of warranty claims and cost per claim. The Company assesses the adequacy of its recorded warranty liabilities by brand on a quarterly basis and adjusts the amounts as necessary. The Company utilizes historical claims trends and analytical tools to assist in determining the appropriate warranty liability.

Changes in the Company’s product warranty liability, which is included in accrued expenses on the unaudited condensed consolidated balance sheets, were as follows:

	Three Months Ended						Six Months Ended
	December 31, 2018			December 31, 2017			December 31, 2018			December 31, 2017
Beginning balance	$	17,999		$	14,725		$	17,217		$	10,050
Add: Warranty expense	3,107			1,717			6,023			4,725
Additions for acquisitions	1,872			—			1,872			4,404
Less: Warranty claims paid	(2,035		)	(925		)	(4,169		)	(3,662		)
Ending balance	$	20,943		$	15,517		$	20,943		$	15,517

9. Financing

Outstanding debt consisted of the following:

	As of December 31, 2018			As of June 30, 2018
Term loans	$	110,000		$	110,000
Revolving credit loan	35,000			—
Less unamortized debt issuance costs	(1,324		)	(1,513		)
Total debt	143,676			108,487
Less current maturities	—			—
Long-term debt less current maturities	$	143,676		$	108,487

Long-Term Debt

Credit Agreement. On June 28, 2017, Malibu Boats, LLC as the borrower ("Boats LLC"), entered into the Second Amended and Restated Credit Agreement with SunTrust Bank, as the administrative agent, swingline lender and issuing bank, to refinance the prior credit facility and to provide funds for the purchase of Cobalt. It provided Boats LLC with a term loan facility in an aggregate principal amount of $160,000 ($55,000 of which was drawn on June 28, 2017 to refinance our previous credit facility and $105,000 of which was drawn on July 6, 2017 to fund the payment of the purchase price for the Cobalt acquisition and to pay certain fees and expenses related to entering into the Credit Agreement and a revolving credit facility of up to $35,000. On August 17, 2017, Boats LLC made a voluntary principal payment on the term loans in the amount of $50,000 with a portion of the net proceeds from the Company’s equity offering completed on August 14, 2017. On August 21, 2018, in connection with the acquisition of Pursuit, Boats LLC entered into the First Incremental Facility Amendment and First Amendment to the Second Amended and Restated Credit Agreement dated as of June 28, 2017 (as amended, the “Credit Agreement”). The amendment increased the amount available under the revolving credit facility by $50,000 (the “Incremental Revolving Commitment”) from $35,000 to $85,000. Each of the term loans and the revolving credit facility are scheduled to mature on July 1, 2022. In connection with the completion of the acquisition of Pursuit, the Company borrowed $50,000 under its revolving credit facility on October 15, 2018. In December 2018, Boats LLC made a voluntary principal payment on the revolving credit facility in the amount of $15,000.

Borrowings under the Credit Agreement bear interest at a rate equal to either, at Boats LLC's option, (i) the highest of the prime rate, the Federal Funds Rate plus 0.5%, or one-month LIBOR plus 1% (the “Base Rate”) or (ii) LIBOR, in each case plus an applicable margin ranging from 1.75% to 3.00% with respect to LIBOR borrowings and 0.75% to 2.00% with respect to Base Rate borrowings. The applicable margin will be based upon the consolidated leverage ratio of the LLC and its subsidiaries calculated on a consolidated basis. Boats LLC is required to pay a commitment fee for the unused portion of the revolving credit facility which ranges from 0.25% to 0.50% per annum, depending on the LLC’s and its subsidiaries’ consolidated leverage ratio. Boats LLC was also required to pay a ticking fee at a rate of 0.30% per annum on the $50,000 Incremental

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Revolving Commitment from August 21, 2018 until the date that the conditions for the lenders to provide the Incremental Revolving Commitment were met, which occurred on October 15, 2018, the closing date of the Company's purchase of assets of Pursuit. The Company is not a party to the Credit Agreement, and the obligations of Boats LLC under the Credit Agreement are guaranteed by the LLC, and, subject to certain exceptions, the present and future domestic subsidiaries of Boats LLC, and all such obligations are secured by substantially all of the assets of the LLC, Boats LLC and such subsidiary guarantors pursuant to the Second Amended and Restated Security Agreement, by and among Boats LLC, the LLC, the subsidiary guarantors, and SunTrust Bank, as administrative agent, dated as of June 28, 2017, and other collateral documents. The weighted average interest rate on the term loan was 4.2% for the three months ended December 31, 2018.

The Credit Agreement permits prepayment of the term loan facilities without penalty. The $55,000 term loan is subject to quarterly installments of approximately $700 per quarter until March 31, 2019, then approximately $1,000 per quarter until June 30, 2021, and approximately $1,400 per quarter through March 31, 2021. The $105,000 term loan is subject to quarterly installments of approximately $1,300 per quarter until March 31, 2019, then approximately $2,000 per quarter until June 30, 2021, and approximately $2,600 per quarter through March 31, 2022. The Company used proceeds from an offering on August 14, 2017 to repay $50,000 on its term loans under the Credit Agreement and exercised its option to apply the prepayment to principal installments through December 31, 2021, and a portion of principal installments due on March 31, 2022. Accordingly, no principal payments are required under the Credit Agreement until March 31, 2022, and as such, all borrowings as of June 30, 2018 and December 31, 2018, are reflected as noncurrent. The $50,000 repayment resulted in a write-off of deferred financing costs of $829 which was included in amortization expense on the condensed consolidated statement of operations and comprehensive income. The balance of both term loans is due on the scheduled maturity date of July 1, 2022. The Credit Agreement is also subject to prepayments from the net cash proceeds received by Boats LLC or any guarantors from certain asset sales and recovery events, subject to certain reinvestment rights, and from excess cash flow, subject to the terms and conditions of the Credit Agreement.

The Credit Agreement contains certain customary representations and warranties, and notice requirements for the occurrence of specific events such as the occurrence of any event of default, or pending or threatened litigation. The Credit Agreement also requires compliance with certain customary financial covenants, including a minimum ratio of EBITDA to fixed charges and a maximum ratio of total debt to EBITDA. The Credit Agreement contains certain restrictive covenants, which, among other things, place limits on certain activities of the loan parties under the Credit Agreement, such as the incurrence of additional indebtedness and additional liens on property and limit the future payment of dividends or distributions. For example, the Credit Agreement generally prohibits the LLC, Boats LLC and the subsidiary guarantors from paying dividends or making distributions, including to the Company. The credit facility permits, however, (i) distributions based on a member’s allocated taxable income, (ii) distributions to fund payments that are required under the LLC’s tax receivable agreement, (iii) purchase of stock or stock options of the LLC from former officers, directors or employees of loan parties or payments pursuant to stock option and other benefit plans up to $2,000 in any fiscal year, and (iv) share repurchase payments up to $20,000 in any fiscal year subject to one-year carry forward and compliance with other financial covenants. In addition, the LLC may make dividends and distributions of up to $6,000 in any fiscal year, subject to compliance with other financial covenants.

In connection with entering into the Credit Agreement, the Company capitalized $2,074 in deferred financing costs during fiscal 2018. These costs, in addition to the unamortized balance related to costs associated with the Company's previous credit facility of $671, are being amortized over the term of the Credit Agreement into interest expense using the effective interest method and presented as a direct offset to the total debt outstanding as of December 31, 2018 and June 30, 2018.

Covenant Compliance

As of December 31, 2018, the Company was in compliance with the covenants contained in the Credit Agreement.

Interest Rate Swap

On July 1, 2015, the Company entered into a five year floating to fixed interest rate swap with an effective start date of July 1, 2015. The swap is based on a one-month LIBOR rate versus a 1.52% fixed rate on a notional value of $39,250, which was equal to 50% of the outstanding balance of the term loan at the time of the swap arrangement. Under ASC Topic 815, Derivatives and Hedging, all derivative instruments are recorded on the unaudited condensed consolidated balance sheets at fair value as either short term or long term assets or liabilities based on their anticipated settlement date. Refer to Fair Value Measurements in Note 11. The Company has elected not to designate its interest rate swap as a hedge for accounting purposes; therefore, changes in the fair value of the derivative instrument are being recognized in earnings in the Company's unaudited condensed consolidated statements of operations and comprehensive income. For the three months ended December 31, 2018 and 2017 the Company recorded a loss of $129 and a gain of $172, respectively, and for the the six months ended December 31, 2018 and 2017, the Company recorded a loss of $132 and a gain of $203, respectively, for the change in fair value of the

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interest rate swap, which is included in interest expense in the unaudited condensed consolidated statements of operations and comprehensive income.

10. Tax Receivable Agreement Liability

The Company has a tax receivable agreement with the pre-IPO owners of the LLC that provides for payment by the Company to the pre-IPO owners (or their permitted assignees) of 85% of the amount of the benefits, if any, that the Company is deemed to realize as a result of (i) increases in tax basis and (ii) certain other tax benefits related to the Company entering into the tax receivable agreement, including those attributable to payments under the tax receivable agreement. These contractual payment obligations are obligations of the Company and not of the LLC. The Company's tax receivable agreement liability was determined on an undiscounted basis in accordance with ASC 450, Contingencies, since the contractual payment obligations were deemed to be probable and reasonably estimable. The tax receivable agreement further provides that, upon certain mergers, asset sales or other forms of business combinations or other changes of control, the Company (or its successor) would owe to the pre-IPO owners of the LLC a lump-sum payment equal to the present value of all forecasted future payments that would have otherwise been made under the tax receivable agreement that would be based on certain assumptions, including a deemed exchange of LLC Units and that the Company would have sufficient taxable income to fully utilize the deductions arising from the increased tax basis and other tax benefits related to entering into the tax receivable agreement. The Company also is entitled to terminate the tax receivable agreement, which, if terminated, would obligate the Company to make early termination payments to the pre-IPO owners of the LLC. In addition, a pre-IPO owner may elect to unilaterally terminate the tax receivable agreement with respect to such pre-IPO owner, which would obligate the Company to pay to such existing owner certain payments for tax benefits received through the taxable year of the election.

For purposes of the tax receivable agreement, the benefit deemed realized by the Company will be computed by comparing the actual income tax liability of the Company (calculated with certain assumptions) to the amount of such taxes that the Company would have been required to pay had there been no increase to the tax basis of the assets of the LLC as a result of the purchases or exchanges, and had the Company not entered into the tax receivable agreement.

The following table reflects the changes to the Company's tax receivable agreement liability:

	As of December 31, 2018			As of June 30, 2018
Payable pursuant to tax receivable agreement	$	55,046		$	82,291
Additions (reductions) to tax receivable agreement:
Exchange of LLC Units for Class A Common Stock	2,553			1,685
Adjustment for change in estimated tax rate	—			(24,637		)
Payments under tax receivable agreement	—			(4,293		)
	57,599			55,046
Less current portion under tax receivable agreement	(3,932		)	(3,932		)
Payable pursuant to tax receivable agreement, less current portion	$	53,667		$	51,114

When estimating the expected tax rate to use in order to determine the tax benefit expected to be recognized from the Company’s increased tax basis as a result of exchanges of LLC Units by the pre-IPO owners of the LLC, the Company continuously monitors changes in its overall tax posture, including changes resulting from new legislation and changes as a result of new jurisdictions in which the Company is subject to tax.

During the second quarter of fiscal 2018, the U.S. Congress enacted tax legislation called the Tax Cuts and Jobs Act of 2017 ("the Tax Act") on December 22, 2017, which, among other provisions, lowered the Company's U.S. corporate tax rate from 35% to 21%, effective January 1, 2018. The Tax Act lowered the estimated tax rate used to compute the Company's future tax obligations and, in turn, reduced the future tax benefit expected to be realized by the Company related to increased tax basis from previous sales and exchanges of LLC Units by pre-IPO owners of the LLC. The change in the underlying tax-rate assumptions used to estimate the tax receivable agreement liability, resulted in a decrease in the tax receivable agreement liability of $30,317 during the second quarter of fiscal 2018.

Also, during the first quarter of fiscal 2018, the Company acquired Cobalt, which expanded the Company's footprint into new state tax jurisdictions. This change in the Company's state tax posture increased the estimated tax rate used in computing the Company's future tax obligations and, in turn, increased the future tax benefit expected to be realized by the Company related to increased tax basis from previous sales and exchanges of LLC Units by pre-IPO owners of the LLC. The change in the underlying tax-rate assumptions used to estimate the tax receivable agreement liability resulted in an increase in

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the tax receivable agreement liability of $6,047 during the first quarter of fiscal 2018. These amounts are included in other (income) expense, net in the accompanying unaudited condensed consolidated statements of operations and comprehensive income. Additionally, during the second quarter of fiscal 2019, the Company analyzed the impact of the Pursuit acquisition on its state footprint and determined that there was an immaterial change to the estimated tax rate used in computing the Company's future tax obligations.

As of December 31, 2018 and June 30, 2018, the Company had deferred tax assets of $110,435 and $107,293, respectively, associated with basis differences in assets upon acquiring an interest in Malibu Boats Holdings, LLC and pursuant to making an election under Section 754 of the Internal Revenue Code of 1986 (the "Internal Revenue Code"), as amended. The aggregate tax receivable agreement liability represents 85% of the tax benefits that the Company expects to receive in connection with the Section 754 election. In accordance with the tax receivable agreement, the next annual payment is anticipated approximately 75 days after filing the federal tax return due by April 15, 2019.

11. Fair Value Measurements

In determining the fair value of certain assets and liabilities, the Company employs a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. As defined in ASC Topic 820, Fair Value Measurements and Disclosures, fair value is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., the exit price). Financial assets and financial liabilities recorded on the unaudited condensed consolidated balance sheets at fair value are categorized based on the reliability of inputs to the valuation techniques as follows:

• Level 1—Financial assets and financial liabilities whose values are based on unadjusted quoted prices in active markets for identical assets.

• Level 2—Financial assets and financial liabilities whose values are based on quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in non-active markets; or valuation models whose inputs are observable, directly or indirectly, for substantially the full term of the asset or liability.

• Level 3—Financial assets and financial liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect the Company’s estimates of the assumptions that market participants would use in valuing the financial assets and financial liabilities.

The hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

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Assets and liabilities that had recurring fair value measurements were as follows:

	Fair Value Measurements at Reporting Date Using
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
As of December 31, 2018:
Assets
Interest rate swap not designated as cash flow hedge	$	286	$	—	$	286	$	—
Total assets at fair value	$	286	$	—	$	286	$	—
As of June 30, 2018:
Assets
Interest rate swap not designated as cash flow hedge	$	418	$	—	$	418	$	—
Total assets at fair value	$	418	$	—	$	418	$	—

Fair value measurements for the Company’s interest rate swap are classified under Level 2 because such measurements are based on significant other observable inputs. There were no transfers of assets or liabilities between Level 1 and Level 2 as of December 31, 2018 or June 30, 2018.

The Company’s nonfinancial assets and liabilities that have nonrecurring fair value measurements include property, plant and equipment, goodwill and intangibles.

In assessing the need for goodwill impairment, management relies on a number of factors, including operating results, business plans, economic projections, anticipated future cash flows, transactions and marketplace data. Accordingly, these fair value measurements fall in Level 3 of the fair value hierarchy. The Company generally uses projected cash flows, discounted as necessary, to estimate the fair values of property, plant and equipment and intangibles using key inputs such as management’s projections of cash flows on a held-and-used basis (if applicable), management’s projections of cash flows upon disposition and discount rates. Accordingly, these fair value measurements fall in Level 3 of the fair value hierarchy. These assets and certain liabilities are measured at fair value on a nonrecurring basis as part of the Company’s impairment assessments and as circumstances require.

12. Income Taxes

Malibu Boats, Inc. is taxed as a C corporation for U.S. income tax purposes and is therefore subject to both federal and state taxation at a corporate level. The LLC continues to operate in the United States as a partnership for U.S. federal income tax purposes.

Income taxes are computed in accordance with ASC Topic 740, Income Taxes, and reflect the net tax effects of temporary differences between the financial reporting carrying amounts of assets and liabilities and the corresponding income tax amounts. The Company has deferred tax assets and liabilities and maintains valuation allowances where it is more likely than not that all or a portion of deferred tax assets will not be realized. To the extent the Company determines that it will not realize the benefit of some or all of its deferred tax assets, such deferred tax assets will be adjusted through the Company’s provision for income taxes in the period in which this determination is made.

As of December 31, 2018 and June 30, 2018, the Company maintained a valuation allowance of $13,215 and $12,716, respectively, against deferred tax assets related to state net operating losses and future amortization deductions (with respect to the Section 754 election) that are reported in the Tennessee corporate tax return without offsetting income, which is taxable at the LLC. The increase in the valuation allowance is due to the exchanges of LLC Units into Class A common stock by certain LLC Unit holders during the six months ended December 31, 2018.

On December 22, 2017, the Tax Act was enacted which, among a number of its provisions, lowered the U.S. corporate tax rate from 35% to 21%, effective January 1, 2018. The Company’s consolidated interim effective tax rate is based upon expected annual income from operations, statutory tax rates and tax laws in the various jurisdictions in which the Company operates. Significant or unusual items, including those related to the change in U.S. tax law noted above as well as other adjustments to accruals for tax uncertainties, are recognized in the quarter in which the related event occurs.

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On October 15, 2018, the Company completed its acquisition of Pursuit. This did not have a significant impact to the effective tax rate. For the three months ended December 31, 2018 and 2017, the Company's effective tax rate was 21.5% and 344.9%, respectively. For the six months ended December 31, 2018 and 2017, the Company's effective tax rate was 22.2% and 98.4%, respectively. For the three months ended December 31, 2018, the Company's effective tax rate exceeded the statutory federal income tax rate of 21% due to the impact of U.S. state taxes. This effect was partially offset by a windfall benefit generated by certain stock based compensation during the quarter, the research and development tax credit, and the impact of non-controlling interests in the LLC, a passthrough entity for U.S. federal tax purposes. For the three and six months ended December 31, 2017 , the principal differences in the Company's effective tax rate with the blended statutory federal income tax rate of approximately 28% relate to the impact of one-time items due to the change in tax law enacted in connection with the Tax Act and the impact of the additional jurisdictions in which the Company is taxed as a result of the Cobalt acquisition. Additionally, the Company's effective tax rate for the three months ended December 31, 2017 is related to, to a lesser extent, the impact of the non-controlling interests in the LLC, a pass-through entity for U.S. federal tax purposes, state income taxes attributable to the LLC, and the benefit of deductions under Section 199 of the Internal Revenue Code.

13. Stock-Based Compensation

The Company adopted a long term incentive plan which became effective on January 1, 2014, and reserves for issuance up to 1,700,000 shares of Malibu Boats, Inc. Class A Common Stock for the Company’s employees, consultants, members of its board of directors and other independent contractors at the discretion of the compensation committee. Incentive stock awards authorized under the Incentive Plan include unrestricted shares of Class A Common Stock, stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent awards and performance awards. As of December 31, 2018, 880,541 shares remain available for future issuance under the long term incentive plan. Readers should refer to Note 13 to the fiscal 2018 audited consolidated financial statements contained in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2018, for additional information related to the Company's awards and the Incentive Plan.

On August 22, 2018, the Company granted 50,000 options to certain key employees to purchase from the Company shares of Class A Common Stock at a price of $42.13 per share. The term of the options commenced on August 22, 2018 and will expire on August 21, 2024, the day before the sixth anniversary of the grant date. Under the terms of the agreements, the awards will vest ratably over four years on each anniversary of their grant date. At August 22, 2018, the fair value of the option awards was $733 and was estimated using the Black-Scholes option-pricing model with the following assumptions: risk-free rate of 2.7%, expected volatility of 38.4%, expected term of 4.25 years, and no dividends. Stock-based compensation expense attributable to the service based options is amortized on a straight-line basis over the requisite service period. Compensation costs associated with performance based option awards are recognized over the requisite service period based on probability of achievement in accordance with ASC Topic 718, Compensation—Stock Compensation.

On November 1, 2018, the Company granted 35,000 restricted stock units and 48,000 restricted stock awards to key employees under the Incentive Plan. The grant date fair value of these awards was $3,474 based on a stock price of $41.85 per share on the date of grant. Under the terms of the agreements, 71% of the awards will vest ratably over four years beginning on November 6, 2019 and approximately 29% of the awards will vest in tranches based on the achievement of annual or cumulative performance targets. Compensation costs associated with performance based awards are recognized over the requisite service period based on probability of achievement in accordance with ASC Topic 718, Compensation—Stock Compensation.

Risk-free interest rate. The risk-free rate for the expected term of the option is based on the U.S. Treasury yield curve at the date of grant.

Expected term. The Company used the simplified method to estimate the expected term of stock options. The simplified method assumes that employees will exercise share options evenly between the period when the share options are vested and ending on the date when the share options would expire. 

Expected volatility. The Company determined expected volatility based on its historical volatility calculated using daily observations of the closing price of its publicly traded common stock.

Expected dividend. The Company has not estimated any dividend yield as the Company currently does not pay a dividend and does not anticipate paying a dividend over the expected term.

The following is a summary of the changes in the Company's stock options for the six months ended December 31, 2018:

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	December 31, 2018
	Shares		Price or range per share	Weighted Average Exercise Price/Share
Total outstanding options at June 30, 2018	144,000		$27.24	$	27.24
Options granted	50,000		42.13	42.13
Options exercised	(28,500	)	(25.85) - (30.87)	(26.29		)
Outstanding options at end of period	165,500		25.85 - 42.13	31.91
Exercisable at end of period	7,500		$30.87	$	30.87

The following is a summary of the changes in non-vested restricted stock units and restricted stock awards for the six months ended December 31, 2018:

	Number of Restricted Stock Units and Restricted Stock Awards Outstanding		Weighted Average Grant Date Fair Value
Total Non-vested Restricted Stock Units as of June 30, 2018	227,154		$	20.84
Granted	97,702		42.05
Vested	(98,625	)	(22.61		)
Forfeited	(1,600	)	(22.21		)
Total Non-vested Restricted Stock Units as of December 31, 2018	224,631		$	29.28

Stock compensation expense attributable to the Company's share-based equity awards was $655 and $488 for the three months ended December 31, 2018 and 2017, respectively, and $1,131 and $850 for the six months ended December 31, 2018 and 2017, respectively. Stock compensation expense attributed to share-based equity awards issued under the Incentive Plan is recognized on a straight-line basis over the terms of the respective awards and is included in general and administrative expense in the Company's unaudited condensed consolidated statement of operations and comprehensive income.

14. Net Earnings Per Share

Basic net income per share of Class A Common Stock is computed by dividing net income attributable to the Company's earnings by the weighted average number of shares of Class A Common Stock outstanding during the period. The weighted average number of shares of Class A Common Stock outstanding used in computing basic net income per share includes fully vested restricted stock units awarded to directors that are entitled to participate in distributions to common shareholders through receipt of additional units of equivalent value to the dividends paid to Class A Common Stock holders.

Diluted net income per share of Class A Common Stock is computed similarly to basic net income per share except the weighted average shares outstanding are increased to include additional shares from the assumed exercise of any common stock equivalents using the treasury method, if dilutive. The Company’s LLC Units and non-qualified stock options are considered common stock equivalents for this purpose. The number of additional shares of Class A Common Stock related to these common stock equivalents and stock options are calculated using the treasury stock method.

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Basic and diluted net income (loss) per share of Class A Common Stock has been computed as follows (in thousands, except share and per share amounts)

	Three Months Ended					Six Months Ended
	December 31, 2018		December 31, 2017			December 31, 2018		December 31, 2017
Basic:
Net income (loss) attributable to Malibu Boats, Inc.	$	14,257	$	(6,383	)	$	25,555	$	(498	)
Shares used in computing basic net income per share:
Weighted-average Class A Common Stock	20,689,779		20,263,999			20,577,182		19,644,918
Weighted-average participating restricted stock units convertible into Class A Common Stock	185,464		165,628			180,913		159,274
Basic weighted-average shares outstanding	20,875,243		20,429,627			20,758,095		19,804,192
Basic net income (loss) per share	$	0.68	$	(0.31	)	$	1.23	$	(0.03	)
Diluted:
Net income (loss) attributable to Malibu Boats, Inc.	$	14,257	$	(6,383	)	$	25,555	$	(498	)
Shares used in computing diluted net income per share:
Basic weighted-average shares outstanding	20,875,243		20,429,627			20,758,095		19,804,192
Restricted stock units granted to employees	94,654		—			117,374		—
Stock options granted to employees	20,416		—			8,399		—
Diluted weighted-average shares outstanding 1	20,990,313		20,429,627			20,883,868		19,804,192
Diluted net income (loss) per share	$	0.68	$	(0.31	)	$	1.22	$	(0.03	)

¹ The Company excluded (i) 904,652 and 1,274,484 potentially dilutive shares from the calculation of diluted net income (loss) per share for the three months ended December 31, 2018 and 2017, respectively, and (ii) 924,652 and 1,274,484 potentially dilutive shares from the calculation of diluted net income (loss) per share for the six months ended December 31, 2018 and 2017, respectively, as these units would have been antidilutive.

The shares of Class B Common Stock do not share in the earnings or losses of Malibu Boats, Inc. and are therefore not included in the calculation. Accordingly, basic and diluted net earnings per share of Class B Common Stock has not been presented.

15. Commitments and Contingencies

Repurchase Commitments

In connection with its dealers’ wholesale floor plan financing of boats, the Company has entered into repurchase agreements with various lending institutions. The reserve methodology used to record an estimated expense and loss reserve in each accounting period is based upon an analysis of likely repurchases based on current field inventory and likelihood of repurchase. Subsequent to the inception of the repurchase commitment, the Company evaluates the likelihood of repurchase and adjusts the estimated loss reserve accordingly. When a potential loss reserve is recorded it is presented in accrued liabilities in the accompanying unaudited condensed consolidated balance sheet. If the Company were obligated to repurchase a significant number of units under any repurchase agreement, its business, operating results and financial condition could be adversely affected. The total amount financed under the floor financing programs with repurchase obligations was $266,565 and $163,626 as of December 31, 2018 and June 30, 2018, respectively.

Repurchases and subsequent sales are recorded as a revenue transaction. The net difference between the repurchase price and the resale price is recorded against the loss reserve and presented in cost of sales in the accompanying unaudited condensed consolidated statements of operations and comprehensive income. The Company did not carry a reserve for repurchases as of December 31, 2018 and June 30, 2018.

The Company has collateralized receivables financing arrangements with a third-party floor plan financing provider for European dealers. Under terms of both arrangements, the Company transfers the right to collect a trade receivable to the financing provider in exchange for cash but agrees to repurchase the receivable if the dealer defaults. Since the transfer of the

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receivable to the financing provider does not meet the conditions for a sale under ASC Topic 860, Transfers and Servicing, the Company continues to report the transferred trade receivable in other current assets with an offsetting balance recorded as a secured obligation in accrued expenses in the Company's unaudited condensed consolidated balance sheet. As of December 31, 2018 and June 30, 2018, the Company had financing receivables of $633 and $453, respectively, recorded in other current assets and accrued expenses related to these arrangements.

Contingencies

Certain conditions may exist which could result in a loss, but which will only be resolved when future events occur. The Company, in consultation with its legal counsel, assesses such contingent liabilities, and such assessments inherently involve an exercise of judgment. If the assessment of a contingency indicates that it is probable that a loss has been incurred, the Company accrues for such contingent loss when it can be reasonably estimated. If the assessment indicates that a potentially material loss contingency is not probable but reasonably estimable, or is probable but cannot be estimated, the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, is disclosed. If the assessment of a contingency deemed to be both probable and reasonably estimable involves a range of possible losses, the amount within the range that appears at the time to be a better estimate than any other amount within the range would be accrued. When no amount within the range is a better estimate than any other amount, the minimum amount in the range is accrued even though the minimum amount in the range is not necessarily the amount of loss that will be ultimately determined.

Estimates of potential legal fees and other directly related costs associated with contingencies are not accrued but rather are expensed as incurred. Except as disclosed below under "Legal Proceedings," management does not believe there are any pending claims (asserted or unasserted) at December 31, 2018 (unaudited) or June 30, 2018 that may have a material adverse impact on the Company’s financial condition, results of operations or cash flows.

Legal Proceedings

On January 12, 2018, the Company filed suit against Skier’s Choice, Inc., or "Skier’s Choice," in the U.S. District Court for the Eastern District of Tennessee, seeking monetary and injunctive relief. The Company's complaint alleges Skier’s Choice’s infringement of three utility patents - U.S. Patent Nos. 9,260,161, 8,578,873, and 9,199,695 - related to wake surfing technology. Skier’s Choice denied liability arising from the causes of action alleged in the Company's complaint and filed counterclaims alleging invalidity of the asserted patents. The parties are currently engaged in discovery. The Company intends to vigorously pursue this litigation to enforce its rights in its patented technology and believes that Skier’s Choice’s counterclaims are without merit.  Trial is set for October 21, 2019.

On January 21, 2015, Cobalt, a wholly owned indirect subsidiary of the Company, filed a patent infringement lawsuit against the Brunswick Corporation and its subsidiary Sea Ray Boats, Inc. alleging that certain of the Sea Ray's branded boats infringed upon Cobalt's patented submersible swim step technology (U.S. Patent No. 8,375,880). On October 31, 2017, the US District Court in the Eastern District of Virginia entered an amended judgment on the jury verdict in favor of Cobalt.

16. Segment Information

The following tables present financial information for the Company’s reportable segments for the three and six months ended December 31, 2018 and 2017, respectively, and the Company’s financial position at December 31, 2018 and June 30, 2018, respectively:

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	Three Months Ended December 31, 2018													Six Months Ended December 31, 2018
	Malibu US		Cobalt		Pursuit		Malibu Australia		Eliminations			Total		Malibu U.S.		Cobalt		Pursuit		Malibu Australia		Eliminations			Total
Net sales	$	86,760	$	45,846	$	29,927	$	7,299	$	(4,039	)	$	165,793	$	157,707	$	94,106	$	29,927	$	13,292	$	(5,756	)	$	289,276
Affiliate (or intersegment) sales	4,039		—						(4,039		)	—		5,756								(5,756		)	—
Net sales to external customers	82,721		45,846		29,927		7,299		—			165,793		151,951		94,106		29,927		13,292		—			289,276
Income before provision for income taxes	$	10,850	$	5,417	$	2,521	$	460	$	(131	)	$	19,117	$	19,079	$	12,264	$	2,521	$	917	$	(66	)	$	34,715
	Three Months Ended December 31, 2017													Six Months Ended December 31, 2017
	Malibu US		Cobalt		Pursuit		Malibu Australia		Eliminations			Total		Malibu U.S.		Cobalt		Pursuit		Malibu Australia		Eliminations			Total
Net sales	$	70,226	$	39,367	$	—	$	6,925	$	(2,145	)	$	114,373	$	133,258	$	76,285	$	—	$	12,688	$	(4,317	)	$	217,914
Affiliate (or intersegment) sales	2,145		—		—		—		(2,145		)	—		4,317		—		—		—		(4,317		)	—
Net sales to external customers	68,081		39,367		—		6,925		—			114,373		128,941		76,285		—		12,688		—			217,914
Income before provision for income taxes	$	40,845	$	3,369	$	—	$	766	$	(6	)	$	44,974	$	44,717	$	5,193	$	—	$	1,236	$	(16	)	$	51,130

	As of December 31, 2018			As of June 30, 2018
Assets
Malibu U.S.	$	385,568		$	327,181
Cobalt	147,930			157,616
Pursuit	111,594			—
Malibu Australia	20,969			20,128
Eliminations	(227,118		)	(139,157		)
Total assets	$	438,943		$	365,768

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Some of the information in this Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts included in this Form 10-Q, including, without limitation, certain statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, may constitute forward-looking statements. In some cases you can identify these “forward-looking statements” by words like “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of those words and other comparable words. Any such forward-looking statements are not guarantees of future performance and involve risks, uncertainties and other factors that may cause our actual results, performance or achievements, or industry results to vary materially from our future results, performance or achievements, or those of our industry, expressed or implied in such forward-looking statements. Such factors include, among others: the impact of our recent acquisition of the assets of Pursuit Boats ("Pursuit"); our ability to grow our business through acquisitions or strategic alliances and new partnerships; general industry, economic and business conditions; demand for our products; changes in consumer preferences; competition within our industry; our reliance on our network of independent dealers; our ability to manage our manufacturing levels and our large fixed cost base; the successful introduction of our new products; and the success of our engines integration strategy as well as other factors affecting us discussed under the heading “Item 1A-Risk Factors” appearing in the Company’s Annual Report on Form 10-K for the year ended June 30, 2018, filed with the Securities and Exchange Commission (“SEC”) on September 6, 2018 ("Form 10-K"). Many of these risks and uncertainties are outside our control, and there may be other risks and uncertainties which we do not currently anticipate because they relate to events and depend on circumstances that may or may not occur in the future. We do not intend and undertake no obligation to update any forward-looking information to reflect actual results or future events or circumstances.

The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included herein.

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Malibu Boats, Inc. is a Delaware corporation with its principal offices in Loudon, Tennessee. We use the terms “Malibu,” the “Company,” “we,” “us,” “our” or similar references to refer to Malibu Boats, Inc., its subsidiary, Malibu Boats Holdings, LLC, or the LLC, and its subsidiary Malibu Boats, LLC and its consolidated subsidiaries, including Cobalt Boats, LLC and PB Holdco, LLC, through which we acquired the assets of Pursuit.

Overview

We are a leading designer, manufacturer and marketer of a diverse range of recreational powerboats, including performance sport boats, sterndrive and outboard boats. Malibu Boats, Inc. is the market leader in the performance sport boat category through our Malibu and Axis Wake Research boat brands, the leader in the 20’ - 40’ segment of the sterndrive boat category through our Cobalt brand and, as a result of our recent acquisition, in a leading position in the fiberglass outboard fishing boat market with our Pursuit brand. See “--Acquisition of Pursuit” below for more information. Our product portfolio of premium brands are used for a broad range of recreational boating activities including, among others, water sports, general recreational boating and fishing. Our passion for consistent innovation, which has led to propriety technology such as Surf Gate, has allowed us to expand the market for our products by introducing consumers to new and exciting recreational activities. We design products that appeal to an expanding range of recreational boaters and water sports enthusiasts whose passion for boating and water sports is a key component of their active lifestyle and provide consumers with a better customer-inspired experience. With performance, quality, value and multi-purpose features, our product portfolio has us well positioned to broaden our addressable market and achieve our goal of increasing our market share in the expanding recreational boating industry.

We currently sell our boats under four brands—Malibu; Axis; Cobalt; and Pursuit. Our flagship Malibu boats offer our latest innovations in performance, comfort and convenience, and are designed for consumers seeking a premium performance sport boat experience. Retail prices of our Malibu boats typically range from $55,000 to $180,000. We launched our Axis boats in 2009 to appeal to consumers who desire a more affordable performance sport boat product but still demand high performance, functional simplicity and the option to upgrade key features. Retail prices of our Axis boats typically range from $55,000 to $105,000. Our Cobalt boats consist of mid to large-sized luxury cruisers and bowriders that we believe offer the ultimate experience in comfort, performance and quality. Retail prices for our Cobalt boats typically range from $55,000 to $750,000. Our recent acquisition of Pursuit expands our product offerings into the saltwater outboard fishing market and includes center console, dual console and offshore models. Retail prices for our Pursuit boats typically range from $80,000 to $800,000.

We sell our boats through a dealer network that we believe is the strongest in the recreational powerboat industry. As of July 1, 2018, our distribution channel consisted of over 300 dealer locations globally. Our acquisition of Pursuit has added approximately 40 new dealers. Our dealer base is an important part of our consumers’ experience, our marketing efforts and our brands. We devote significant time and resources to find, develop and improve the performance of our dealers and believe our dealer network gives us a distinct competitive advantage.

On a consolidated basis, we achieved second quarter fiscal 2019 net sales, gross profit, net income (loss) and adjusted EBITDA of $165.8 million, $38.3 million, $15.0 million and $29.4 million, respectively, compared to $114.4 million, $27.5 million, $(5.6) million and $20.6 million, respectively, for the second quarter of fiscal 2018. For the second quarter of fiscal 2019, net sales increased 45.0%, gross profit increased 39.2%, net income increased 368.6% and adjusted EBITDA increased 42.5% as compared to the second quarter of fiscal 2018. On a consolidated basis, we achieved first half fiscal 2019 net sales, gross profit, net income and adjusted EBITDA of $289.3 million, $68.8 million, $27.0 million and $52.3 million, respectively, compared to $217.9 million, $50.4 million, $0.8 million and $38.3 million, respectively, for the first half of fiscal 2018. For the first half of fiscal 2019, net sales increased 32.7%, gross profit increased 36.4%, net income increased 3,154.6% and adjusted EBITDA increased 36.6% as compared to the first half of fiscal 2018. Our results for fiscal 2019 include Pursuit since our acquisition of Pursuit on October 15, 2018. For the definition of adjusted EBITDA and a reconciliation to net income (loss), see “GAAP Reconciliation of Non-GAAP Financial Measures.”

We currently report our results of operations under four reportable segments: Malibu U.S., Malibu Australia, Cobalt and Pursuit, based on our boat manufacturing operations. The Malibu U.S. and Malibu Australia segments participate in the manufacturing, distribution, marketing and sale of Malibu and Axis performance sport boats. The Malibu U.S. segment primarily serves markets in North America, South America, Europe, and Asia while the Malibu Australia operating segment principally serves the Australian and New Zealand markets. Our Cobalt segment participates in the manufacturing, distribution, marketing and sale of Cobalt boats throughout the world. Our Pursuit segment participates in the manufacturing, distribution, marketing and sale of Pursuit boats throughout the world. Malibu U.S. is our largest segment and represented 52.5% and 59.2% of our net sales for the six months ended December 31, 2018 and December 31, 2017, respectively. Cobalt represented 32.5% and 35.0% of our net sales for the six months ended December 31, 2018 and December 31, 2017, respectively. We completed the acquisition of Pursuit on October 15, 2018 and Pursuit represented 10.4% of our net sales for the six months ended

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December 31, 2018 . Malibu Australia represented 4.6% and 5.8% of our net sales for the six months ended December 31, 2018 and December 31, 2017, respectively. See Note 16 to our unaudited condensed consolidated financial statements for more information about our reporting segments.

Acquisition of Pursuit

On October 15, 2018, we completed our acquisition of assets of the Pursuit Boats division of S2 Yachts, Inc., pursuant to an asset purchase agreement dated as of August 21, 2018. We paid an aggregate purchase price of $100.1 million. A portion of the purchase price was deposited into an escrow account to secure certain post-closing obligations of the sellers. We paid the purchase price for the acquisition with $50.1 million of cash on hand and $50.0 million of borrowings under our revolving credit facility.

As noted, we borrowed $50.0 million under our revolving credit facility to fund a portion of the purchase price of Pursuit. Our subsidiary, Malibu Boats, LLC, as the borrower, entered into the First Incremental Facility Amendment and First Amendment (the “Amendment”) to its existing Second Amended and Restated Credit Agreement dated as of June 28, 2017 (as amended, the “Credit Agreement”). The Amendment increased the amount available under the revolving credit facility by $50.0 million (the “Incremental Revolving Commitment”) from $35.0 million to $85.0 million. The availability of the Incremental Revolving Commitment was subject to the satisfaction of certain conditions set forth in the Amendment, including the closing of the acquisition of the assets of Pursuit. Malibu was required to pay a ticking fee at a rate of 0.30% per annum on the $50.0 million Incremental Revolving Commitment until the conditions for the lenders to provide the Incremental Revolving Commitment were met, which occurred on October 15, 2018, the closing date of the acquisition. Revolving loans made pursuant to the Amendment have terms and conditions identical to revolving loans under the Credit Agreement.

Outlook

Industry-wide marine retail registrations continue to recover from the years following the global financial crisis. According to Statistical Surveys, Inc., domestic retail registration volumes of performance sport boats, fiberglass sterndrive and fiberglass outboards increased at a compound annual growth rate of approximately 6.5% between 2011 and 2017, for the 50 reporting states. This has been led by growth in our core market, performance sport boats, having produced a double digit compound annual growth rate over that period. Domestic retail demand growth has continued in performance sport boats for calendar year 2018 and, in fact, has accelerated versus 2017. Fiberglass sterndrive and outboard boats, the target markets for our Cobalt and Pursuit branded products, have seen their combined market grow at a 6.0% compound annual growth rate between 2011 and 2017. That growth has been driven by the outboard market where Pursuit is focused and Cobalt is a new entrant and where we plan to meaningfully expand our market share in the future. While Cobalt’s primary market for sterndrive propulsion has been challenged, their performance has been helped by strength in larger sterndrive boats and market share gains. We expect the growing demand for our products to continue, and there are numerous variables that have the potential to impact our volumes, both positively and negatively. For example, we believe the substantial decrease in the price of oil, broad strength of the U.S. dollar and recently implemented tariffs has resulted in reduced demand for our boats in certain markets. To date, growth in our domestic market has offset significantly diminished demand from economies that are driven by the oil industry and international markets. Consumer confidence, expanded or eroded, is a variable that could also impact demand in both directions. Additionally, we are monitoring the possibility of another federal government shutdown in the United States, as we believe a prolonged shutdown could result in a negative impact on our business. Other challenges that could impact demand for recreational powerboats include higher interest rates reducing retail consumer appetite for our product, the availability of credit to our dealers and retail consumers, fuel costs, a meaningful reduction in the value of global or domestic equity markets, the continued acceptance of our new products in the recreational boating market, our ability to compete in the competitive power boating industry, and the costs of labor and certain of our raw materials and key components.

Since 2008, we have increased our market share among manufacturers of performance sport boats due to new product development, improved distribution, new models, and innovative features. As the market for our product has recovered our competitors have become more aggressive in their product introductions, increased their distribution and begun to compete with our patented Surf Gate system. This competitive environment has continued throughout the past few years, but we continue to maintain a strong lead over our nearest competitor in terms of market position and believe that we are well positioned to maintain our industry leading position given our strong dealer network and new product pipeline. In addition, we continue to be the market share leader in both the premium and value-oriented product sub-categories.

We believe our track record of expanding our market share due to new product development, improved distribution, new models, and innovative features is directly transferable to our Cobalt and Pursuit acquisitions. While Cobalt and Pursuit are market leaders in certain areas, we believe our experience positions us to execute a strategy to drive enhanced share by expanding both the Cobalt and Pursuit product offerings with different foot lengths, different boat types and different propulsion technologies. Our new product development efforts at Cobalt and Pursuit will take time and our ability to influence

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near-term model introductions is limited, but we have already begun to execute on this strategy. We believe enhancing new product development combined with diligent management of the Cobalt and Pursuit dealer networks positions us to meaningfully improve our share of the sterndrive and outboard markets over time.

Factors Affecting Our Results of Operations

We believe that our results of operations and our growth prospects are affected by a number of factors, such as the economic environment and consumer demand for our products, our ability to develop new products and innovate, our product mix, our ability to manage manufacturing costs, including through our vertical integration efforts, sales cycles and inventory levels, the strength of our dealer network and our ability to offer dealer financing and incentives. While we do not have control of all factors affecting our results from operations, we work diligently to influence and manage those factors which we can impact to enhance our results of operations.

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Components of Results of Operations

Net Sales

We primarily generate revenue from sales to our dealers. The substantial majority of our net sales are derived from the sale of boats and trailers, including optional features included at the time of the initial wholesale purchase of the boat. Net sales consists of the following:

• Gross sales from:

• Boat and trailer sales—consists of sales of boats and trailers to our dealer network. Nearly all of our boat sales include optional feature upgrades purchased by the consumer, which increase the average selling price of our boats; and

• Parts and other sales—consists of sales of replacement and aftermarket boat parts and accessories to our dealer network; and consists of royalty income earned from license agreements with various boat manufacturers, including Nautique, Chaparral, Mastercraft, and Tige related to the use of our intellectual property.

• Net sales are net of:

• Sales returns—consists primarily of contractual repurchases of boats either repossessed by the floor plan financing provider from the dealer or returned by the dealer in limited circumstances and at our discretion under our warranty program; and

• Rebates, free flooring and discounts—consists of incentives, rebates and free flooring, we provide to our dealers based on sales of eligible products. For our Malibu and Axis models, if a dealer meets its monthly or quarterly commitment volume based on tier, as well as other terms of the rebate program, the dealer is entitled to a specified rebate tied to each tier. Cobalt dealers are entitled to volume-based discounts taken at the time of invoice. For our Pursuit models, if a dealer meets its quarterly or annual retail volume goals, the dealer is entitled to a specific rebate tied to each tier and applied to their wholesale volume purchased from Pursuit. For Malibu and Cobalt models and select Pursuit models, our dealers that take delivery of current model year boats in the offseason, typically July through April in the U.S., are also entitled to have us pay the interest to floor the boat until the earlier of (1) the sale of the unit or (2) a date near the end of the current model year, which incentive we refer to as “free flooring.” From time to time, we may extend the flooring program to eligible models beyond the offseason period.

Cost of Sales

Our cost of sales includes all of the costs to manufacture our products, including raw materials, components, supplies, direct labor and factory overhead. For components and accessories manufactured by third-party vendors, such costs represent the amounts invoiced by the vendors. Shipping costs and depreciation expense related to manufacturing equipment and facilities are also included in cost of sales. Warranty costs associated with the repair or replacement of our boats under warranty are also included in cost of sales.

Operating Expenses

Our operating expenses include selling and marketing, and general and administrative costs. Each of these items includes personnel and related expenses, supplies, non-manufacturing overhead, third-party professional fees and various other operating expenses. Further, selling and marketing expenditures include the cost of advertising and various promotional sales incentive programs. General and administrative expenses include, among other things, salaries, benefits and other personnel related expenses for employees engaged in product development, engineering, finance, information technology, human resources and executive management. Other costs include outside legal and accounting fees, investor relations, risk management (insurance) and other administrative costs. General and administrative expenses also include product development expenses associated with our engines vertical integration initiative and acquisition or integration related expenses.

Other (Income) Expense, Net

Other (income) expense, net consists of interest expense and other income or (expense), net. Interest expense consists of interest charged on our term loan and borrowings under our revolving credit facility, interest on our interest rate swap arrangement and change in the fair value of our interest rate swap we entered into on July 1, 2015, amortization of deferred financing costs on our amended and restated credit agreement and adjustments to our tax receivable agreement liability.

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Income Taxes

Malibu Boats, Inc. is subject to U.S. federal and state income tax in multiple jurisdictions with respect to our allocable share of any net taxable income of the LLC. The LLC is a pass-through entity for federal purposes but incurs income tax in certain state jurisdictions. The provision for income taxes reflects an estimated effective income tax rate attributable to Malibu Boats, Inc.'s share of income. Our provision for income taxes for the three and six months ended December 31, 2018 reflects a reported effective tax rate of 21.5% and 22.2%, respectively, which differs from the statutory federal income tax rate of 21% due to the impact of U.S. state taxes, the research and development tax credit, and the impact of non-controlling interests in the LLC. Our effective tax rate also reflects the impact of our share of the LLC's permanent items such as stock compensation expense attributable to profits interests.

Net Income Attributable to Non-controlling Interest

As of December 31, 2018, we had a 96.1% controlling economic interest and 100% voting interest in the LLC and, therefore, we consolidate the LLC's operating results for financial statement purposes. Net income attributable to non-controlling interest represents the portion of net income attributable to the non-controlling LLC members.

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Results of Operations

The table below sets forth our unaudited consolidated results of operations, expressed in thousands (except unit volume and net sales per unit) and as a percentage of net sales, for the periods presented. Our unaudited consolidated financial results for these periods are not necessarily indicative of the consolidated financial results that we will achieve in future periods. Certain totals for the table below will not sum to exactly 100% due to rounding.

	Three Months Ended December 31,										Six Months Ended December 31,
	2018					2017					2018					2017
	$			% Revenue		$			% Revenue		$			% Revenue		$			% Revenue
Net sales	165,793			100.0	%	114,373			100.0	%	289,276			100.0	%	217,914			100.0	%
Cost of sales	127,478			76.9	%	86,857			75.9	%	220,460			76.2	%	167,475			76.9	%
Gross profit	38,315			23.1	%	27,516			24.1	%	68,816			23.8	%	50,439			23.1	%
Operating expenses:
Selling and marketing	4,601			2.8	%	3,122			2.7	%	8,099			2.8	%	6,711			3.1	%
General and administrative	11,232			6.8	%	7,435			6.5	%	20,203			7.0	%	14,509			6.7	%
Amortization	1,538			0.9	%	1,304			1.1	%	2,818			1.0	%	2,612			1.2	%
Operating income	20,944			12.6	%	15,655			13.7	%	37,696			13.0	%	26,607			12.2	%
Other expense, net:
Other income, net	(17		)	—	%	(30,333		)	(26.5	)%	(34		)	—	%	(27,736		)	(12.7	)%
Interest expense	1,844			1.1	%	1,014			0.9	%	3,015			1.0	%	3,213			1.5	%
Other (income) expense, net	1,827			1.1	%	(29,319		)	(25.6	)%	2,981			1.0	%	(24,523		)	(11.3	)%
Income before provision for income taxes	19,117			11.5	%	44,974			39.3	%	34,715			12.0	%	51,130			23.5	%
Provision for income taxes	4,119			2.5	%	50,558			44.2	%	7,702			2.7	%	50,300			23.1	%
Net income (loss)	14,998			9.0	%	(5,584		)	(4.9	)%	27,013			9.3	%	830			0.4	%
Net income attributable to non-controlling interest	741			0.4	%	799			0.7	%	1,458			0.5	%	1,328			0.6	%
Net income (loss) attributable to Malibu Boats, Inc.	14,257			8.6	%	(6,383		)	(5.6	)%	25,555			8.8	%	(498		)	(0.2	)%
	Three Months Ended December 31,										Six Months Ended December 31,
	2018					2017					2018					2017
	Unit Volumes			% Total		Unit Volumes			% Total		Unit Volumes			% Total		Unit Volumes			% Total
Volume by Segment
Malibu U.S.	1,005			57.1	%	893			60.0	%	1,858			56.7	%	1,660			59.3	%
Cobalt	545			31.0	%	510			34.2	%	1,128			34.4	%	979			35.0	%
Pursuit	111			6.3	%	—			—	%	111			3.4	%	—			—	%
Australia	99			5.6	%	86			5.8	%	179			5.5	%	159			5.7	%
Total units	1,760					1,489					3,276					2,798
Volume by Brand
Malibu	783			44.5	%	688			46.2	%	1,419			43.3	%	1,289			46.1	%
Axis	321			18.2	%	291			19.5	%	618			18.9	%	530			18.9	%
Cobalt	545			31.0	%	510			34.3	%	1,128			34.4	%	979			35.0	%
Pursuit	111			6.3	%	—			—	%	111			3.4	%	—			—	%
Total units	1,760					1,489					3,276					2,798
Net sales per unit	$	94,200				$	76,812				$	88,302				$	77,882

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Comparison of the Three Months Ended December 31, 2018 to the Three Months Ended December 31, 2017

Net Sales

Net sales for the three months ended December 31, 2018 increased $51.4 million, or 45.0%, to $165.8 million as compared to the three months ended December 31, 2017. Unit volume for the three months ended December 31, 2018, increased 271 units, or 18.2%, to 1,760 units as compared to the three months ended December 31, 2017.

Net sales attributable to our Malibu U.S. segment increased $14.6 million, or 21.5%, to $82.7 million for the three months ended December 31, 2018, compared to the three months ended December 31, 2017. Unit volumes attributable to our Malibu U.S. segment increased 112 units for the three months ended December 31, 2018, compared to the three months ended December 31, 2017. The increase in net sales and unit volume for Malibu U.S. was driven primarily by strong demand for new models and optional features.

Net sales from our Cobalt segment increased $6.5 million, or 16.5%, to $45.9 million for the three months ended December 31, 2018, compared to the three months ended December 31, 2017. Unit volumes attributable to Cobalt increased 35 units for the three months ended December 31, 2018 compared to the three months ended December 31, 2017. The increase in Cobalt net sales and unit volume was driven primarily by strong demand for our R series models.

Since our acquisition of Pursuit on October 15, 2018, net sales and unit volume contributed by Pursuit were $29.9 million and 111 units, respectively, for the three months ended December 31, 2018.

Net sales from our Malibu Australia segment increased $0.4 million, or 5.4%, to $7.3 million for the three months ended December 31, 2018, compared to the three months ended December 31, 2017.

Overall consolidated net sales per unit increased 22.6% to $94,200 for the three months ended December 31, 2018, compared to the three months ended December 31, 2017. Net sales per unit for our Malibu U.S. segment increased 8.0% to $82,308 for the three months ended December 31, 2018, compared to the three months ended December 31, 2017, driven by strong demand for optional features and year-over-year price increases. Net sales per unit for our Cobalt segment increased 9.0% to $84,121 for the three months ended December 31, 2018, compared to the three months ended December 31, 2017, driven by a favorable mix of R series models which have a higher average selling price as well as year-over-year price increases. Net sales per unit for Pursuit for the three months ended December 31, 2018 was $269,613.

Cost of Sales

Cost of sales for the three months ended December 31, 2018 increased $40.6 million, or 46.8%, to $127.5 million as compared to the three months ended December 31, 2017. The increase in cost of sales was driven primarily by incremental costs contributed by Pursuit since its acquisition in October 2018 and an increase in unit volumes at our Malibu U.S. and Cobalt businesses.

Gross Profit

Gross profit for the three months ended December 31, 2018 increased $10.8 million, or 39.2%, to $38.3 million compared to the three months ended December 31, 2017. The increase in gross profit was due mainly to higher unit volumes. Gross margin for the three months ended December 31, 2018 decreased 100 basis points from 24.1% to 23.1% over the same period in the prior fiscal year primarily due to $0.9 million of additional expense related to the fair value step up of Pursuit inventory acquired and sold during the period. Our gross margins increased year-over-year for our comparable businesses primarily as a result of our operational efficiency initiatives.

Operating Expenses

Selling and marketing expenses for the three month period ended December 31, 2018, increased $1.5 million or 47.4% compared to the three months ended December 31, 2017 due primarily to the incremental expenses from Pursuit since its acquisition. As a percentage of sales, selling and marketing expenses increased 10 basis points compared to the same period in the prior fiscal year. General and administrative expenses for the three months ended December 31, 2018, increased $3.8 million, or 51.1%, to $11.2 million as compared to the three months ended December 31, 2017, largely due to incremental general and administrative expenses attributable to Pursuit since its acquisition, acquisition related expenses for our acquisition of Pursuit, which we completed in October 2018 and higher legal expenses. As a percentage of sales, general and administrative expenses increased 30 basis points to 6.8% for the three months ended December 31, 2018 compared to the three months ended December 31, 2017. Amortization expense for the three month period ended December 31, 2018, increased $0.2 million, or 17.9% to $1.5 million compared to the three months ended December 31, 2017 due to additional amortization expense related to intangibles acquired as part of the Pursuit acquisition.

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Other (Income) Expense, Net

Other (income) expense, net for the three month period ended December 31, 2018 changed by $31.1 million as compared to the three months ended December 31, 2017 from income of $29.3 million to expense of $1.8 million. The change was primarily due to a $30.3 million reduction in the tax receivable agreement liability for the three months ended December 31, 2017. The reduction of our tax receivable agreement liability primarily resulted from a decrease in the estimated tax rate used in computing our future tax obligations as a result of the Tax Cut and Jobs Act of 2017 (the "Tax Act"), which, in turn, decreased the future tax benefit we expect to realize related to our increased tax basis from previous sales and exchanges of LLC Units by our pre-IPO owners. The remaining change is due to higher interest expense on loans, which had an overall higher average principal balance for the three month period ended December 31, 2018 compared to the three months ended December 31, 2017, as a result of our $50.0 million of borrowing under our revolving credit facility to finance a portion of the purchase price for Pursuit.

Provision for Income Taxes

Our provision for income taxes for the three months ended December 31, 2018, decreased $46.4 million, to $4.1 million compared to the three months ended December 31, 2017. The decrease in our provision for income taxes is the result of recording a non-cash provisional adjustment to income tax expense of $47.0 million during the three month period ended December 31, 2017 for the remeasurement of deferred taxes on the enactment date of the Tax Act and deferred tax impact related to the reduction in the tax receivable agreement liability. For the three months ended December 31, 2018, our effective tax rate of 21.5% differs from the statutory federal income tax rate of 21% primarily due to the impact of U.S. state taxes. This increase was partially offset by a windfall benefit generated by certain stock based compensation during the quarter, the research and development tax credit, and the impact of non-controlling interests in the LLC, a passthrough entity for U.S. federal tax purposes. For the three months ended December 31, 2017, our effective tax rate of 344.9% differs from the blended statutory federal income tax rate of approximately 28% primarily due to the impact of the Tax Act and the impact of the additional jurisdictions in which we are taxed as a result of the Cobalt acquisition. Our effective tax rate was also impacted by, to a lesser extent, the impact of non-controlling interests in the LLC, state income taxes attributable to the LLC, and the benefit of deductions under Section 199 of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code").

Non-controlling Interest

Non-controlling interest represents the ownership interests of the members of the LLC other than us and the amount recorded as non-controlling interest in our unaudited condensed consolidated statements of operations and comprehensive income is computed by multiplying pre-tax income for the three month period ended December 31, 2018, by the percentage ownership in the LLC not directly attributable to us. For the three months ended December 31, 2018 and 2017, the weighted average non-controlling interest attributable to ownership interests in the LLC not directly attributable to us was 3.9% and 5.4%, respectively.

Comparison of the Six Months Ended December 31, 2018 to the Six Months Ended December 31, 2017

Net Sales

Net sales for the six months ended December 31, 2018 increased $71.3 million or 32.7%, to $289.3 million as compared to the six months ended December 31, 2017. Unit volume for the six months ended December 31, 2018, increased 478 units, or 17.1%, to 3,276 units as compared to the six months ended December 31, 2017.

Net sales attributable to our Malibu U.S. segment increased $23.0 million, or 17.8%, to $152.0 million for the six months ended December 31, 2018, compared to the six months ended December 31, 2017. Unit volumes attributable to our Malibu U.S. segment increased 198 units for the six months ended December 31, 2018, compared to the six months ended December 31, 2017. The increase in net sales and unit volume for Malibu U.S. was driven primarily by strong demand for new models and optional features.

Net sales from our Cobalt segment increased $17.8 million, or 23.4%, to $94.1 million for the six months ended December 31, 2018, compared to the six months ended December 31, 2017. Unit volumes attributable to Cobalt increased 149 units for the six months ended December 31, 2018 compared to the six months ended December 31, 2017. The increase in Cobalt net sales and unit volume was driven primarily by strong demand for our R series models.

Since our acquisition of Pursuit on October 15, 2018, net sales and unit volume contributed by Pursuit were $29.9 million and 111 units, respectively, for the six months ended December 31, 2018.

Net sales from our Malibu Australia segment increased $0.6 million, or 4.8%, to $13.3 million for the six months ended December 31, 2018, compared to the six months ended December 31, 2017.

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Overall consolidated net sales per unit increased 13.4% to $88,302 for the six months ended December 31, 2018, compared to the six months ended December 31, 2017. Net sales per unit for our Malibu U.S. segment increased 5.3% to $81,782 for the six months ended December 31, 2018, compared to the six months ended December 31, 2017, driven by strong demand for optional features and year-over-year price increases. Net sales per unit for our Cobalt segment increased 7.1% to $83,427 for the six months ended December 31, 2018, compared to the six months ended December 31, 2017, driven by a favorable mix of R series models which have a higher average selling price as well as year-over-year price increases. Net sales per unit for Pursuit for the three months ended December 31, 2018 was $269,613.

Cost of Sales

Cost of sales for the six months ended December 31, 2018 increased $53.0 million, or 31.6%, to $220.5 million as compared to the six months ended December 31, 2017. The increase in cost of sales was driven primarily by incremental costs contributed by Pursuit and an increase in unit volumes at our Malibu U.S. and Cobalt businesses.

Gross Profit

Gross profit for the six months ended December 31, 2018 increased $18.4 million, or 36.4%, to $68.8 million compared to the six months ended December 31, 2017. The increase in gross profit was due mainly to higher unit volumes. Gross margin for the six months ended December 31, 2018 increased 70 basis points from 23.1% to 23.8% over the same period in the prior fiscal year due primarily to efficiencies gained in our Cobalt business.

Operating Expenses

Selling and marketing expenses for the six month period ended December 31, 2018, increased $1.4 million or 20.7%, compared to the six months ended December 31, 2017 due primarily to the incremental expenses from the acquisition of Pursuit. As a percentage of sales, selling and marketing expenses decreased 30 basis points compared to the same period in the prior fiscal year. General and administrative expenses for the six months ended December 31, 2018, increased $5.7 million, or 39.2%, to $20.2 million as compared to the six months ended December 31, 2017, largely due to incremental general and administrative expenses attributable to Pursuit since its acquisition, acquisition related expenses for our acquisition of Pursuit, which we completed in October 2018 and higher legal expenses. As a percentage of sales, general and administrative expenses increased 30 basis points to 7.0% for the six months ended December 31, 2018 compared to the six months ended December 31, 2017. Amortization expense for the six month period ended December 31, 2018, increased $0.2 million, or 7.9% to $2.8 million compared to the three months ended December 31, 2017 primarily due to additional amortization related to intangibles acquired as part of the Pursuit acquisition.

Other (Income) Expense, Net

Other (income) expense, net for the six month period ended December 31, 2018 changed by $27.5 million as compared to the six months ended December 31, 2017 from income of $24.5 million to expense of $3.0 million. The change was primarily due to a $27.7 million reduction in our tax receivable agreement liability for the six months ended December 31, 2017, which resulted in us recognizing a corresponding amount as other income. The reduction of our tax receivable agreement liability primarily resulted from a decrease in the estimated tax rate used in computing our future tax obligations as a result of the Tax Act, which, in turn, decreased the future tax benefit we expect to realize related to our increased tax basis from previous sales and exchanges of LLC Units by our pre-IPO owners.

Provision for Income Taxes

Our provision for income taxes for the six months ended December 31, 2018, decreased $42.6 million, to $7.7 million compared to the six months ended December 31, 2017. For the six months ended December 31, 2017, we recorded a non-cash provisional adjustment to income tax expense of $47.0 million for the remeasurement of deferred taxes on the enactment date of the Tax Act and deferred tax impact related to the reduction in the tax receivable agreement liability. This decrease was partially offset by higher pre-tax net income for the six months ended December 31, 2018 compared to the same period in 2017. For the six months ended December 31, 2018, our effective tax rate of 22.2% differs from the statutory federal income tax rate of 21% primarily due to the impact of U.S. state taxes. This increase was partially offset by a windfall benefit generated by certain stock based compensation during the quarter, the research and development tax credit, and the impact of non-controlling interests in the LLC, a passthrough entity for U.S. federal tax purposes. For the six months ended December 31, 2017, our effective tax rate of 98.4% differs from the blended statutory federal income tax rate of approximately 28% primarily due to the impact of the Tax Act previously mentioned and the impact of the additional jurisdictions in which we are taxed as a result of the Cobalt acquisition. Our effective tax rate was also impacted by, to a lesser extent, the impact of noncontrolling interests in the LLC, state income taxes attributable to the LLC, and the benefit of deductions under Section 199 of the Internal

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Revenue Code. Our effective tax rate also reflects the impact of the Company's share of the LLC's permanent items such as stock compensation expense attributable to profits interests.

Non-controlling Interest

Non-controlling interest represents the ownership interests of the members of the LLC other than us and the amount recorded as non-controlling interest in our unaudited condensed consolidated statements of operations and comprehensive income is computed by multiplying pre-tax income for the six month period ended December 31, 2018, by the percentage ownership in the LLC not directly attributable to us. For the six months ended December 31, 2018 and 2017, the weighted average non-controlling interest attributable to ownership interests in the LLC not directly attributable to us was 4.3% and 5.8%, respectively.

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GAAP Reconciliation of Non-GAAP Financial Measures

Adjusted EBITDA

Adjusted EBITDA and adjusted EBITDA margin are non-GAAP financial measures that are used by management as well as by investors, commercial bankers, industry analysts and other users of our financial statements.

We define adjusted EBITDA as net income before interest expense, income taxes, depreciation, amortization and non-cash, non-recurring or non-operating expenses, including certain professional fees, acquisition and integration related expenses, non-cash compensation expense, expenses related to our engine development initiative, and adjustments to our tax receivable agreement liability. We define adjusted EBITDA margin as adjusted EBITDA divided by net sales. Adjusted EBITDA and adjusted EBITDA margin are not measures of net income as determined by GAAP. Management believes adjusted EBITDA and adjusted EBITDA margin allow investors to evaluate the company’s operating performance and compare our results of operations from period to period on a consistent basis by excluding items that management does not believe are indicative of our core operating performance. Management uses Adjusted EBITDA to assist in highlighting trends in our operating results without regard to our financing methods, capital structure and non-recurring or non-operating expenses. We exclude the items listed above from net income in arriving at adjusted EBITDA because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures, the methods by which assets were acquired and other factors. Adjusted EBITDA has limitations as an analytical tool and should not be considered as an alternative to, or more meaningful than, net income as determined in accordance with GAAP or as an indicator of our liquidity. Certain items excluded from adjusted EBITDA are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historical costs of depreciable assets. Our presentation of adjusted EBITDA and adjusted EBITDA margin should not be construed as an inference that our results will be unaffected by unusual or non-recurring items. Our computations of adjusted EBITDA and adjusted EBITDA margin may not be comparable to other similarly titled measures of other companies.

The following table sets forth a reconciliation of net income (loss) as determined in accordance with GAAP to adjusted EBITDA and adjusted EBITDA margin for the periods indicated (dollars in thousands):

	Three Months Ended December 31,						Six Months Ended December 31,
	2018			2017			2018			2017
Net income (loss)	$	14,998		$	(5,584	)	$	27,013		$	830
Provision for income taxes 1	4,119			50,558			7,702			50,300
Interest expense	1,844			1,014			3,015			3,213
Depreciation	2,495			1,687			4,358			3,417
Amortization	1,538			1,304			2,818			2,612
Professional fees 2	383			—			383			26
Acquisition and integration related expenses 3	2,552			322			3,909			2,137
Stock-based compensation expense 4	655			488			1,131			850
Engine development 5	787			1,140			1,939			2,587
Adjustments to tax receivable agreement liability 6	—			(30,317		)	—			(27,702		)
Adjusted EBITDA	$	29,371		$	20,612		$	52,268		$	38,270
Adjusted EBITDA Margin	17.7		%	18.0		%	18.1		%	17.6		%

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(1)	Provision for income taxes for the three months and six months ended December 31, 2018 reflects the impact of the Tax Act adopted in December 2017, which among other items, lowered the U.S. corporate income tax rate from 35% to 21%, effective January 1, 2018. See Note 12 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.
(2)	For the three and six months ended December 31, 2018, represents legal and advisory fees related to our litigation with Skier's Choice, Inc. For the six months ended December 31, 2017, represents legal and advisory fees related to our litigation with MasterCraft Boat Company, LLC ("MasterCraft") which was settled in May 2017. See Note 15 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.
(3)	For the three and six months ended December 31, 2018, represents legal and advisory fees incurred in connection with our acquisition of Pursuit on October 15, 2018. For the three and six months ended December 31, 2017 represents legal and advisory fees as well as integration costs incurred in connection with our acquisition of Cobalt on July 6, 2017. Integration related expenses for the three and six months ended December 31, 2018 include post-acquisition adjustments to cost of goods sold of $0.9 million for the fair value step up of Pursuit inventory acquired, most of which was sold during the second quarter of fiscal 2019. Integration related expenses for the three and six months ended December 31, 2017 include post-acquisition adjustments to cost of goods sold of $1.5 million for the fair value step up of Cobalt inventory acquired, most of which was sold during the first quarter of fiscal 2018.
(4)	Represents equity-based incentives awarded to key employees under the Malibu Boats, Inc. Long-Term Incentive Plan and profit interests issued under the previously existing limited liability company agreement of the LLC. For more information, see Note 13 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.
(5)	Represents costs incurred in connection with our vertical integration of engines including product development costs and supplier transition performance incentives.
(6)	For the three and six months ended December 31, 2017, we recognized other income as a result of a decrease in our estimated tax receivable agreement liability. The reduction in our tax receivable agreement liability resulted from the adoption of the Tax Act, which decreased the estimated tax rate used in computing our future tax obligations and, in turn, decreased the future tax benefit we expect to realize related to increased tax basis from previous sales and exchanges of LLC Units by our pre-IPO owners. Refer to Note 10 of our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.

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Adjusted Fully Distributed Net Income

We define Adjusted Fully Distributed Net Income as net income attributable to Malibu Boats, Inc. (i) excluding income tax expense, (ii) excluding the effect of non-recurring or non-cash items, (iii) assuming the exchange of all LLC units into shares of Class A Common Stock, which results in the elimination of non-controlling interest in the LLC, and (iv) reflecting an adjustment for income tax expense on fully distributed net income before income taxes at our estimated effective income tax rate. Adjusted Fully Distributed Net Income is a non-GAAP financial measure because it represents net income attributable to Malibu Boats, Inc., before non-recurring or non-cash items and the effects of non-controlling interests in the LLC.

We use Adjusted Fully Distributed Net Income to facilitate a comparison of our operating performance on a consistent basis from period to period that, when viewed in combination with our results prepared in accordance with GAAP, provides a more complete understanding of factors and trends affecting our business than GAAP measures alone.

We believe Adjusted Fully Distributed Net Income assists our board of directors, management and investors in comparing our net income on a consistent basis from period to period because it removes non-cash or non-recurring items, and eliminates the variability of non-controlling interest as a result of member owner exchanges of LLC Units into shares of Class A Common Stock.

In addition, because Adjusted Fully Distributed Net Income is susceptible to varying calculations, the Adjusted Fully Distributed Net Income measures, as presented in this Quarterly Report, may differ from and may, therefore, not be comparable to similarly titled measures used by other companies.

The following table shows the reconciliation of the numerator and denominator for net income (loss) available to Class A Common Stock per share to Adjusted Fully Distributed Net Income per Share of Class A Common Stock for the periods presented (in thousands except share and per share data):

	Three Months Ended December 31,					Six Months Ended December 31,
	2018		2017			2018		2017
Reconciliation of numerator for net income (loss) available to Class A Common Stock per share to Adjusted Fully Distributed Net Income per Share of Class A Common Stock:
Net income (loss) attributable to Malibu Boats, Inc.	$	14,257	$	(6,383	)	$	25,555	$	(498	)
Provision for income taxes 1	4,119		50,558			7,702		50,300
Professional fees 2	383		—			383		26
Acquisition and integration related expenses 3	3,688		1,017			5,798		3,523
Fair market value adjustment for interest rate swap 4	129		(172		)	132		(203		)
Stock-based compensation expense 5	655		488			1,131		850
Engine development 6	787		1,140			1,939		2,587
Adjustments to tax receivable agreement liability 7	—		(30,317		)	—		(27,702		)
Net income attributable to non-controlling interest 8	741		799			1,458		1,328
Fully distributed net income before income taxes	24,759		17,130			44,098		30,211
Income tax expense on fully distributed income before income taxes 9	5,967		5,704			10,628		10,060
Adjusted fully distributed net income	$	18,792	$	11,426		$	33,470	$	20,151

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	Three Months Ended December 31,		Six Months Ended December 31,
	2018	2017	2018	2017
Reconciliation of denominator for net income (loss) available to Class A Common Stock per share to Adjusted Fully Distributed Net Income per Share of Class A Common Stock:
Weighted average shares outstanding of Class A Common Stock used for basic net income per share: 10	20,875,243	20,436,110	20,758,095	19,819,438
Adjustments to weighted average shares of Class A Common Stock:
Weighted-average LLC units held by non-controlling unit holders 11	844,652	1,170,314	925,963	1,211,709
Weighted-average unvested restricted stock awards issued to management 12	125,378	126,447	128,491	128,199
Adjusted weighted average shares of Class A Common Stock outstanding used in computing Adjusted Fully Distributed Net Income per Share of Class A Common Stock:	21,845,273	21,732,871	21,812,549	21,159,346

The following table shows the reconciliation of net income (loss) available to Class A Common Stock per share to Adjusted Fully Distributed Net Income per Share of Class A Common Stock for the periods presented:

	Three Months Ended December 31,						Six Months Ended December 31,
	2018			2017			2018			2017
Net income (loss) available to Class A Common Stock per share	$	0.68		$	(0.31	)	$	1.23		$	(0.03	)
Impact of adjustments:
Provision for income taxes 1	0.20			2.47			0.37			2.54
Professional fees 2	0.02			—			0.02			—
Acquisition and integration related expenses 3	0.18			0.05			0.28			0.18
Fair market value adjustment for interest rate swap 4	0.01			(0.01		)	0.01			(0.01		)
Stock-based compensation expense 5	0.03			0.02			0.05			0.04
Engine development 6	0.04			0.06			0.09			0.13
Adjustment to tax receivable agreement liability 7	—			(1.48		)	—			(1.40		)
Net income attributable to non-controlling interest 8	0.04			0.04			0.07			0.07
Fully distributed net income per share before income taxes	1.20			0.84			2.12			1.52
Impact of income tax expense on fully distributed income before income taxes 9	(0.29		)	(0.28		)	(0.51		)	(0.51		)
Impact of increased share count 13	(0.05		)	(0.03		)	$	(0.08	)	$	(0.06	)
Adjusted Fully Distributed Net Income per Share of Class A Common Stock	$	0.86		$	0.53		$	1.53		$	0.95

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(1)	Provision for income taxes for the three months and six months ended December 31, 2018 reflects the impact of the Tax Act adopted in December 2017, which among other items, lowered the U.S. corporate income tax rate from 35% to 21%, effective January 1, 2018. See Note 12 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.
(2)	For the three and six months ended December 31, 2018, represents legal and advisory fees related to our litigation with Skier's Choice, Inc. For the six months ended December 31, 2017, represents legal and advisory fees related to our litigation with MasterCraft which was settled in May 2017. See Note 15 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.
(3)	For the three and six months ended December 31, 2018, represents legal and advisory fees incurred in connection with our acquisition of Pursuit on October 15, 2018. For the three and six months ended December 31, 2017 represents legal and advisory fees as well as integration costs incurred in connection with our acquisition of Cobalt on July 6, 2017. Integration related expenses for the three and six months ended December 31, 2018 include post-acquisition adjustments to cost of goods sold of $0.9 million for the fair value step up of inventory acquired, most of which was sold during the second quarter of fiscal 2019. In addition, for the three and six months ended December 31, 2018, integration related expenses includes $0.4 million in depreciation and amortization associated with our fair value step up of property, plant and equipment and intangibles acquired in connection with the acquisition of Pursuit. Also, for the three and six months ended December 31, 2018, integration related expenses includes $0.7 million and $1.5 million, respectively, in amortization associated with our fair value step up of intangibles acquired in connection with the acquisition of Cobalt. Integration related expenses for the three and six months ended December 31, 2017 include post-acquisition adjustments to cost of goods sold of $1.5 million for the fair value step up of inventory acquired, most of which was sold during the first quarter of fiscal 2018. In addition, for the three and six months ended December 31, 2017, integration related expenses includes $0.7 million and $1.4 million, respectively, in depreciation and amortization associated with our fair value step up of property, plant and equipment and intangibles acquired in connection with the acquisition of Cobalt.
(4)	Represents the change in the fair value of our interest rate swap entered into on July 1, 2015.
(5)	Represents equity-based incentives awarded to certain of our employees under the Malibu Boats, Inc. Long-Term Incentive Plan and profit interests issued under the previously existing limited liability company agreement of the LLC. See Note 13 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.
(6)	Represents costs incurred in connection with our vertical integration of engines including product development costs and supplier transition performance incentives.
(7)	For the three and six months ended December 31, 2017, we recognized other income as a result of a decrease in our estimated tax receivable agreement liability. The reduction in our tax receivable agreement liability resulted from the adoption of the Tax Act, which decreased the estimated tax rate used in computing our future tax obligations and, in turn, decreased the future tax benefit we expect to realize related to increased tax basis from previous sales and exchanges of LLC Units by our pre-IPO owners. Refer to Note 10 of our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.
(8)	Reflects the elimination of the non-controlling interest in the LLC as if all LLC members had fully exchanged their LLC Units for shares of Class A Common Stock.
(9)	Reflects income tax expense at an estimated normalized annual effective income tax rate of 24.1% and 33.3% of income before income taxes for the three and six months ended December 31, 2018 and 2017, respectively, assuming the conversion of all LLC Units into shares of Class A Common Stock. The estimated normalized annual effective income tax rate is based on the federal statutory rate plus a blended state rate adjusted for deductions under Section 199 of the Internal Revenue Code of 1986, as amended, state taxes attributable to the LLC, and foreign income taxes attributable to our Australian based subsidiary. The decrease in the normalized annual effective income tax rate to 24.1% for the three and six months ended December 31, 2018, is primarily the result of the Tax Act which was effective for periods after January 1, 2018, lowering the corporate tax rate to 21%, as well as an updated blended state rate, which considers the impacts of the Cobalt acquisition and a recent law change in Tennessee.
(10)	The difference in weighted average shares outstanding for the three and six months ended December 31, 2017 relates to the difference in the weighting of shares outstanding of Class A common stock during this period for the calculation of basic net income per share for our financial statements and basic net income per share for adjusted fully distributed net income.
(11)	Represents the weighted average shares outstanding of LLC Units held by non-controlling interests assuming they were exchanged into Class A Common Stock on a one-for-one basis.
(12)	Represents the weighted average unvested restricted stock awards included in outstanding shares during the applicable period that were convertible into Class A Common Stock and granted to members of management.
(13)	Reflects impact of increased share counts assuming the exchange of all weighted average shares outstanding of LLC Units into shares of Class A Common Stock and the conversion of all weighted average unvested restricted stock awards included in outstanding shares granted to members of management.

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Liquidity and Capital Resources

Our primary sources of funds have been cash provided by operating activities and borrowings under our credit agreement. Our primary use of funds has been for acquisitions, repayments under our debt arrangements, capital investments, cash distributions to members of the LLC and cash payments under our tax receivable agreement. The following table summarizes the cash flows from operating, investing and financing activities (dollars in thousands):

	Six Months Ended December 31,
	2018			2017
Total cash provided by (used in):
Operating activities	$	35,612		$	27,025
Investing activities	(106,910		)	(130,475		)
Financing activities	33,654			107,340
Impact of currency exchange rates on cash balances	(76		)	19
Increase (decrease) in cash	$	(37,720	)	$	3,909

Comparison of the Six Months Ended December 31, 2018 to the Six Months Ended December 31, 2017

Operating Activities

Net cash provided by operating activities was $35.6 million for the six months ended December 31, 2018, compared to net cash provided by operating activities of $27.0 million for the six months ended December 31, 2017, an increase of $8.6 million. The increase in cash provided by operating activities primarily resulted from an increase of $10.6 million due to increases in net income (after consideration of non-cash items included in net income, including an adjustment to our tax receivable agreement liability and an adjustment to our deferred tax assets), offset by a net decrease in operating assets and liabilities of $2.0 million related to the timing of collections of accounts receivables, payments for accruals and payables, and purchases of inventory.

Investing Activities

Net cash used for investing activities was $106.9 million for the six months ended December 31, 2018, compared to $130.5 million for the six months ended December 31, 2017, a decrease of $23.6 million. The decrease in cash used was primarily related to the lower purchase price paid for Pursuit in October 2018 compared to the purchase price paid for Cobalt in July 2017. Remaining capital outlays consisted of normal purchases for manufacturing infrastructure and expansion activities, molds, and equipment.

Financing Activities

Net cash provided by financing activities decreased $73.7 million to cash provided by financing activities of $33.7 million for the six months ended December 31, 2018, compared to cash provided by financing activities of $107.3 million for the six months ended December 31, 2017. For the six months ended December 31, 2018, we received $50.0 million in proceeds from our credit facility to fund the acquisition of Pursuit, we repaid $15.0 million of revolving debt borrowed for the Pursuit acquisition, we paid $0.9 million in distributions to LLC unit holders and $1.2 million on taxes for shares withheld on restricted stock vestings and we received $0.7 million proceeds from the exercise of stock options. During the six months ended December 31, 2017, we received proceeds of $105.0 million from our credit facility to fund the acquisition of Cobalt and $55.3 million in proceeds from our equity offering, which we used to repay $50.0 million on our outstanding term debt. In connection with the term debt and equity offering, we paid $1.1 million and $0.7 million in legal and advisory costs, respectively. In addition, during the six months ended December 31, 2017, we paid $0.6 million in distributions to LLC unit holders and $0.5 million in taxes for shares withheld on restricted stock vestings.

Loans and Commitments

We currently have a $110.0 million term loan outstanding and a revolving credit facility with $35.0 million outstanding and $50.0 million available for borrowing. Malibu Boats, LLC as the borrower (“Boats LLC”) entered into a Second Amended and Restated Credit Agreement with SunTrust Bank, as the administrative agent, swingline lender and issuing bank, on June 28, 2017, to refinance our prior credit facility and to provide funds for our purchase of Cobalt. The credit agreement provided us with a term loan facility in an aggregate principal amount of $160.0 million ($55.0 million of which was drawn on June 28, 2017 to refinance the outstanding loans under our prior credit facility and $105.0 million of which was drawn on July 6, 2017 to fund the payment of the purchase price for our acquisition of Cobalt and certain fees and expenses related to entering into the

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credit agreement) and a revolving credit facility of up to $35.0 million. On August 17, 2017 we made a voluntary principal payment on the term loans in the amount of $50.0 million with a portion of the net proceeds from our equity offering completed on August 14, 2017. On August 21, 2018, in connection with the acquisition of Pursuit, Boats LLC entered into the First Incremental Facility Amendment and First Amendment to the Second Amended and Restated Credit Agreement dated as of June 28, 2017. The amendment increased the amount available under the revolving credit facility by $50.0 million (the “Incremental Revolving Commitment”) from $35.0 million to $85.0 million. On October 15, 2018, we borrowed $50.0 million under the revolving credit facility to pay for a portion of the purchase price of Pursuit. In December 2018, Boats LLC made a voluntary principal payment on the revolving credit facility in the amount of $15.0 million. Each of the term loans and the revolving credit facility have a maturity date of July 1, 2022.

Borrowings under our credit agreement bear interest at a rate equal to either, at our option, (i) the highest of the prime rate, the Federal Funds Rate plus 0.5%, or one-month LIBOR plus 1% (the “Base Rate”) or (ii) LIBOR, in each case plus an applicable margin ranging from 1.75% to 3.00% with respect to LIBOR borrowings and 0.75% to 2.00% with respect to Base Rate borrowings. The applicable margin will be based upon the consolidated leverage ratio of Malibu Boats Holdings, LLC and its subsidiaries calculated on a consolidated basis. As of December 31, 2018, the interest rate on each of our term loans and revolving credit facility was 4.50%. We are required to pay a commitment fee for the unused portion of the revolving credit facility, which will range from 0.25% to 0.50% per annum, depending on Malibu Boats Holdings, LLC’s and its subsidiaries’ consolidated leverage ratio. We were also required to pay a ticking fee at a rate of 0.30% per annum on the $50.0 million Incremental Revolving Commitment from August 21, 2018 until the date that the conditions for the lenders to provide the Incremental Revolving Commitment were met, which occurred on October 15, 2018, the closing date of our purchase of assets of Pursuit. Malibu Boats, Inc. is not a party to the credit agreement, and the obligations of Boats LLC under the credit agreement are guaranteed by Malibu Boats Holdings, LLC, and, subject to certain exceptions, the present and future domestic subsidiaries of Boats LLC, and all such obligations are secured by substantially all of the assets of the Malibu Boats Holdings LLC, Boats LLC and such subsidiary guarantors.

The credit agreement permits prepayment of the term loans without any penalties. The $55.0 million term loan is subject to quarterly installments of approximately $0.7 million per quarter until March 31, 2019, then approximately $1.0 million per quarter until June 30, 2021, and approximately $1.4 million per quarter through March 31, 2021. The $105.0 million term loan is subject to quarterly installments of approximately $1.3 million per quarter until March 31, 2019, then approximately $2.0 million per quarter until June 30, 2021, and approximately $2.6 million per quarter through March 31, 2022. The balance of both term loans is due on the scheduled maturity date of July 1, 2022. On August 17, 2017 we made a voluntary principal payment on the term loans in the amount of $50.0 million with a portion of the net proceeds from our equity offering completed on August 14, 2017. We exercised our option to apply the prepayment to principal installments on our term loans through December 31, 2021 and a portion of the principal installments due on March 31, 2022. The credit agreement is also subject to prepayments from the net cash proceeds received by Boats LLC or any guarantors from certain asset sales and recovery events, subject to certain reinvestment rights, and from excess cash flow, subject to the terms and conditions of the credit agreement. As of December 31, 2018, the outstanding principal amount of our term loans and revolving credit facility was $145.0 million.

The credit agreement contains certain customary representations and warranties, and notice requirements for the occurrence of specific events such as the occurrence of any event of default, or pending or threatened litigation. The credit agreement also requires compliance with certain customary financial covenants, including a minimum ratio of EBITDA to fixed charges and a maximum ratio of total debt to EBITDA. The credit agreement contains certain restrictive covenants, which, among other things, place limits on certain activities of the loan parties under the credit agreement, such as the incurrence of additional indebtedness and additional liens on property and limit the future payment of dividends or distributions. For example, the credit agreement generally prohibits Malibu Boats Holdings, LLC, Boats LLC and the subsidiary guarantors from paying dividends or making distributions, including to the Company. The credit facility permits, however, (i) distributions based on a member’s allocated taxable income, (ii) distributions to fund payments that are required under the LLC’s tax receivable agreement, (iii) purchase of stock or stock options of the LLC from former officers, directors or employees of loan parties or payments pursuant to stock option and other benefit plans up to $2.0 million in any fiscal year, and (iv) share repurchase payments up to $20.0 million in any fiscal year subject to one-year carry forward and compliance with other financial covenants. In addition, the LLC may make dividends and distributions of up to $6.0 million in any fiscal year, subject to compliance with other financial covenants.

Future Liquidity Needs and Capital Expenditures

Management believes that our existing cash, borrowing capacity under our revolving credit facility and cash flows from operations will be sufficient to fund our operations for the next 12 months. Our future capital requirements will depend on many factors, including the general economic environment in which we operate and our ability to generate cash flow from operations. Factors impacting our cash flow from operations include, but are not limited to, our growth rate and the timing and extent of operating expenses.

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We estimate that approximately $3.9 million will be due under the tax receivable agreement within the next 12 months. In accordance with the tax receivable agreement, the next payment is anticipated to occur approximately 75 days after filing the federal tax return which is due by April 15, 2019. Management expects minimal effect on our future liquidity and capital resources.

Management expects our capital expenditures for fiscal year 2019 to be higher than our 2018 capital expenditures primarily driven by our recent acquisition of Pursuit. With respect to our engine vertical integration strategy, we expect a total investment, including investments already made to date, through expenditures, working capital, and capital expenses of approximately $18.0 million through fiscal year 2019, which we intend to finance with cash from operations and our revolving credit facility.

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Contractual Obligations and Commitments

Since June 30, 2018, we borrowed $50.0 million under our revolving credit facility to pay for a portion of the purchase price of Pursuit Boats and have repaid $15.0 million outstanding under our revolving credit facility, resulting in $35.0 million outstanding under our revolving credit facility and $110.0 million outstanding on our term loans, each as of December 31, 2018. As of December 31, 2018, our continuing contractual obligations were as follows:

	Payments Due by Period
	Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
Bank debt 1	$	145,000	$	—	$	—	$	145,000	$	—
Interest expense 2	21,119		5,925		12,153		3,041		—
Operating leases 3	21,982		2,493		5,040		4,351		10,098
Purchase obligations 4	86,292		86,292		—		—		—
Payments pursuant to tax receivable agreement 5	57,599		3,932		7,389		7,745		38,533
Total	$	331,992	$	98,642	$	24,582	$	160,137	$	48,631

(1)	Principal payments on our outstanding bank debt per terms of our Credit Agreement, which is comprised of a $110.0 million term loan and $85.0 million revolving credit facility, of which $35.0 million was outstanding as of December 31, 2018. Assumes no additional borrowings or repayments under our revolving credit facility prior to its maturity. Both the term loan and revolving credit facility mature on July 1, 2022.
(2)	Interest payments on our outstanding term loans and borrowings under our revolving credit facility under our Credit Agreement. Our term loan and revolving credit facility bear interest at variable rates. We have calculated future interest obligations based on the interest rate as of December 31, 2018.
(3)	We sold our two primary manufacturing and office facilities for a total of $18.3 million in 2008, which resulted in a gain of $0.7 million. Simultaneous with the sale, we entered into an agreement to lease back the buildings for an initial term of 20 years. The net gain of $0.2 million has been deferred and is being amortized in proportion to rent charged over the initial lease term.
(4)	As part of the normal course of business, we enter into purchase orders from a variety of suppliers, primarily for raw materials, in order to manage our various operating needs. The orders are expected to be purchased throughout fiscal year 2019.
(5)	Reflects amounts owed under our tax receivables agreement that we entered into with our pre-IPO owners at the time of our IPO. Under the tax receivables agreement, we pay the pre-IPO owners (or any permitted assignees) 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax or franchise tax that we actually realize, or in some circumstances are deemed to realize, as a result of an expected increase in our share of tax basis in LLC’s tangible and intangible assets, including increases attributable to payments made under the tax receivable agreement. These obligations will not be paid if we do not realize cash tax savings. The amounts owed reflect adjustments in the tax receivables agreement liability as a result of the passage of the Tax Act in December 2017.

Off Balance Sheet Arrangements

In connection with our dealers’ wholesale floor plan financing of boats, we have entered into repurchase arrangements with various lending institutions. The repurchase commitment is on an individual unit basis with a term from the date it is financed by the lending institution through payment date by the dealer, generally not exceeding two and a half years. Such arrangements are customary in the industry and our exposure to loss under such arrangements is limited by the resale value of the inventory which is required to be repurchased. Refer to Note 15 of our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report for further information on repurchase commitments.

Seasonality

Our dealers experience seasonality in their business. Retail demand for boats is seasonal, with a significant majority of sales occurring during peak boating season, which coincides with our first and fourth fiscal quarters. In order to minimize the impact of this seasonality on our business, we manage our manufacturing processes and structure dealer incentives to tie our annual volume rebates program to consistent ordering patterns, encouraging dealers to purchase our products throughout the year. In this regard, we may offer free flooring incentives to dealers. Further, in the event that a dealer does not consistently order units throughout the year, such dealer’s rebate is materially reduced. We may offer off-season retail promotions to our dealers in seasonally slow months, during and ahead of boat shows, to encourage retail demand.

Emerging Growth Company

We are an “emerging growth company,” as defined in the JOBS Act. For as long as we are an “emerging growth company,” we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including, but not limited to, not being required to comply with the

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auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding stockholder advisory “say-on-pay” votes on executive compensation and stockholder advisory votes on golden parachute compensation.

The JOBS Act also provides that an “emerging growth company” can utilize the extended transition period provided in Section 7(a)(2)(B) of the Securities Act, for complying with new or revised accounting standards. Pursuant to Section 107 of the JOBS Act, we have chosen to “opt out” of such extended transition period and, as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for companies that are not “emerging growth companies.” Under the JOBS Act, our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

We will continue to be an emerging growth company until the earliest to occur of (i) the last day of the fiscal year during which we had total annual gross revenues of at least $1 billion (as indexed for inflation), (ii) the last day of the fiscal year following the fifth anniversary of the closing of the IPO, (iii) the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt or (iv) the date on which we are deemed to be a "large accelerated filer," as defined under the Exchange Act. Accordingly, we will remain an "emerging growth company" until June 30, 2019.

Critical Accounting Policies

As of December 31, 2018, other than the adoption of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 606, Revenue from Contracts with Customers, on July 1, 2018, there were no other significant changes in the application of our critical accounting policies or estimation procedures from those presented in our Annual Report on Form 10-K for the fiscal year ended June 30, 2018.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Refer to our Annual Report on Form 10-K for the year ended June 30, 2018, for a complete discussion on the Company’s market risk. There have been no material changes in market risk from those disclosed in the Company's Form 10-K for the year ended June 30, 2018.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

As of the end of the period covered by this Quarterly Report, we carried out an evaluation under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures. Based upon this evaluation, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of December 31, 2018.

Changes in Internal Control Over Financial Reporting

During the second quarter ended December 31, 2018, we completed the acquisition of Pursuit. Prior to the acquisition, Pursuit was a privately-held company and was not subject to the Sarbanes-Oxley Act of 2002, the rules and regulations of the SEC, or other corporate governance requirements applicable to public reporting companies. As part of our ongoing integration activities, we are continuing to incorporate our controls and procedures into Pursuit and to augment our company-wide controls to reflect the risks that may be inherent in acquisitions of privately-held companies.

Other than the acquisition of Pursuit, there have been no changes in our internal control over financial reporting during the quarter ended December 31, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting other than new processes and controls implemented in connection with the adoption of FASB ASC Topic 606, Revenue from Contracts with Customers, on July 1, 2018.

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Part II - Other Information

Item 1. Legal Proceedings

The discussion of legal matters under the section entitled "Legal Proceedings" is incorporated by reference from Note 15 of our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.

Item 1A. Risk Factors

During the quarter ended December 31, 2018, there were no material changes to the risk factors discussed in Part I, Item 1A. "Risk Factors” of our Annual Report on Form 10-K for the year ended June 30, 2018.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Repurchase of Class A Common Stock

In November 2018, the Company repurchased 2,736 and 5,722 shares of Class A Common Stock at $42.39 and $42.00 per share, respectively, from employees to satisfy tax withholding obligations incurred in connections with the vesting of restricted stock.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

Exhibit No.	Description
3.1	Certificate of Incorporation of Malibu Boats, Inc. 1
3.2	Bylaws of Malibu Boats, Inc. 1
3.3	Certificate of Formation of Malibu Boats Holdings, LLC 1
3.4	First Amended and Restated Limited Liability Company Agreement of Malibu Boats Holdings, LLC, dated as of February 5, 2014 2
3.4.1	First Amendment, dated as of February 5, 2014, to First Amended and Restated Limited Liability Company Agreement of Malibu Boats Holdings, LLC 3
3.4.2	Second Amendment, dated as of June 27, 2014, to First Amended and Restated Limited Liability Company Agreement of Malibu Boats Holdings, LLC 4
4.1	Form of Class A Common Stock Certificate 1
4.2	Form of Class B Common Stock Certificate 1
4.3	Exchange Agreement, dated as of February 5, 2014, by and among Malibu Boats, Inc. and Affiliates of Black Canyon Capital LLC and Horizon Holdings, LLC 2
4.4	Exchange Agreement, dated as of February 5, 2014, by and among Malibu Boats, Inc. and the Members of Malibu Boats Holdings, LLC 2
4.5	Tax Receivable Agreement, dated as of February 5, 2014, by and among Malibu Boats, Inc., Malibu Boats Holdings, LLC and the Other Members of Malibu Boats Holdings, LLC 2
31.1	Certificate of the Chief Executive Officer of Malibu Boats, Inc. pursuant to Rule 13a-14 or 15d-14 of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certificate of the Chief Financial Officer of Malibu Boats, Inc. pursuant to Rule 13a-14 or 15d-14 of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32	Certification of the Chief Executive Officer and Chief Financial Officer of Malibu Boats, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Calculation Linkbase Document
101.DEF	XBRL Definition Linkbase Document
101.LAB	XBRL Taxonomy Label Linkbase Document
101.PRE	XBRL Taxonomy Presentation Linkbase Document

(1) Filed as an exhibit to Amendment No. 1 to the Company’s registration statement on Form S-1 (Registration No. 333-192862) filed on January 8, 2014.

(2) Filed as an exhibit to the Company’s Current Report on Form 8-K (File No. 001-36290) filed on February 6, 2014.

(3) Filed as an exhibit to the Company's Quarterly Report on Form 10-Q/A (File No. 001-36290) filed on May 13, 2014.

(4) Filed as an exhibit to the Company's Current Report on Form 8-K (File No. 001-36290) filed on June 27, 2014.

45

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

February 6, 2019	MALIBU BOATS, INC.
	By:	/s/ Jack Springer
		Jack Springer, Chief Executive Officer
		(Principal Executive Officer)
	By:	/s/ Wayne Wilson
		Wayne Wilson, Chief Financial Officer
		(Principal Financial Officer)

46

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO RULE 13a-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jack Springer, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2018 of Malibu Boats, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: February 6, 2019

/s/ Jack Springer

Jack Springer

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO RULE 13a-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Wayne Wilson, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2018 of Malibu Boats, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: February 6, 2019

/s/ Wayne Wilson

Wayne Wilson

Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATIONS PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002*

In connection with the Quarterly Report of Malibu Boats, Inc. (“Malibu”) on Form 10-Q for the fiscal quarter ended December 31, 2018 (the “Report”), Jack Springer, chief executive officer, and Wayne Wilson, chief financial officer, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Malibu.

Dated: February 6, 2019

/s/ Jack Springer

Jack Springer

Chief Executive Officer

Dated: February 6, 2019

/s/ Wayne Wilson

Wayne Wilson

Chief Financial Officer

________________________

* A signed original of this written statement required by Section 906 has been provided to Malibu Boats, Inc. and will be retained by Malibu Boats, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	6 Months Ended
	Dec. 31, 2018	Feb. 05, 2019
Document Information [Line Items]
Entity Registrant Name	MALIBU BOATS, INC.
Entity Central Index Key	0001590976
Document Type	10-Q
Document Period End Date	Dec. 31, 2018
Amendment Flag	false
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--06-30
Entity Filer Category	Accelerated Filer
Entity Emerging Growth Company	true
Entity Smaller Reporting Company	false
Entity Transition Period	true
Class A Common Stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding (in shares)		20,836,597
Class B Common Stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding (in shares)		16

XML

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2017
Income Statement [Abstract]
Net sales	$ 165,793	$ 114,373	$ 289,276	$ 217,914
Cost of sales	127,478	86,857	220,460	167,475
Gross profit	38,315	27,516	68,816	50,439
Operating expenses:
Selling and marketing	4,601	3,122	8,099	6,711
General and administrative	11,232	7,435	20,203	14,509
Amortization	1,538	1,304	2,818	2,612
Operating income	20,944	15,655	37,696	26,607
Other (income) expense, net:
Other income, net	(17)	(30,333)	(34)	(27,736)
Interest expense	1,844	1,014	3,015	3,213
Other (income) expense, net	1,827	(29,319)	2,981	(24,523)
Income before provision for income taxes	19,117	44,974	34,715	51,130
Provision for income taxes	4,119	50,558	7,702	50,300
Net income (loss)	14,998	(5,584)	27,013	830
Net income attributable to non-controlling interest	741	799	1,458	1,328
Net income (loss) attributable to Malibu Boats, Inc.	14,257	(6,383)	25,555	(498)
Other comprehensive income (loss), net of tax:
Change in cumulative translation adjustment	(367)	(66)	(771)	234
Other comprehensive income (loss), net of tax	(367)	(66)	(771)	234
Comprehensive income (loss), net of tax	14,631	(5,650)	26,242	1,064
Less: comprehensive income attributable to non-controlling interest, net of tax	723	806	1,416	1,360
Comprehensive income (loss) attributable to Malibu Boats, Inc., net of tax	$ 13,908	$ (6,456)	$ 24,826	$ (296)
Weighted average shares outstanding used in computing net income (loss) per share:
Basic (in shares)	20,875,243	20,429,627	20,758,095	19,804,192
Diluted (in shares)	20,990,313	20,429,627	20,883,868	19,804,192
Net income (loss) available to Class A Common Stock per share:
Basic (in dollars per share)	$ 0.68	$ (0.31)	$ 1.23	$ (0.03)
Diluted (in dollars per share)	$ 0.68	$ (0.31)	$ 1.22	$ (0.03)

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Dec. 31, 2018	Jun. 30, 2018
Current assets
Cash	$ 23,903	$ 61,623
Trade receivables, net	13,545	24,625
Inventories, net	68,465	44,268
Prepaid expenses and other current assets	5,979	3,298
Income tax receivable	1,363	100
Total current assets	113,255	133,914
Property, plant and equipment, net	60,193	40,845
Goodwill	51,410	32,230
Other intangible assets, net	149,206	94,221
Deferred tax assets	64,566	64,105
Other assets	313	453
Total assets	438,943	365,768
Current liabilities
Accounts payable	25,996	24,349
Accrued expenses	43,058	35,685
Income taxes and tax distribution payable	335	1,420
Payable pursuant to tax receivable agreement, current portion	3,932	3,932
Total current liabilities	73,321	65,386
Deferred tax liabilities	270	341
Payable pursuant to tax receivable agreement, less current portion	53,667	51,114
Long-term debt	143,676	108,487
Other long-term liabilities	704	569
Total liabilities	271,638	225,897
Commitments and contingencies (See Note 15)
Stockholders' Equity
Preferred Stock, par value $0.01 per share; 25,000,000 shares authorized; no shares issued and outstanding as of December 31, 2018 and June 30, 2018	0	0
Additional paid in capital	111,347	108,360
Accumulated other comprehensive loss	(2,755)	(1,984)
Accumulated earnings	53,346	27,789
Total stockholders' equity attributable to Malibu Boats, Inc.	162,145	134,369
Non-controlling interest	5,160	5,502
Total stockholders’ equity	167,305	139,871
Total liabilities and stockholders' equity	438,943	365,768
Class A Common Stock
Stockholders' Equity
Common stock	207	204
Class B Common Stock
Stockholders' Equity
Common stock	$ 0	$ 0

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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Dec. 31, 2018	Jun. 30, 2018
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	25,000,000	25,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Class A Common Stock
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common stock, shares issued (in shares)	20,836,429	20,555,348
Common stock, shares, outstanding (in shares)	20,836,429	20,555,348
Class B Common Stock
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	25,000,000	25,000,000
Common stock, shares issued (in shares)	16	17
Common stock, shares, outstanding (in shares)	16	17

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Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - 6 months ended Dec. 31, 2018 - USD ($) $ in Thousands	Total	Additional Paid In Capital	Accumulated Other Comprehensive Loss	Accumulated Earnings	Non-controlling Interest in LLC	Class A Common Stock	Class A Common Stock Common Stock	Class B Common Stock	Class B Common Stock Common Stock
Beginning balance (in shares) at Jun. 30, 2018						20,555,348	20,555,000	17	17
Beginning balance at Jun. 30, 2018	$ 139,871	$ 108,360	$ (1,984)	$ 27,789	$ 5,502		$ 204		$ 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	27,013			25,555	1,458
Stock based compensation, net of withholding taxes on vested equity awards (in shares)							53,000
Stock based compensation, net of withholding taxes on vested equity awards	(61)	(62)					$ 1
Issuances of equity for services	$ 668	668
Issuance of equity for exercise of options (in shares)	28,500						29,000
Issuance of equity for exercise of options	$ 749	749
Increase in payable pursuant to the tax receivable agreement	(2,553)	(2,553)
Increase in deferred tax asset from step-up in tax basis	3,138	3,138
Exchange of LLC Units for Class A Common Stock (in shares)							199,000
Exchange of LLC Units for Class A Common Stock	2	1,047			(1,047)		$ 2
Cancellation of Class B Common Stock (in shares)									(1)
Cancellation of Class B Common Stock	0
Distributions to LLC Unit holders	(716)			2	(718)
Foreign currency translation adjustment	(806)		(771)		(35)
Ending balance (in shares) at Dec. 31, 2018						20,836,429	20,836,000	16	16
Ending balance at Dec. 31, 2018	$ 167,305	$ 111,347	$ (2,755)	$ 53,346	$ 5,160		$ 207		$ 0

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Operating activities:
Net income	$ 27,013	$ 830
Adjustments to reconcile net income to net cash provided by operating activities:
Non-cash compensation expense	1,131	850
Non-cash compensation to directors	421	404
Depreciation and amortization	7,176	6,029
Amortization of deferred financing costs	189	1,046
Deferred income taxes	2,617	46,764
Adjustment to tax receivable agreement liability	0	(27,702)
Other items, net	28	(208)
Change in operating assets and liabilities, net of effects of acquisitions:
Trade receivables	11,231	1,315
Inventories	(16,073)	(6,037)
Prepaid expenses and other assets	(2,006)	(512)
Accounts payable	2,169	1,954
Income taxes receivable and payable	(2,112)	65
Accrued expenses and other liabilities	3,828	2,227
Net cash provided by operating activities	35,612	27,025
Investing activities:
Purchases of property, plant and equipment	(6,837)	(4,923)
Payment for acquisition, net of cash acquired	(100,073)	(125,552)
Net cash used in investing activities	(106,910)	(130,475)
Financing activities:
Principal payments on long-term borrowings	0	(50,000)
Proceeds from long-term borrowings	0	105,000
Proceeds from revolving credit facility	50,000	0
Payments on revolving credit facility	(15,000)	0
Payment of deferred financing costs	0	(1,148)
Proceeds from issuance of Class A Common Stock in offering, net of underwriting discounts	0	55,317
Payments of costs directly associated with offering	0	(650)
Proceeds received from exercise of stock option	749	0
Cash paid for withholding taxes on vested restricted stock	(1,186)	(543)
Distributions to LLC Unit holders	(909)	(636)
Net cash provided by financing activities	33,654	107,340
Effect of exchange rate changes on cash	(76)	19
Changes in cash	(37,720)	3,909
Cash—Beginning of period	61,623	32,822
Cash—End of period	23,903	36,731
Supplemental cash flow information:
Cash paid for interest	2,361	861
Cash paid for income taxes	6,628	2,740
Non-cash investing and financing activities:
Establishment of deferred tax assets from step-up in tax basis	3,138	2,513
Establishment of amounts payable under tax receivable agreements	2,553	1,259
Exchange of LLC Units by LLC Unit holders for Class A common stock	1,047	738
Tax distributions payable to non-controlling LLC Unit holders	319	361
Capital expenditures in accounts payable	$ 493	$ 659

XML

Organization, Basis of Presentation, and Summary of Significant Accounting Policies

6 Months Ended

Dec. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization, Basis of Presentation, and Summary of Significant Accounting Policies

Organization, Basis of Presentation, and Summary of Significant Accounting Policies

Organization

Malibu Boats, Inc. (together with its subsidiaries, the “Company” or "Malibu"), a Delaware corporation formed on November 1, 2013, is the sole managing member of Malibu Boats Holdings, LLC, a Delaware limited liability company (the "LLC"). The Company operates and controls all of the LLC's business and affairs and, therefore, pursuant to Financial Accounting Standards Board ("FASB") Accounting Standards Codification (“ASC”) Topic 810, Consolidation, consolidates the financial results of the LLC and its subsidiaries, and records a non-controlling interest for the economic interest in the Company held by the non-controlling holders of units in the LLC ("LLC Units"). Malibu Boats Holdings, LLC was formed in 2006 with Malibu's acquisition by an investor group, including affiliates of Black Canyon Capital LLC, Horizon Holdings, LLC and then-current management. The LLC, through its wholly owned subsidiary, Malibu Boats, LLC, is engaged in the design, engineering, manufacturing and marketing of innovative, high-quality, recreational powerboats that are sold through a world-wide network of independent dealers. On July 6, 2017, the Company acquired all the outstanding units of Cobalt Boats, LLC (“Cobalt”) further expanding the Company's product offering across a broader segment of the recreational boating industry including performance sport boats, sterndrive and outboard boats. As a result of the acquisition, the Company consolidates the financial results of Cobalt. On October 15, 2018, our subsidiary Malibu Boats, LLC, purchased the assets of Pursuit Boats ("Pursuit") from S2 Yachts, Inc., expanding the Company's product offering into the fiberglass outboard fishing boat market. As a result of the acquisition, the Company consolidates the financial results of Pursuit. Refer to Note 4. The Company reports its results of operations under four reportable segments: Malibu U.S., Malibu Australia, Cobalt and Pursuit, based on their boat manufacturing operations.

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim condensed financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and disclosures of results of operations, financial position and changes in cash flow in conformity with GAAP for complete financial statements. Such statements should be read in conjunction with the audited consolidated financial statements and notes thereto of Malibu Boats, Inc. and subsidiaries for the year ended June 30, 2018, included in the Company's Annual Report on Form 10-K. In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements reflect all adjustments considered necessary to present fairly the Company’s financial position at December 31, 2018, and the results of its operations for the three and six month periods ended December 31, 2018 and December 31, 2017, and its cash flows for the six month periods ended December 31, 2018 and December 31, 2017. Operating results for the three and six months ended December 31, 2018, are not necessarily indicative of the results that may be expected for the full year ending June 30, 2019. Units and shares are presented as whole numbers while all dollar amounts are presented in thousands, unless otherwise noted.

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include the operations and accounts of the Company and all subsidiaries thereof. All intercompany balances and transactions have been eliminated upon consolidation.

Pursuit Acquisition

On October 15, 2018, our subsidiary Malibu Boats, LLC, purchased the assets of Pursuit from S2 Yachts, Inc. for a purchase price of $100,073. Pursuit, located in Fort Pierce, Florida, is a leader in the saltwater outboard fishing boat market through its offering of 15 models of offshore, dual console and center console boats.

Recent Accounting Pronouncements

On July 1, 2018, the Company adopted the new accounting standard, ASC Topic 606, Revenue from Contracts with Customers, and all the related amendments (“ASC 606”) and applied the provisions of the standard to all contracts using the modified retrospective method. The cumulative effect of adopting the new revenue standard was immaterial and no adjustment has been recorded to the opening balance of retained earnings. Prior year information has not been restated and continues to be reported under the accounting standards in effect for those periods. Substantially all of the Company’s revenue continues to be recognized at a point in time when the product is either shipped or received from the Company's facilities and control of the product is transferred to the customer.  New controls and processes designed to meet the requirements of the standard were implemented, and the required new disclosures are presented in Note 2. The adoption of ASC Topic 606 did not have a material impact on the amounts reported in the Company's unaudited condensed consolidated financial position, results of operations or cash flows.

In February 2016, the FASB issued Accounting Standards Update (ASU) 2016‑02, Leases (Topic 842).  The amendments in this update create ASC Topic 842, Leases, and supersede the requirements in ASC Topic 840, Leases.  ASC Topic 842 requires lessees to recognize on the balance sheet a right‑of‑use asset, representing its right to use the underlying asset for the lease term, and a lease liability for all leases with terms greater than 12 months. The guidance also requires qualitative and quantitative disclosures designed to assess the amount, timing, and uncertainty of cash flows arising from leases. The standard requires the use of a modified retrospective transition approach, which includes a number of optional practical expedients that entities may elect to apply. In June 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvement, which provides entities with an additional (optional) transition method to adopt the new lease standard.  Under this new transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The new leases standard is effective for fiscal years beginning after December 15, 2018. Early application is permitted. The Company is currently assessing the potential impact this guidance may have on its consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This guidance provides specific classification of how certain cash receipts and cash payments are presented in the statement of cash flows. The ASU was applied using a retrospective transition method. The adoption of this ASU on July 1, 2018 did not have a material impact on the Company's consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The guidance clarifies the definition of a business that provides a two-step analysis in the determination of whether an acquisition or derecognition is a business or an asset. The update removes the evaluation of whether a market participant could replace any missing elements and provides a framework to assist entities in evaluating whether both an input and a substantive process are present. This guidance will be applied on a prospective basis for transactions that occur after the effective date. The adoption of this ASU on July 1, 2018 did not have a material impact on the Company's consolidated financial statements.

There are no other new accounting pronouncements that are expected to have a significant impact on the Company's consolidated financial statements and related disclosures.

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Revenue Recognition

6 Months Ended

Dec. 31, 2018

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Revenue Recognition

The following table disaggregates the Company's revenue by major product type and geography:

	Three months ended December 31, 2018										Six months ended December 31, 2018
	Malibu US		Cobalt		Pursuit		Malibu Australia		Consolidated		Malibu US		Cobalt		Pursuit		Malibu Australia		Consolidated
Revenue by product:
Boat and trailer sales	$	81,028	$	45,360	$	29,852	$	6,850	$	163,090	$	147,108	$	92,799	$	29,852	$	12,681	$	282,440
Part and other sales	1,693		486		75		449		2,703		4,843		1,307		75		611		6,836
Total revenue	$	82,721	$	45,846	$	29,927	$	7,299	$	165,793	$	151,951	$	94,106	$	29,927	$	13,292	$	289,276
Revenue by geography:
North America	$	82,282	$	43,171	$	26,833	$	—	$	152,286	$	150,140	$	88,145	$	26,833	$	—	$	265,118
International	439		2,675		3,094		7,299		13,507		1,811		5,961		3,094		13,292		24,158
Total revenue	$	82,721	$	45,846	$	29,927	$	7,299	$	165,793	$	151,951	$	94,106	$	29,927	$	13,292	$	289,276

Boat and Trailer Sales

Consists of sales of boats and trailers to the Company's dealer network, net of sales returns, discounts, rebates and free flooring incentives. Boat and trailer sales also includes optional boat features. Sales returns consist of boats returned by dealers under our warranty program. Rebates, free flooring and discounts consists of incentives, including rebates, volume discounts and free flooring that the Company provides to its dealers based on sales of eligible products.

Part and Other Sales

Consists primarily of parts and accessories sales, royalty income, and clothing sales. Parts and accessories sales include replacement and aftermarket boat parts and accessories sold to the Company's dealer network. Royalty income is earned from license agreements with various boat manufacturers, including Nautique, Chaparral, Mastercraft, and Tige related to the use of the Company's intellectual property.

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Non-controlling Interest

6 Months Ended

Dec. 31, 2018

Noncontrolling Interest [Abstract]

Non-controlling Interest

Non-controlling Interest

The non-controlling interest on the unaudited condensed consolidated statement of operations and comprehensive income represents the portion of earnings attributable to the economic interest in the Company's subsidiary, Malibu Boats Holdings, LLC, held by the non-controlling LLC Unit holders. Non-controlling interest on the unaudited condensed consolidated balance sheets represents the portion of net assets of the Company attributable to the non-controlling LLC Unit holders, based on the portion of the LLC Units owned by such Unit holders. The ownership of Malibu Boats Holdings, LLC is summarized as follows:

	As of December 31, 2018			As of June 30, 2018
	Units	Ownership %		Units	Ownership %
Non-controlling LLC Unit holders ownership in Malibu Boats Holdings, LLC	844,652	3.9	%	1,043,186	4.8	%
Malibu Boats, Inc. ownership in Malibu Boats Holdings, LLC	20,836,429	96.1	%	20,555,348	95.2	%
	21,681,081	100.0	%	21,598,534	100.0	%

Issuance of Additional LLC Units

Under the first amended and restated limited liability agreement of the LLC, as amended (the "LLC Agreement"), the Company is required to cause the LLC to issue additional LLC Units to the Company when the Company issues additional shares of Class A Common Stock. Other than in connection with the issuance of Class A Common Stock in connection with an equity incentive program, the Company must contribute to the LLC net proceeds and property, if any, received by the Company with respect to the issuance of such additional shares of Class A Common Stock. The Company must cause the LLC to issue a number of LLC Units equal to the number of shares of Class A Common Stock issued such that, at all times, the number of LLC Units held by the Company equals the number of outstanding shares of Class A Common Stock. During the six months ended December 31, 2018, the Company caused the LLC to issue a total of 305,288 LLC Units to the Company in connection with (i) the Company's issuance of Class A Common Stock to a non-employee director for his services, (ii) the issuance of Class A Common Stock for the vesting of awards granted under the Malibu Boats, Inc. Long-Term Incentive Plan (the "Incentive Plan"), (iii) the issuance of Class A Common Stock to LLC Unit holders for exchange of their LLC Units, and (iv) the issuance of Class A Common Stock for the exercise of vested stock options granted under the Incentive Plan. During the six months ended December 31, 2018, 24,207 LLC Units were canceled in connection with the vesting of share-based equity awards to satisfy employee tax withholding requirements and the retirement of 24,207 treasury shares in accordance with the LLC Agreement.

Distributions and Other Payments to Non-controlling Unit Holders

Distributions for Taxes

As a limited liability company (treated as a partnership for income tax purposes), Malibu Boats Holdings, LLC does not incur significant federal, state or local income taxes, as these taxes are primarily the obligations of its members. As authorized by the LLC Agreement, the LLC is required to distribute cash, to the extent that the LLC has cash available, on a pro rata basis, to its members to the extent necessary to cover the members’ tax liabilities, if any, with respect to their share of LLC earnings. The LLC makes such tax distributions to its members based on an estimated tax rate and projections of taxable income. If the actual taxable income of the LLC multiplied by the estimated tax rate exceeds the tax distributions made in a calendar year, the LLC may make true-up distributions to its members, if cash or borrowings are available for such purposes. As of December 31, 2018 and June 30, 2018, tax distributions payable to non-controlling LLC Unit holders were $319 and $511, respectively. During the six months ended December 31, 2018 and 2017, tax distributions paid to the non-controlling LLC Unit holders were $909 and $602, respectively.

Other Distributions

Pursuant to the LLC Agreement, the Company has the right to determine when distributions will be made to LLC members and the amount of any such distributions. If the Company authorizes a distribution, such distribution will be made to the members of the LLC (including the Company) pro rata in accordance with the percentages of their respective LLC units.

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Acquisitions

6 Months Ended

Dec. 31, 2018

Business Combinations [Abstract]

Acquisitions

Acquisitions

Pursuit

On October 15, 2018, the Company completed its acquisition of the assets of Pursuit. The aggregate purchase price for the transaction was $100,073, funded with cash and borrowings under the Company's credit agreement. The aggregate purchase price was subject to certain adjustments, including customary adjustments for the amount of working capital in the business at the closing date. The Company accounted for the transaction in accordance with ASC 805, Business Combinations.

The total consideration given to the former owners of Pursuit has been allocated to the assets acquired and liabilities assumed based on estimates of fair value as of the date of the acquisition. The preliminary measurements of fair value were determined based upon estimates utilizing the assistance of third party valuation specialists, and are subject to change within the measurement period (up to one year from the acquisition date). The Company expects appraisals of tangible and intangible assets and working capital adjustments to be finalized during the second half of fiscal 2019.

The following table summarizes the preliminary purchase price allocation based on the estimated fair values of the assets acquired and liabilities of Pursuit assumed at the acquisition date:

Consideration:
Cash consideration paid	$	100,073
Recognized preliminary amounts of identifiable assets acquired and (liabilities assumed), at fair value:
Inventories	$	8,332
Other current assets	373
Property, plant and equipment	17,454
Identifiable intangible assets	57,900
Current liabilities	(3,488		)
Fair value of assets acquired and liabilities assumed	80,571
Goodwill	19,502
Total purchase price	$	100,073

The preliminary fair value estimates for the Company's identifiable intangible assets acquired as part of the acquisition are as follows:

	Estimates of Fair Value		Estimated Useful Life (in years)
Definite-lived intangibles:
Dealer relationships	$	25,400	20
Total definite-lived intangibles	25,400
Indefinite-lived intangible:
Trade name	32,500
Total intangible assets	$	57,900

The value allocated to inventories reflects the estimated fair value of the acquired inventory based on the expected sales price of the inventory, less an estimated cost to complete and a reasonable profit margin. The fair value of the identifiable intangible assets were determined based on the following approaches:

Dealer Relationships - The value associated with Pursuit's dealer relationships is attributed to its long standing dealer distribution network. The estimate of fair value assigned to this asset was determined using the income approach, which requires an estimate or forecast of the expected future cash flows from the dealer relationships through the application of the multi-period excess earnings approach. The estimated remaining useful life of dealer relationships is approximately twenty years.

Trade Name - The value attributed to Pursuit's trade name was determined using a variation of the income approach called the relief from royalty method, which requires an estimate or forecast of the expected future cash flows. The trade name has an indefinite life.

The fair value of the definite-lived intangible assets are being amortized using the straight-line method to general and administrative expenses over their estimated useful lives. Indefinite-lived intangible assets are not amortized, but instead are evaluated for potential impairment on an annual basis in accordance with the provisions of ASC Topic 350, Intangibles—Goodwill and Other. The weighted average useful life of identifiable definite-lived intangible assets acquired was 20 years. Goodwill of $19,502 arising from the acquisition consists of expected synergies and cost savings as well as intangible assets that do not qualify for separate recognition. The indefinite-lived intangible asset and goodwill acquired are expected to be deductible for income tax purposes.

Acquisition-related costs of $2,809, which were incurred by the Company in the first half of fiscal year 2019 related to the Pursuit acquisition, were expensed in the period incurred, and are included in general and administrative expenses in the consolidated statement of operations and comprehensive income (loss) for the six months ended December 31, 2018.

Pro Forma Financial Information (unaudited):

The following unaudited pro forma consolidated results of operations for the three and six months ended December 31, 2018 and 2017, assumes that the acquisition of Pursuit occurred as of July 1, 2017. The unaudited pro forma financial information combines historical results of Malibu and Pursuit, with adjustments for depreciation and amortization attributable to preliminary fair value estimates on acquired tangible and intangible assets for the respective periods. Non-recurring pro forma adjustments associated with the fair value step up of inventory were included in the reported pro forma cost of sales and earnings. The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of fiscal year 2018 or the results that may occur in the future:

	Three Months Ended December 31,					Six Months Ended December 31,
	2018		2017			2018		2017
Net sales	$	172,219	$	143,689		$	330,918	$	275,300
Net income (loss)	15,553		(4,773		)	31,083		2,241
Net income (loss) attributable to Malibu Boats, Inc.	14,784		(5,633		)	29,394		796
Basic earnings (loss) per share	$	0.71	$	(0.28	)	$	1.42	$	0.04
Diluted earnings (loss) per share	$	0.70	$	(0.28	)	$	1.41	$	0.04

Cobalt

On July 6, 2017, the Company completed its acquisition of Cobalt. The aggregate purchase price for the transaction was$130,525, consisting of$129,525funded with cash and borrowings under the Company's credit agreement and$1,000in equity equal to39,262shares of the Company's Class A Common Stock based on a closing stock price of$25.47per share on June 27, 2017. The aggregate purchase price wassubject to certain adjustments, including customary adjustments for the amount of working capital in the business at the closing date and subject to adjustment for any judgment or settlement in connection with a pending litigation matter between Cobalt and Sea Ray Boats, Inc. and Brunswick Corporation. William Paxson St. Clair, Jr., a former owner of Cobalt, was appointed as a director to the Company's Board of Directors and as President of Cobalt. The Company accounted for the transaction in accordance with ASC 805,Business Combinations.

The total consideration given to the former members of Cobalt has been allocated to the assets acquired and liabilities assumed based on estimates of fair value as of the date of the acquisition. The measurements of fair value were determined based upon estimates utilizing the assistance of third party valuation specialists.

The following table summarizes the purchase price allocation based on the estimated fair values of the assets acquired and liabilities of Cobalt assumed at the acquisition date:

Consideration:
Cash consideration paid	$	129,525
Equity consideration paid	1,000
Fair value of total consideration transferred	$	130,525
Recognized amounts of identifiable assets acquired and (liabilities assumed), at fair value:
Cash	$	3,973
Accounts receivable	2,329
Inventories	14,343
Other current assets	363
Property, plant and equipment	12,934
Identifiable intangible assets	89,900
Current liabilities	(13,108		)
Fair value of assets acquired and liabilities assumed	110,734
Goodwill	19,791
Total purchase price	$	130,525

The fair value estimates for the Company's identifiable intangible assets acquired as part of the acquisition are as follows:

	Estimates of Fair Value		Estimated Useful Life (in years)
Definite-lived intangibles:
Dealer relationships	$	56,300	20
Patent	2,600		15
Total definite-lived intangibles	58,900
Indefinite-lived intangible:
Trade name	31,000
Total intangible assets	$	89,900

The value allocated to inventories reflects the estimated fair value of the acquired inventory based on the expected sales price of the inventory, less an estimated cost to complete and a reasonable profit margin. The fair value of the identifiable intangible assets were determined based on the following approaches:

Dealer Relationships - The value associated with Cobalt's dealer relationships is attributed to its long standing dealer distribution network. The estimate of fair value assigned to this asset was determined using the income approach, which requires an estimate or forecast of the expected future cash flows from the dealer relationships through the application of the multi-period excess earnings approach. The estimated remaining useful life of dealer relationships is approximately twenty years.

Patent - The value associated with the patented technology was based on financial projections and the patent's estimated remaining legal life of approximately fifteen years using a variation of the income approach called the royalty savings method.

Trade Name - The value attributed to Cobalt's trade name was determined using a variation of the income approach called the relief from royalty method, which requires an estimate or forecast of the expected future cash flows. The trade name has an indefinite life.

The fair value of the definite-lived intangible assets are being amortized using the straight-line method to general and administrative expenses over their estimated useful lives. Indefinite-lived intangible assets are not amortized, but instead are evaluated for potential impairment on an annual basis in accordance with the provisions of ASC Topic 350, Intangibles—Goodwill and Other. The weighted average useful life of identifiable definite-lived intangible assets acquired was 19.8 years. Goodwill of $19,791 arising from the acquisition consists of expected synergies and cost savings as well as intangible assets that do not qualify for separate recognition. The indefinite-lived intangible asset and goodwill acquired are deductible for income tax purposes.

Acquisition-related costs of $3,056, which were incurred by the Company in fiscal year 2018 related to the Cobalt acquisition, were expensed in the period incurred, and are included in general and administrative expenses in the consolidated statement of operations and comprehensive income for the fiscal year ended June 30, 2018.

Pro Forma Financial Information (unaudited):

The following unaudited pro forma consolidated results of operations for the three months and six months ended December 31, 2018 and 2017, assumes that the acquisition of Cobalt occurred as of July 1, 2016. The unaudited pro forma financial information combines historical results of Malibu and Cobalt, with adjustments for depreciation and amortization attributable to preliminary fair value estimates on acquired tangible and intangible assets for the respective periods. Non-recurring pro forma adjustments associated with the fair value step up of inventory were included in the reported pro forma cost of sales and earnings. The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of fiscal year 2017 or the results that may occur in the future:

	Three Months Ended December 31,					Six Months Ended December 31,
	2018		2017			2018		2017
Net sales	$	165,793	$	114,373		$	289,276	$	217,914
Net income (loss)	14,998		(6,271		)	27,013		496
Net income (loss) attributable to Malibu Boats, Inc.	14,257		(7,018		)	25,555		(805		)
Basic earnings (loss) per share	$	0.68	$	(0.34	)	$	1.23	$	(0.04	)
Diluted earnings (loss) per share	$	0.68	$	(0.34	)	$	1.22	$	(0.04	)

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Inventories

6 Months Ended

Dec. 31, 2018

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories, net consisted of the following:

	As of December 31, 2018		As of June 30, 2018
Raw materials	$	46,838	$	28,851
Work in progress	11,099		6,164
Finished goods	10,528		9,253
Total inventories	$	68,465	$	44,268

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Property, Plant and Equipment

6 Months Ended

Dec. 31, 2018

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Property, Plant and Equipment

Property, plant and equipment, net consisted of the following:

	As of December 31, 2018			As of June 30, 2018
Land	$	2,194		$	634
Building and leasehold improvements	28,156			20,110
Machinery and equipment	42,177			32,471
Furniture and fixtures	5,828			4,667
Construction in process	5,552			5,636
	83,906			63,518
Less: Accumulated depreciation	(23,713		)	(22,673		)
Property, plant and equipment, net	$	60,193		$	40,845

During the first quarter of fiscal 2019 and the first quarter of fiscal 2018, the Company disposed of various molds for models not currently in production with zero net book value and historical costs of $3,285 and $2,122, respectively. Depreciation expense was $2,495 and $1,687 for the three months ended December 31, 2018 and 2017, and $4,358 and $3,417 for the six months ended December 31, 2018 and 2017, respectively, substantially all of which was recorded in cost of sales.

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Goodwill and Other Intangible Assets

6 Months Ended

Dec. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

Changes in the carrying amount of goodwill for the six months ended December 31, 2018 were as follows:

Goodwill as of June 30, 2018	$	32,230
Addition related to the acquisition of Pursuit	19,502
Effect of foreign currency changes on goodwill	(322		)
Goodwill as of December 31, 2018	$	51,410

The components of other intangible assets were as follows:

	As of December 31, 2018			As of June 30, 2018			Estimated Useful Life (in years)	Weighted Average Remaining Useful Life (in years)
Definite-lived intangibles:
Reacquired franchise rights	$	1,270		$	1,333		5	0.8
Dealer relationships	111,349			86,062			8-20	18.8
Patent	3,986			3,986			12-15	13.5
Trade name	24,667			24,667			15	2.7
Non-compete agreement	49			52			10	5.8
Backlog	88			93			0.3	0.0
Total	141,410			116,193
Less: Accumulated amortization	(55,704		)	(52,972		)
Total definite-lived intangible assets, net	85,706			63,221
Indefinite-lived intangible:
Trade name	63,500			31,000
Total other intangible assets, net	$	149,206		$	94,221

Amortization expense recognized on all amortizable intangibles was $1,538 and $1,304 for the three months ended December 31, 2018 and 2017, respectively and $2,818 and $2,612 for the six months ended December 31, 2018 and 2017.

The estimated future amortization of definite-lived intangible assets is as follows:

Fiscal years ending June 30:
	Remainder of 2019	$	3,138
	2020	6,137
	2021	6,058
	2022	4,557
	2023	4,420
	Thereafter	61,395
		$	85,706

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Product Warranties

6 Months Ended

Dec. 31, 2018

Product Warranties Disclosures [Abstract]

Product Warranties

Product Warranties

Effective for model year 2016, the Company began providing a limited warranty for a period up to five years for both Malibu and Axis brand boats. For model years prior to 2016, the Company provided a limited warranty for a period of up to three years and two years for its Malibu and Axis brands, respectively. For Cobalt boats, the Company provides a structural warranty of up to ten years which covers the hull, deck joints, bulkheads, floor, transom, stringers, and motor mount. In addition, the Company provides a five year bow-to-stern warranty on all components manufactured or purchased (excluding hull and deck structural components), including canvas and upholstery. For Pursuit boats, the Company provides a structural warranty of up to five years which covers structural defects in materials and workmanship on the deck and hull. Gelcoat is covered up to three years for Cobalt and one year for Malibu and Axis. In each of our brands, some materials, components or parts of the boat that are not covered by our limited product warranties are separately warranted by their manufacturers or suppliers. These other warranties include warranties covering engines and other components.

The Company’s standard warranties require the Company or its dealers to repair or replace defective products during such warranty period at no cost to the consumer. The Company estimates the costs that may be incurred under its limited warranty and records a liability for such costs at the time the product revenue is recognized. Factors that affect the Company’s warranty liability include the number of units sold, historical and anticipated rates of warranty claims and cost per claim. The Company assesses the adequacy of its recorded warranty liabilities by brand on a quarterly basis and adjusts the amounts as necessary. The Company utilizes historical claims trends and analytical tools to assist in determining the appropriate warranty liability.

Changes in the Company’s product warranty liability, which is included in accrued expenses on the unaudited condensed consolidated balance sheets, were as follows:

	Three Months Ended						Six Months Ended
	December 31, 2018			December 31, 2017			December 31, 2018			December 31, 2017
Beginning balance	$	17,999		$	14,725		$	17,217		$	10,050
Add: Warranty expense	3,107			1,717			6,023			4,725
Additions for acquisitions	1,872			—			1,872			4,404
Less: Warranty claims paid	(2,035		)	(925		)	(4,169		)	(3,662		)
Ending balance	$	20,943		$	15,517		$	20,943		$	15,517

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Financing

6 Months Ended

Dec. 31, 2018

Debt Disclosure [Abstract]

Financing

Financing

Outstanding debt consisted of the following:

	As of December 31, 2018			As of June 30, 2018
Term loans	$	110,000		$	110,000
Revolving credit loan	35,000			—
Less unamortized debt issuance costs	(1,324		)	(1,513		)
Total debt	143,676			108,487
Less current maturities	—			—
Long-term debt less current maturities	$	143,676		$	108,487

Long-Term Debt

Credit Agreement. On June 28, 2017, Malibu Boats, LLC as the borrower ("Boats LLC"), entered into the Second Amended and Restated Credit Agreement with SunTrust Bank, as the administrative agent, swingline lender and issuing bank, to refinance the prior credit facility and to provide funds for the purchase of Cobalt. It provided Boats LLC with a term loan facility in an aggregate principal amount of $160,000 ($55,000 of which was drawn on June 28, 2017 to refinance our previous credit facility and $105,000 of which was drawn on July 6, 2017 to fund the payment of the purchase price for the Cobalt acquisition and to pay certain fees and expenses related to entering into the Credit Agreement and a revolving credit facility of up to $35,000. On August 17, 2017, Boats LLC made a voluntary principal payment on the term loans in the amount of $50,000 with a portion of the net proceeds from the Company’s equity offering completed on August 14, 2017. On August 21, 2018, in connection with the acquisition of Pursuit, Boats LLC entered into the First Incremental Facility Amendment and First Amendment to the Second Amended and Restated Credit Agreement dated as of June 28, 2017 (as amended, the “Credit Agreement”). The amendment increased the amount available under the revolving credit facility by $50,000 (the “Incremental Revolving Commitment”) from $35,000 to $85,000. Each of the term loans and the revolving credit facility are scheduled to mature on July 1, 2022. In connection with the completion of the acquisition of Pursuit, the Company borrowed $50,000 under its revolving credit facility on October 15, 2018. In December 2018, Boats LLC made a voluntary principal payment on the revolving credit facility in the amount of $15,000.

Borrowings under the Credit Agreement bear interest at a rate equal to either, at Boats LLC's option, (i) the highest of the prime rate, the Federal Funds Rate plus 0.5%, or one-month LIBOR plus 1% (the “Base Rate”) or (ii) LIBOR, in each case plus an applicable margin ranging from 1.75% to 3.00% with respect to LIBOR borrowings and 0.75% to 2.00% with respect to Base Rate borrowings. The applicable margin will be based upon the consolidated leverage ratio of the LLC and its subsidiaries calculated on a consolidated basis. Boats LLC is required to pay a commitment fee for the unused portion of the revolving credit facility which ranges from 0.25% to 0.50% per annum, depending on the LLC’s and its subsidiaries’ consolidated leverage ratio. Boats LLC was also required to pay a ticking fee at a rate of 0.30% per annum on the $50,000 Incremental Revolving Commitment from August 21, 2018 until the date that the conditions for the lenders to provide the Incremental Revolving Commitment were met, which occurred on October 15, 2018, the closing date of the Company's purchase of assets of Pursuit. The Company is not a party to the Credit Agreement, and the obligations of Boats LLC under the Credit Agreement are guaranteed by the LLC, and, subject to certain exceptions, the present and future domestic subsidiaries of Boats LLC, and all such obligations are secured by substantially all of the assets of the LLC, Boats LLC and such subsidiary guarantors pursuant to the Second Amended and Restated Security Agreement, by and among Boats LLC, the LLC, the subsidiary guarantors, and SunTrust Bank, as administrative agent, dated as of June 28, 2017, and other collateral documents. The weighted average interest rate on the term loan was 4.2% for the three months ended December 31, 2018.

The Credit Agreement permits prepayment of the term loan facilities without penalty. The $55,000 term loan is subject to quarterly installments of approximately $700 per quarter until March 31, 2019, then approximately $1,000 per quarter until June 30, 2021, and approximately $1,400 per quarter through March 31, 2021. The $105,000 term loan is subject to quarterly installments of approximately $1,300 per quarter until March 31, 2019, then approximately $2,000 per quarter until June 30, 2021, and approximately $2,600 per quarter through March 31, 2022. The Company used proceeds from an offering on August 14, 2017 to repay $50,000 on its term loans under the Credit Agreement and exercised its option to apply the prepayment to principal installments through December 31, 2021, and a portion of principal installments due on March 31, 2022. Accordingly, no principal payments are required under the Credit Agreement until March 31, 2022, and as such, all borrowings as of June 30, 2018 and December 31, 2018, are reflected as noncurrent. The $50,000 repayment resulted in a write-off of deferred financing costs of $829 which was included in amortization expense on the condensed consolidated statement of operations and comprehensive income. The balance of both term loans is due on the scheduled maturity date of July 1, 2022. The Credit Agreement is also subject to prepayments from the net cash proceeds received by Boats LLC or any guarantors from certain asset sales and recovery events, subject to certain reinvestment rights, and from excess cash flow, subject to the terms and conditions of the Credit Agreement.

The Credit Agreement contains certain customary representations and warranties, and notice requirements for the occurrence of specific events such as the occurrence of any event of default, or pending or threatened litigation. The Credit Agreement also requires compliance with certain customary financial covenants, including a minimum ratio of EBITDA to fixed charges and a maximum ratio of total debt to EBITDA. The Credit Agreement contains certain restrictive covenants, which, among other things, place limits on certain activities of the loan parties under the Credit Agreement, such as the incurrence of additional indebtedness and additional liens on property and limit the future payment of dividends or distributions. For example, the Credit Agreement generally prohibits the LLC, Boats LLC and the subsidiary guarantors from paying dividends or making distributions, including to the Company. The credit facility permits, however, (i) distributions based on a member’s allocated taxable income, (ii) distributions to fund payments that are required under the LLC’s tax receivable agreement, (iii) purchase of stock or stock options of the LLC from former officers, directors or employees of loan parties or payments pursuant to stock option and other benefit plans up to $2,000 in any fiscal year, and (iv) share repurchase payments up to $20,000 in any fiscal year subject to one-year carry forward and compliance with other financial covenants. In addition, the LLC may make dividends and distributions of up to $6,000 in any fiscal year, subject to compliance with other financial covenants.

In connection with entering into the Credit Agreement, the Company capitalized $2,074 in deferred financing costs during fiscal 2018. These costs, in addition to the unamortized balance related to costs associated with the Company's previous credit facility of $671, are being amortized over the term of the Credit Agreement into interest expense using the effective interest method and presented as a direct offset to the total debt outstanding as of December 31, 2018 and June 30, 2018.

Covenant Compliance

As of December 31, 2018, the Company was in compliance with the covenants contained in the Credit Agreement.

Interest Rate Swap

On July 1, 2015, the Company entered into a five year floating to fixed interest rate swap with an effective start date of July 1, 2015. The swap is based on a one-month LIBOR rate versus a 1.52% fixed rate on a notional value of $39,250, which was equal to 50% of the outstanding balance of the term loan at the time of the swap arrangement. Under ASC Topic 815, Derivatives and Hedging, all derivative instruments are recorded on the unaudited condensed consolidated balance sheets at fair value as either short term or long term assets or liabilities based on their anticipated settlement date. Refer to Fair Value Measurements in Note 11. The Company has elected not to designate its interest rate swap as a hedge for accounting purposes; therefore, changes in the fair value of the derivative instrument are being recognized in earnings in the Company's unaudited condensed consolidated statements of operations and comprehensive income. For the three months ended December 31, 2018 and 2017 the Company recorded a loss of $129 and a gain of $172, respectively, and for the the six months ended December 31, 2018 and 2017, the Company recorded a loss of $132 and a gain of $203, respectively, for the change in fair value of the interest rate swap, which is included in interest expense in the unaudited condensed consolidated statements of operations and comprehensive income.

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Tax Receivable Agreement Liability

6 Months Ended

Dec. 31, 2018

Tax Receivable Agreement [Abstract]

Tax Receivable Agreement Liability

Tax Receivable Agreement Liability

The Company has a tax receivable agreement with the pre-IPO owners of the LLC that provides for payment by the Company to the pre-IPO owners (or their permitted assignees) of 85% of the amount of the benefits, if any, that the Company is deemed to realize as a result of (i) increases in tax basis and (ii) certain other tax benefits related to the Company entering into the tax receivable agreement, including those attributable to payments under the tax receivable agreement. These contractual payment obligations are obligations of the Company and not of the LLC. The Company's tax receivable agreement liability was determined on an undiscounted basis in accordance with ASC 450, Contingencies, since the contractual payment obligations were deemed to be probable and reasonably estimable. The tax receivable agreement further provides that, upon certain mergers, asset sales or other forms of business combinations or other changes of control, the Company (or its successor) would owe to the pre-IPO owners of the LLC a lump-sum payment equal to the present value of all forecasted future payments that would have otherwise been made under the tax receivable agreement that would be based on certain assumptions, including a deemed exchange of LLC Units and that the Company would have sufficient taxable income to fully utilize the deductions arising from the increased tax basis and other tax benefits related to entering into the tax receivable agreement. The Company also is entitled to terminate the tax receivable agreement, which, if terminated, would obligate the Company to make early termination payments to the pre-IPO owners of the LLC. In addition, a pre-IPO owner may elect to unilaterally terminate the tax receivable agreement with respect to such pre-IPO owner, which would obligate the Company to pay to such existing owner certain payments for tax benefits received through the taxable year of the election.

For purposes of the tax receivable agreement, the benefit deemed realized by the Company will be computed by comparing the actual income tax liability of the Company (calculated with certain assumptions) to the amount of such taxes that the Company would have been required to pay had there been no increase to the tax basis of the assets of the LLC as a result of the purchases or exchanges, and had the Company not entered into the tax receivable agreement.

The following table reflects the changes to the Company's tax receivable agreement liability:

	As of December 31, 2018			As of June 30, 2018
Payable pursuant to tax receivable agreement	$	55,046		$	82,291
Additions (reductions) to tax receivable agreement:
Exchange of LLC Units for Class A Common Stock	2,553			1,685
Adjustment for change in estimated tax rate	—			(24,637		)
Payments under tax receivable agreement	—			(4,293		)
	57,599			55,046
Less current portion under tax receivable agreement	(3,932		)	(3,932		)
Payable pursuant to tax receivable agreement, less current portion	$	53,667		$	51,114

When estimating the expected tax rate to use in order to determine the tax benefit expected to be recognized from the Company’s increased tax basis as a result of exchanges of LLC Units by the pre-IPO owners of the LLC, the Company continuously monitors changes in its overall tax posture, including changes resulting from new legislation and changes as a result of new jurisdictions in which the Company is subject to tax.

During the second quarter of fiscal 2018, the U.S. Congress enacted tax legislation called the Tax Cuts and Jobs Act of 2017 ("the Tax Act") on December 22, 2017, which, among other provisions, lowered the Company's U.S. corporate tax rate from 35% to 21%, effective January 1, 2018. The Tax Act lowered the estimated tax rate used to compute the Company's future tax obligations and, in turn, reduced the future tax benefit expected to be realized by the Company related to increased tax basis from previous sales and exchanges of LLC Units by pre-IPO owners of the LLC. The change in the underlying tax-rate assumptions used to estimate the tax receivable agreement liability, resulted in a decrease in the tax receivable agreement liability of $30,317 during the second quarter of fiscal 2018.

Also, during the first quarter of fiscal 2018, the Company acquired Cobalt, which expanded the Company's footprint into new state tax jurisdictions. This change in the Company's state tax posture increased the estimated tax rate used in computing the Company's future tax obligations and, in turn, increased the future tax benefit expected to be realized by the Company related to increased tax basis from previous sales and exchanges of LLC Units by pre-IPO owners of the LLC. The change in the underlying tax-rate assumptions used to estimate the tax receivable agreement liability resulted in an increase in the tax receivable agreement liability of $6,047 during the first quarter of fiscal 2018. These amounts are included in other (income) expense, net in the accompanying unaudited condensed consolidated statements of operations and comprehensive income. Additionally, during the second quarter of fiscal 2019, the Company analyzed the impact of the Pursuit acquisition on its state footprint and determined that there was an immaterial change to the estimated tax rate used in computing the Company's future tax obligations.

As of December 31, 2018 and June 30, 2018, the Company had deferred tax assets of $110,435 and $107,293, respectively, associated with basis differences in assets upon acquiring an interest in Malibu Boats Holdings, LLC and pursuant to making an election under Section 754 of the Internal Revenue Code of 1986 (the "Internal Revenue Code"), as amended. The aggregate tax receivable agreement liability represents 85% of the tax benefits that the Company expects to receive in connection with the Section 754 election. In accordance with the tax receivable agreement, the next annual payment is anticipated approximately 75 days after filing the federal tax return due by April 15, 2019.

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Fair Value Measurements

6 Months Ended

Dec. 31, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

In determining the fair value of certain assets and liabilities, the Company employs a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. As defined in ASC Topic 820, Fair Value Measurements and Disclosures, fair value is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., the exit price). Financial assets and financial liabilities recorded on the unaudited condensed consolidated balance sheets at fair value are categorized based on the reliability of inputs to the valuation techniques as follows:

• Level 1—Financial assets and financial liabilities whose values are based on unadjusted quoted prices in active markets for identical assets.

• Level 2—Financial assets and financial liabilities whose values are based on quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in non-active markets; or valuation models whose inputs are observable, directly or indirectly, for substantially the full term of the asset or liability.

• Level 3—Financial assets and financial liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect the Company’s estimates of the assumptions that market participants would use in valuing the financial assets and financial liabilities.

The hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

Assets and liabilities that had recurring fair value measurements were as follows:

	Fair Value Measurements at Reporting Date Using
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
As of December 31, 2018:
Assets
Interest rate swap not designated as cash flow hedge	$	286	$	—	$	286	$	—
Total assets at fair value	$	286	$	—	$	286	$	—
As of June 30, 2018:
Assets
Interest rate swap not designated as cash flow hedge	$	418	$	—	$	418	$	—
Total assets at fair value	$	418	$	—	$	418	$	—

Fair value measurements for the Company’s interest rate swap are classified under Level 2 because such measurements are based on significant other observable inputs. There were no transfers of assets or liabilities between Level 1 and Level 2 as of December 31, 2018 or June 30, 2018.

The Company’s nonfinancial assets and liabilities that have nonrecurring fair value measurements include property, plant and equipment, goodwill and intangibles.

In assessing the need for goodwill impairment, management relies on a number of factors, including operating results, business plans, economic projections, anticipated future cash flows, transactions and marketplace data. Accordingly, these fair value measurements fall in Level 3 of the fair value hierarchy. The Company generally uses projected cash flows, discounted as necessary, to estimate the fair values of property, plant and equipment and intangibles using key inputs such as management’s projections of cash flows on a held-and-used basis (if applicable), management’s projections of cash flows upon disposition and discount rates. Accordingly, these fair value measurements fall in Level 3 of the fair value hierarchy. These assets and certain liabilities are measured at fair value on a nonrecurring basis as part of the Company’s impairment assessments and as circumstances require.

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Income Taxes

6 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Malibu Boats, Inc. is taxed as a C corporation for U.S. income tax purposes and is therefore subject to both federal and state taxation at a corporate level. The LLC continues to operate in the United States as a partnership for U.S. federal income tax purposes.

Income taxes are computed in accordance with ASC Topic 740, Income Taxes, and reflect the net tax effects of temporary differences between the financial reporting carrying amounts of assets and liabilities and the corresponding income tax amounts. The Company has deferred tax assets and liabilities and maintains valuation allowances where it is more likely than not that all or a portion of deferred tax assets will not be realized. To the extent the Company determines that it will not realize the benefit of some or all of its deferred tax assets, such deferred tax assets will be adjusted through the Company’s provision for income taxes in the period in which this determination is made.

As of December 31, 2018 and June 30, 2018, the Company maintained a valuation allowance of $13,215 and $12,716, respectively, against deferred tax assets related to state net operating losses and future amortization deductions (with respect to the Section 754 election) that are reported in the Tennessee corporate tax return without offsetting income, which is taxable at the LLC. The increase in the valuation allowance is due to the exchanges of LLC Units into Class A common stock by certain LLC Unit holders during the six months ended December 31, 2018.

On December 22, 2017, the Tax Act was enacted which, among a number of its provisions, lowered the U.S. corporate tax rate from 35% to 21%, effective January 1, 2018. The Company’s consolidated interim effective tax rate is based upon expected annual income from operations, statutory tax rates and tax laws in the various jurisdictions in which the Company operates. Significant or unusual items, including those related to the change in U.S. tax law noted above as well as other adjustments to accruals for tax uncertainties, are recognized in the quarter in which the related event occurs.

On October 15, 2018, the Company completed its acquisition of Pursuit. This did not have a significant impact to the effective tax rate. For the three months ended December 31, 2018 and 2017, the Company's effective tax rate was 21.5% and 344.9%, respectively. For the six months ended December 31, 2018 and 2017, the Company's effective tax rate was 22.2% and 98.4%, respectively. For the three months ended December 31, 2018, the Company's effective tax rate exceeded the statutory federal income tax rate of 21% due to the impact of U.S. state taxes. This effect was partially offset by a windfall benefit generated by certain stock based compensation during the quarter, the research and development tax credit, and the impact of non-controlling interests in the LLC, a passthrough entity for U.S. federal tax purposes. For the three and six months ended December 31, 2017 , the principal differences in the Company's effective tax rate with the blended statutory federal income tax rate of approximately 28% relate to the impact of one-time items due to the change in tax law enacted in connection with the Tax Act and the impact of the additional jurisdictions in which the Company is taxed as a result of the Cobalt acquisition. Additionally, the Company's effective tax rate for the three months ended December 31, 2017 is related to, to a lesser extent, the impact of the non-controlling interests in the LLC, a pass-through entity for U.S. federal tax purposes, state income taxes attributable to the LLC, and the benefit of deductions under Section 199 of the Internal Revenue Code.

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Stock-Based Compensation

6 Months Ended

Dec. 31, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

Stock-Based Compensation

The Company adopted a long term incentive plan which became effective on January 1, 2014, and reserves for issuance up to 1,700,000 shares of Malibu Boats, Inc. Class A Common Stock for the Company’s employees, consultants, members of its board of directors and other independent contractors at the discretion of the compensation committee. Incentive stock awards authorized under the Incentive Plan include unrestricted shares of Class A Common Stock, stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent awards and performance awards. As of December 31, 2018, 880,541 shares remain available for future issuance under the long term incentive plan. Readers should refer to Note 13 to the fiscal 2018 audited consolidated financial statements contained in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2018, for additional information related to the Company's awards and the Incentive Plan.

On August 22, 2018, the Company granted 50,000 options to certain key employees to purchase from the Company shares of Class A Common Stock at a price of $42.13 per share. The term of the options commenced on August 22, 2018 and will expire on August 21, 2024, the day before the sixth anniversary of the grant date. Under the terms of the agreements, the awards will vest ratably over four years on each anniversary of their grant date. At August 22, 2018, the fair value of the option awards was $733 and was estimated using the Black-Scholes option-pricing model with the following assumptions: risk-free rate of 2.7%, expected volatility of 38.4%, expected term of 4.25 years, and no dividends. Stock-based compensation expense attributable to the service based options is amortized on a straight-line basis over the requisite service period. Compensation costs associated with performance based option awards are recognized over the requisite service period based on probability of achievement in accordance with ASC Topic 718, Compensation—Stock Compensation.

On November 1, 2018, the Company granted 35,000 restricted stock units and 48,000 restricted stock awards to key employees under the Incentive Plan. The grant date fair value of these awards was $3,474 based on a stock price of $41.85 per share on the date of grant. Under the terms of the agreements, 71% of the awards will vest ratably over four years beginning on November 6, 2019 and approximately 29% of the awards will vest in tranches based on the achievement of annual or cumulative performance targets. Compensation costs associated with performance based awards are recognized over the requisite service period based on probability of achievement in accordance with ASC Topic 718, Compensation—Stock Compensation.

Risk-free interest rate. The risk-free rate for the expected term of the option is based on the U.S. Treasury yield curve at the date of grant.

Expected term. The Company used the simplified method to estimate the expected term of stock options. The simplified method assumes that employees will exercise share options evenly between the period when the share options are vested and ending on the date when the share options would expire. 

Expected volatility. The Company determined expected volatility based on its historical volatility calculated using daily observations of the closing price of its publicly traded common stock.

Expected dividend. The Company has not estimated any dividend yield as the Company currently does not pay a dividend and does not anticipate paying a dividend over the expected term.

The following is a summary of the changes in the Company's stock options for the six months ended December 31, 2018:

	December 31, 2018
	Shares		Price or range per share	Weighted Average Exercise Price/Share
Total outstanding options at June 30, 2018	144,000		$27.24	$	27.24
Options granted	50,000		42.13	42.13
Options exercised	(28,500	)	(25.85) - (30.87)	(26.29		)
Outstanding options at end of period	165,500		25.85 - 42.13	31.91
Exercisable at end of period	7,500		$30.87	$	30.87

The following is a summary of the changes in non-vested restricted stock units and restricted stock awards for the six months ended December 31, 2018:

	Number of Restricted Stock Units and Restricted Stock Awards Outstanding		Weighted Average Grant Date Fair Value
Total Non-vested Restricted Stock Units as of June 30, 2018	227,154		$	20.84
Granted	97,702		42.05
Vested	(98,625	)	(22.61		)
Forfeited	(1,600	)	(22.21		)
Total Non-vested Restricted Stock Units as of December 31, 2018	224,631		$	29.28

Stock compensation expense attributable to the Company's share-based equity awards was $655 and $488 for the three months ended December 31, 2018 and 2017, respectively, and $1,131 and $850 for the six months ended December 31, 2018 and 2017, respectively. Stock compensation expense attributed to share-based equity awards issued under the Incentive Plan is recognized on a straight-line basis over the terms of the respective awards and is included in general and administrative expense in the Company's unaudited condensed consolidated statement of operations and comprehensive income.

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Net Earnings Per Share

6 Months Ended

Dec. 31, 2018

Earnings Per Share [Abstract]

Net Earnings Per Share

Net Earnings Per Share

Basic net income per share of Class A Common Stock is computed by dividing net income attributable to the Company's earnings by the weighted average number of shares of Class A Common Stock outstanding during the period. The weighted average number of shares of Class A Common Stock outstanding used in computing basic net income per share includes fully vested restricted stock units awarded to directors that are entitled to participate in distributions to common shareholders through receipt of additional units of equivalent value to the dividends paid to Class A Common Stock holders.

Diluted net income per share of Class A Common Stock is computed similarly to basic net income per share except the weighted average shares outstanding are increased to include additional shares from the assumed exercise of any common stock equivalents using the treasury method, if dilutive. The Company’s LLC Units and non-qualified stock options are considered common stock equivalents for this purpose. The number of additional shares of Class A Common Stock related to these common stock equivalents and stock options are calculated using the treasury stock method.

Basic and diluted net income (loss) per share of Class A Common Stock has been computed as follows (in thousands, except share and per share amounts)

	Three Months Ended					Six Months Ended
	December 31, 2018		December 31, 2017			December 31, 2018		December 31, 2017
Basic:
Net income (loss) attributable to Malibu Boats, Inc.	$	14,257	$	(6,383	)	$	25,555	$	(498	)
Shares used in computing basic net income per share:
Weighted-average Class A Common Stock	20,689,779		20,263,999			20,577,182		19,644,918
Weighted-average participating restricted stock units convertible into Class A Common Stock	185,464		165,628			180,913		159,274
Basic weighted-average shares outstanding	20,875,243		20,429,627			20,758,095		19,804,192
Basic net income (loss) per share	$	0.68	$	(0.31	)	$	1.23	$	(0.03	)
Diluted:
Net income (loss) attributable to Malibu Boats, Inc.	$	14,257	$	(6,383	)	$	25,555	$	(498	)
Shares used in computing diluted net income per share:
Basic weighted-average shares outstanding	20,875,243		20,429,627			20,758,095		19,804,192
Restricted stock units granted to employees	94,654		—			117,374		—
Stock options granted to employees	20,416		—			8,399		—
Diluted weighted-average shares outstanding 1	20,990,313		20,429,627			20,883,868		19,804,192
Diluted net income (loss) per share	$	0.68	$	(0.31	)	$	1.22	$	(0.03	)

¹ The Company excluded (i) 904,652 and 1,274,484 potentially dilutive shares from the calculation of diluted net income (loss) per share for the three months ended December 31, 2018 and 2017, respectively, and (ii) 924,652 and 1,274,484 potentially dilutive shares from the calculation of diluted net income (loss) per share for the six months ended December 31, 2018 and 2017, respectively, as these units would have been antidilutive.

The shares of Class B Common Stock do not share in the earnings or losses of Malibu Boats, Inc. and are therefore not included in the calculation. Accordingly, basic and diluted net earnings per share of Class B Common Stock has not been presented.

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Commitment and Contingencies

6 Months Ended

Dec. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Repurchase Commitments

In connection with its dealers’ wholesale floor plan financing of boats, the Company has entered into repurchase agreements with various lending institutions. The reserve methodology used to record an estimated expense and loss reserve in each accounting period is based upon an analysis of likely repurchases based on current field inventory and likelihood of repurchase. Subsequent to the inception of the repurchase commitment, the Company evaluates the likelihood of repurchase and adjusts the estimated loss reserve accordingly. When a potential loss reserve is recorded it is presented in accrued liabilities in the accompanying unaudited condensed consolidated balance sheet. If the Company were obligated to repurchase a significant number of units under any repurchase agreement, its business, operating results and financial condition could be adversely affected. The total amount financed under the floor financing programs with repurchase obligations was $266,565 and $163,626 as of December 31, 2018 and June 30, 2018, respectively.

Repurchases and subsequent sales are recorded as a revenue transaction. The net difference between the repurchase price and the resale price is recorded against the loss reserve and presented in cost of sales in the accompanying unaudited condensed consolidated statements of operations and comprehensive income. The Company did not carry a reserve for repurchases as of December 31, 2018 and June 30, 2018.

The Company has collateralized receivables financing arrangements with a third-party floor plan financing provider for European dealers. Under terms of both arrangements, the Company transfers the right to collect a trade receivable to the financing provider in exchange for cash but agrees to repurchase the receivable if the dealer defaults. Since the transfer of the receivable to the financing provider does not meet the conditions for a sale under ASC Topic 860, Transfers and Servicing, the Company continues to report the transferred trade receivable in other current assets with an offsetting balance recorded as a secured obligation in accrued expenses in the Company's unaudited condensed consolidated balance sheet. As of December 31, 2018 and June 30, 2018, the Company had financing receivables of $633 and $453, respectively, recorded in other current assets and accrued expenses related to these arrangements.

Contingencies

Certain conditions may exist which could result in a loss, but which will only be resolved when future events occur. The Company, in consultation with its legal counsel, assesses such contingent liabilities, and such assessments inherently involve an exercise of judgment. If the assessment of a contingency indicates that it is probable that a loss has been incurred, the Company accrues for such contingent loss when it can be reasonably estimated. If the assessment indicates that a potentially material loss contingency is not probable but reasonably estimable, or is probable but cannot be estimated, the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, is disclosed. If the assessment of a contingency deemed to be both probable and reasonably estimable involves a range of possible losses, the amount within the range that appears at the time to be a better estimate than any other amount within the range would be accrued. When no amount within the range is a better estimate than any other amount, the minimum amount in the range is accrued even though the minimum amount in the range is not necessarily the amount of loss that will be ultimately determined.

Estimates of potential legal fees and other directly related costs associated with contingencies are not accrued but rather are expensed as incurred. Except as disclosed below under "Legal Proceedings," management does not believe there are any pending claims (asserted or unasserted) at December 31, 2018 (unaudited) or June 30, 2018 that may have a material adverse impact on the Company’s financial condition, results of operations or cash flows.

Legal Proceedings

On January 12, 2018, the Company filed suit against Skier’s Choice, Inc., or "Skier’s Choice," in the U.S. District Court for the Eastern District of Tennessee, seeking monetary and injunctive relief. The Company's complaint alleges Skier’s Choice’s infringement of three utility patents - U.S. Patent Nos. 9,260,161, 8,578,873, and 9,199,695 - related to wake surfing technology. Skier’s Choice denied liability arising from the causes of action alleged in the Company's complaint and filed counterclaims alleging invalidity of the asserted patents. The parties are currently engaged in discovery. The Company intends to vigorously pursue this litigation to enforce its rights in its patented technology and believes that Skier’s Choice’s counterclaims are without merit.  Trial is set for October 21, 2019.

On January 21, 2015, Cobalt, a wholly owned indirect subsidiary of the Company, filed a patent infringement lawsuit against the Brunswick Corporation and its subsidiary Sea Ray Boats, Inc. alleging that certain of the Sea Ray's branded boats infringed upon Cobalt's patented submersible swim step technology (U.S. Patent No. 8,375,880). On October 31, 2017, the US District Court in the Eastern District of Virginia entered an amended judgment on the jury verdict in favor of Cobalt.

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Segment Information

6 Months Ended

Dec. 31, 2018

Segment Reporting [Abstract]

Segment Information

Segment Information

The following tables present financial information for the Company’s reportable segments for the three and six months ended December 31, 2018 and 2017, respectively, and the Company’s financial position at December 31, 2018 and June 30, 2018, respectively:

	Three Months Ended December 31, 2018													Six Months Ended December 31, 2018
	Malibu US		Cobalt		Pursuit		Malibu Australia		Eliminations			Total		Malibu U.S.		Cobalt		Pursuit		Malibu Australia		Eliminations			Total
Net sales	$	86,760	$	45,846	$	29,927	$	7,299	$	(4,039	)	$	165,793	$	157,707	$	94,106	$	29,927	$	13,292	$	(5,756	)	$	289,276
Affiliate (or intersegment) sales	4,039		—						(4,039		)	—		5,756								(5,756		)	—
Net sales to external customers	82,721		45,846		29,927		7,299		—			165,793		151,951		94,106		29,927		13,292		—			289,276
Income before provision for income taxes	$	10,850	$	5,417	$	2,521	$	460	$	(131	)	$	19,117	$	19,079	$	12,264	$	2,521	$	917	$	(66	)	$	34,715
	Three Months Ended December 31, 2017													Six Months Ended December 31, 2017
	Malibu US		Cobalt		Pursuit		Malibu Australia		Eliminations			Total		Malibu U.S.		Cobalt		Pursuit		Malibu Australia		Eliminations			Total
Net sales	$	70,226	$	39,367	$	—	$	6,925	$	(2,145	)	$	114,373	$	133,258	$	76,285	$	—	$	12,688	$	(4,317	)	$	217,914
Affiliate (or intersegment) sales	2,145		—		—		—		(2,145		)	—		4,317		—		—		—		(4,317		)	—
Net sales to external customers	68,081		39,367		—		6,925		—			114,373		128,941		76,285		—		12,688		—			217,914
Income before provision for income taxes	$	40,845	$	3,369	$	—	$	766	$	(6	)	$	44,974	$	44,717	$	5,193	$	—	$	1,236	$	(16	)	$	51,130

	As of December 31, 2018			As of June 30, 2018
Assets
Malibu U.S.	$	385,568		$	327,181
Cobalt	147,930			157,616
Pursuit	111,594			—
Malibu Australia	20,969			20,128
Eliminations	(227,118		)	(139,157		)
Total assets	$	438,943		$	365,768

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Organization, Basis of Presentation, and Summary of Significant Accounting Policies (Policies)

6 Months Ended

Dec. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim condensed financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and disclosures of results of operations, financial position and changes in cash flow in conformity with GAAP for complete financial statements. Such statements should be read in conjunction with the audited consolidated financial statements and notes thereto of Malibu Boats, Inc. and subsidiaries for the year ended June 30, 2018, included in the Company's Annual Report on Form 10-K. In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements reflect all adjustments considered necessary to present fairly the Company’s financial position at December 31, 2018, and the results of its operations for the three and six month periods ended December 31, 2018 and December 31, 2017, and its cash flows for the six month periods ended December 31, 2018 and December 31, 2017. Operating results for the three and six months ended December 31, 2018, are not necessarily indicative of the results that may be expected for the full year ending June 30, 2019. Units and shares are presented as whole numbers while all dollar amounts are presented in thousands, unless otherwise noted.

Principles of Consolidation

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include the operations and accounts of the Company and all subsidiaries thereof. All intercompany balances and transactions have been eliminated upon consolidation.

Pursuit Acquisition

Pursuit Acquisition

On October 15, 2018, our subsidiary Malibu Boats, LLC, purchased the assets of Pursuit from S2 Yachts, Inc. for a purchase price of $100,073. Pursuit, located in Fort Pierce, Florida, is a leader in the saltwater outboard fishing boat market through its offering of 15 models of offshore, dual console and center console boats.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

On July 1, 2018, the Company adopted the new accounting standard, ASC Topic 606, Revenue from Contracts with Customers, and all the related amendments (“ASC 606”) and applied the provisions of the standard to all contracts using the modified retrospective method. The cumulative effect of adopting the new revenue standard was immaterial and no adjustment has been recorded to the opening balance of retained earnings. Prior year information has not been restated and continues to be reported under the accounting standards in effect for those periods. Substantially all of the Company’s revenue continues to be recognized at a point in time when the product is either shipped or received from the Company's facilities and control of the product is transferred to the customer.  New controls and processes designed to meet the requirements of the standard were implemented, and the required new disclosures are presented in Note 2. The adoption of ASC Topic 606 did not have a material impact on the amounts reported in the Company's unaudited condensed consolidated financial position, results of operations or cash flows.

In February 2016, the FASB issued Accounting Standards Update (ASU) 2016‑02, Leases (Topic 842).  The amendments in this update create ASC Topic 842, Leases, and supersede the requirements in ASC Topic 840, Leases.  ASC Topic 842 requires lessees to recognize on the balance sheet a right‑of‑use asset, representing its right to use the underlying asset for the lease term, and a lease liability for all leases with terms greater than 12 months. The guidance also requires qualitative and quantitative disclosures designed to assess the amount, timing, and uncertainty of cash flows arising from leases. The standard requires the use of a modified retrospective transition approach, which includes a number of optional practical expedients that entities may elect to apply. In June 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvement, which provides entities with an additional (optional) transition method to adopt the new lease standard.  Under this new transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The new leases standard is effective for fiscal years beginning after December 15, 2018. Early application is permitted. The Company is currently assessing the potential impact this guidance may have on its consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This guidance provides specific classification of how certain cash receipts and cash payments are presented in the statement of cash flows. The ASU was applied using a retrospective transition method. The adoption of this ASU on July 1, 2018 did not have a material impact on the Company's consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The guidance clarifies the definition of a business that provides a two-step analysis in the determination of whether an acquisition or derecognition is a business or an asset. The update removes the evaluation of whether a market participant could replace any missing elements and provides a framework to assist entities in evaluating whether both an input and a substantive process are present. This guidance will be applied on a prospective basis for transactions that occur after the effective date. The adoption of this ASU on July 1, 2018 did not have a material impact on the Company's consolidated financial statements.

There are no other new accounting pronouncements that are expected to have a significant impact on the Company's consolidated financial statements and related disclosures.

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Revenue Recognition (Tables)

6 Months Ended

Dec. 31, 2018

Revenue from Contract with Customer [Abstract]

Schedule of Disaggregation of Revenue

The following table disaggregates the Company's revenue by major product type and geography:

	Three months ended December 31, 2018										Six months ended December 31, 2018
	Malibu US		Cobalt		Pursuit		Malibu Australia		Consolidated		Malibu US		Cobalt		Pursuit		Malibu Australia		Consolidated
Revenue by product:
Boat and trailer sales	$	81,028	$	45,360	$	29,852	$	6,850	$	163,090	$	147,108	$	92,799	$	29,852	$	12,681	$	282,440
Part and other sales	1,693		486		75		449		2,703		4,843		1,307		75		611		6,836
Total revenue	$	82,721	$	45,846	$	29,927	$	7,299	$	165,793	$	151,951	$	94,106	$	29,927	$	13,292	$	289,276
Revenue by geography:
North America	$	82,282	$	43,171	$	26,833	$	—	$	152,286	$	150,140	$	88,145	$	26,833	$	—	$	265,118
International	439		2,675		3,094		7,299		13,507		1,811		5,961		3,094		13,292		24,158
Total revenue	$	82,721	$	45,846	$	29,927	$	7,299	$	165,793	$	151,951	$	94,106	$	29,927	$	13,292	$	289,276

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Non-controlling Interest (Tables)

6 Months Ended

Dec. 31, 2018

Noncontrolling Interest [Abstract]

Non-controlling Interest

The ownership of Malibu Boats Holdings, LLC is summarized as follows:

	As of December 31, 2018			As of June 30, 2018
	Units	Ownership %		Units	Ownership %
Non-controlling LLC Unit holders ownership in Malibu Boats Holdings, LLC	844,652	3.9	%	1,043,186	4.8	%
Malibu Boats, Inc. ownership in Malibu Boats Holdings, LLC	20,836,429	96.1	%	20,555,348	95.2	%
	21,681,081	100.0	%	21,598,534	100.0	%

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Acquisitions (Tables)

6 Months Ended

Dec. 31, 2018

Business Combinations [Abstract]

Schedule of Business Acquisitions, by Acquisition

The following table summarizes the purchase price allocation based on the estimated fair values of the assets acquired and liabilities of Cobalt assumed at the acquisition date:

Consideration:
Cash consideration paid	$	129,525
Equity consideration paid	1,000
Fair value of total consideration transferred	$	130,525
Recognized amounts of identifiable assets acquired and (liabilities assumed), at fair value:
Cash	$	3,973
Accounts receivable	2,329
Inventories	14,343
Other current assets	363
Property, plant and equipment	12,934
Identifiable intangible assets	89,900
Current liabilities	(13,108		)
Fair value of assets acquired and liabilities assumed	110,734
Goodwill	19,791
Total purchase price	$	130,525

The following table summarizes the preliminary purchase price allocation based on the estimated fair values of the assets acquired and liabilities of Pursuit assumed at the acquisition date:

Consideration:
Cash consideration paid	$	100,073
Recognized preliminary amounts of identifiable assets acquired and (liabilities assumed), at fair value:
Inventories	$	8,332
Other current assets	373
Property, plant and equipment	17,454
Identifiable intangible assets	57,900
Current liabilities	(3,488		)
Fair value of assets acquired and liabilities assumed	80,571
Goodwill	19,502
Total purchase price	$	100,073

Finite-Lived and Indefinite-Lived Intangible Assets Acquired as Part of Business Combination

The fair value estimates for the Company's identifiable intangible assets acquired as part of the acquisition are as follows:

	Estimates of Fair Value		Estimated Useful Life (in years)
Definite-lived intangibles:
Dealer relationships	$	56,300	20
Patent	2,600		15
Total definite-lived intangibles	58,900
Indefinite-lived intangible:
Trade name	31,000
Total intangible assets	$	89,900

The preliminary fair value estimates for the Company's identifiable intangible assets acquired as part of the acquisition are as follows:

	Estimates of Fair Value		Estimated Useful Life (in years)
Definite-lived intangibles:
Dealer relationships	$	25,400	20
Total definite-lived intangibles	25,400
Indefinite-lived intangible:
Trade name	32,500
Total intangible assets	$	57,900

Business Acquisition, Pro Forma Information

The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of fiscal year 2018 or the results that may occur in the future:

	Three Months Ended December 31,					Six Months Ended December 31,
	2018		2017			2018		2017
Net sales	$	172,219	$	143,689		$	330,918	$	275,300
Net income (loss)	15,553		(4,773		)	31,083		2,241
Net income (loss) attributable to Malibu Boats, Inc.	14,784		(5,633		)	29,394		796
Basic earnings (loss) per share	$	0.71	$	(0.28	)	$	1.42	$	0.04
Diluted earnings (loss) per share	$	0.70	$	(0.28	)	$	1.41	$	0.04

The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of fiscal year 2017 or the results that may occur in the future:

	Three Months Ended December 31,					Six Months Ended December 31,
	2018		2017			2018		2017
Net sales	$	165,793	$	114,373		$	289,276	$	217,914
Net income (loss)	14,998		(6,271		)	27,013		496
Net income (loss) attributable to Malibu Boats, Inc.	14,257		(7,018		)	25,555		(805		)
Basic earnings (loss) per share	$	0.68	$	(0.34	)	$	1.23	$	(0.04	)
Diluted earnings (loss) per share	$	0.68	$	(0.34	)	$	1.22	$	(0.04	)

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Inventories (Tables)

6 Months Ended

Dec. 31, 2018

Inventory Disclosure [Abstract]

Inventories

Inventories, net consisted of the following:

	As of December 31, 2018		As of June 30, 2018
Raw materials	$	46,838	$	28,851
Work in progress	11,099		6,164
Finished goods	10,528		9,253
Total inventories	$	68,465	$	44,268

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Property, Plant and Equipment (Tables)

6 Months Ended

Dec. 31, 2018

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Property, plant and equipment, net consisted of the following:

	As of December 31, 2018			As of June 30, 2018
Land	$	2,194		$	634
Building and leasehold improvements	28,156			20,110
Machinery and equipment	42,177			32,471
Furniture and fixtures	5,828			4,667
Construction in process	5,552			5,636
	83,906			63,518
Less: Accumulated depreciation	(23,713		)	(22,673		)
Property, plant and equipment, net	$	60,193		$	40,845

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Goodwill and Other Intangible Assets (Tables)

6 Months Ended

Dec. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

Changes in the carrying amount of goodwill for the six months ended December 31, 2018 were as follows:

Goodwill as of June 30, 2018	$	32,230
Addition related to the acquisition of Pursuit	19,502
Effect of foreign currency changes on goodwill	(322		)
Goodwill as of December 31, 2018	$	51,410

Schedule of Acquired Finite-Lived Intangible Assets by Major Class

The components of other intangible assets were as follows:

	As of December 31, 2018			As of June 30, 2018			Estimated Useful Life (in years)	Weighted Average Remaining Useful Life (in years)
Definite-lived intangibles:
Reacquired franchise rights	$	1,270		$	1,333		5	0.8
Dealer relationships	111,349			86,062			8-20	18.8
Patent	3,986			3,986			12-15	13.5
Trade name	24,667			24,667			15	2.7
Non-compete agreement	49			52			10	5.8
Backlog	88			93			0.3	0.0
Total	141,410			116,193
Less: Accumulated amortization	(55,704		)	(52,972		)
Total definite-lived intangible assets, net	85,706			63,221
Indefinite-lived intangible:
Trade name	63,500			31,000
Total other intangible assets, net	$	149,206		$	94,221

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense

The estimated future amortization of definite-lived intangible assets is as follows:

Fiscal years ending June 30:
	Remainder of 2019	$	3,138
	2020	6,137
	2021	6,058
	2022	4,557
	2023	4,420
	Thereafter	61,395
		$	85,706

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Product Warranties (Tables)

6 Months Ended

Dec. 31, 2018

Product Warranties Disclosures [Abstract]

Product Warranties

Changes in the Company’s product warranty liability, which is included in accrued expenses on the unaudited condensed consolidated balance sheets, were as follows:

	Three Months Ended						Six Months Ended
	December 31, 2018			December 31, 2017			December 31, 2018			December 31, 2017
Beginning balance	$	17,999		$	14,725		$	17,217		$	10,050
Add: Warranty expense	3,107			1,717			6,023			4,725
Additions for acquisitions	1,872			—			1,872			4,404
Less: Warranty claims paid	(2,035		)	(925		)	(4,169		)	(3,662		)
Ending balance	$	20,943		$	15,517		$	20,943		$	15,517

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Financing (Tables)

6 Months Ended

Dec. 31, 2018

Debt Disclosure [Abstract]

Schedule of Debt

Outstanding debt consisted of the following:

	As of December 31, 2018			As of June 30, 2018
Term loans	$	110,000		$	110,000
Revolving credit loan	35,000			—
Less unamortized debt issuance costs	(1,324		)	(1,513		)
Total debt	143,676			108,487
Less current maturities	—			—
Long-term debt less current maturities	$	143,676		$	108,487

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Tax Receivable Agreement Liability (Tables)

6 Months Ended

Dec. 31, 2018

Tax Receivable Agreement [Abstract]

Tax Receivable Agreement Liability

The following table reflects the changes to the Company's tax receivable agreement liability:

	As of December 31, 2018			As of June 30, 2018
Payable pursuant to tax receivable agreement	$	55,046		$	82,291
Additions (reductions) to tax receivable agreement:
Exchange of LLC Units for Class A Common Stock	2,553			1,685
Adjustment for change in estimated tax rate	—			(24,637		)
Payments under tax receivable agreement	—			(4,293		)
	57,599			55,046
Less current portion under tax receivable agreement	(3,932		)	(3,932		)
Payable pursuant to tax receivable agreement, less current portion	$	53,667		$	51,114

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Fair Value Measurements (Tables)

6 Months Ended

Dec. 31, 2018

Fair Value Disclosures [Abstract]

Assets and Liabilities on Recurring Basis

Assets and liabilities that had recurring fair value measurements were as follows:

	Fair Value Measurements at Reporting Date Using
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
As of December 31, 2018:
Assets
Interest rate swap not designated as cash flow hedge	$	286	$	—	$	286	$	—
Total assets at fair value	$	286	$	—	$	286	$	—
As of June 30, 2018:
Assets
Interest rate swap not designated as cash flow hedge	$	418	$	—	$	418	$	—
Total assets at fair value	$	418	$	—	$	418	$	—

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Stock-Based Compensation (Tables)

6 Months Ended

Dec. 31, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation, Stock Options, Activity

The following is a summary of the changes in the Company's stock options for the six months ended December 31, 2018:

	December 31, 2018
	Shares		Price or range per share	Weighted Average Exercise Price/Share
Total outstanding options at June 30, 2018	144,000		$27.24	$	27.24
Options granted	50,000		42.13	42.13
Options exercised	(28,500	)	(25.85) - (30.87)	(26.29		)
Outstanding options at end of period	165,500		25.85 - 42.13	31.91
Exercisable at end of period	7,500		$30.87	$	30.87

Schedule of Summary of the Changes in Non-vested Restricted

The following is a summary of the changes in non-vested restricted stock units and restricted stock awards for the six months ended December 31, 2018:

	Number of Restricted Stock Units and Restricted Stock Awards Outstanding		Weighted Average Grant Date Fair Value
Total Non-vested Restricted Stock Units as of June 30, 2018	227,154		$	20.84
Granted	97,702		42.05
Vested	(98,625	)	(22.61		)
Forfeited	(1,600	)	(22.21		)
Total Non-vested Restricted Stock Units as of December 31, 2018	224,631		$	29.28

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Net Earnings Per Share (Tables)

6 Months Ended

Dec. 31, 2018

Earnings Per Share [Abstract]

Schedule of Basic and Diluted Net Income Per Share

Basic and diluted net income (loss) per share of Class A Common Stock has been computed as follows (in thousands, except share and per share amounts)

	Three Months Ended					Six Months Ended
	December 31, 2018		December 31, 2017			December 31, 2018		December 31, 2017
Basic:
Net income (loss) attributable to Malibu Boats, Inc.	$	14,257	$	(6,383	)	$	25,555	$	(498	)
Shares used in computing basic net income per share:
Weighted-average Class A Common Stock	20,689,779		20,263,999			20,577,182		19,644,918
Weighted-average participating restricted stock units convertible into Class A Common Stock	185,464		165,628			180,913		159,274
Basic weighted-average shares outstanding	20,875,243		20,429,627			20,758,095		19,804,192
Basic net income (loss) per share	$	0.68	$	(0.31	)	$	1.23	$	(0.03	)
Diluted:
Net income (loss) attributable to Malibu Boats, Inc.	$	14,257	$	(6,383	)	$	25,555	$	(498	)
Shares used in computing diluted net income per share:
Basic weighted-average shares outstanding	20,875,243		20,429,627			20,758,095		19,804,192
Restricted stock units granted to employees	94,654		—			117,374		—
Stock options granted to employees	20,416		—			8,399		—
Diluted weighted-average shares outstanding 1	20,990,313		20,429,627			20,883,868		19,804,192
Diluted net income (loss) per share	$	0.68	$	(0.31	)	$	1.22	$	(0.03	)

¹ The Company excluded (i) 904,652 and 1,274,484 potentially dilutive shares from the calculation of diluted net income (loss) per share for the three months ended December 31, 2018 and 2017, respectively, and (ii) 924,652 and 1,274,484 potentially dilutive shares from the calculation of diluted net income (loss) per share for the six months ended December 31, 2018 and 2017, respectively, as these units would have been antidilutive.

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Segment Information (Tables)

6 Months Ended

Dec. 31, 2018

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, By Segment

The following tables present financial information for the Company’s reportable segments for the three and six months ended December 31, 2018 and 2017, respectively, and the Company’s financial position at December 31, 2018 and June 30, 2018, respectively:

	Three Months Ended December 31, 2018													Six Months Ended December 31, 2018
	Malibu US		Cobalt		Pursuit		Malibu Australia		Eliminations			Total		Malibu U.S.		Cobalt		Pursuit		Malibu Australia		Eliminations			Total
Net sales	$	86,760	$	45,846	$	29,927	$	7,299	$	(4,039	)	$	165,793	$	157,707	$	94,106	$	29,927	$	13,292	$	(5,756	)	$	289,276
Affiliate (or intersegment) sales	4,039		—						(4,039		)	—		5,756								(5,756		)	—
Net sales to external customers	82,721		45,846		29,927		7,299		—			165,793		151,951		94,106		29,927		13,292		—			289,276
Income before provision for income taxes	$	10,850	$	5,417	$	2,521	$	460	$	(131	)	$	19,117	$	19,079	$	12,264	$	2,521	$	917	$	(66	)	$	34,715
	Three Months Ended December 31, 2017													Six Months Ended December 31, 2017
	Malibu US		Cobalt		Pursuit		Malibu Australia		Eliminations			Total		Malibu U.S.		Cobalt		Pursuit		Malibu Australia		Eliminations			Total
Net sales	$	70,226	$	39,367	$	—	$	6,925	$	(2,145	)	$	114,373	$	133,258	$	76,285	$	—	$	12,688	$	(4,317	)	$	217,914
Affiliate (or intersegment) sales	2,145		—		—		—		(2,145		)	—		4,317		—		—		—		(4,317		)	—
Net sales to external customers	68,081		39,367		—		6,925		—			114,373		128,941		76,285		—		12,688		—			217,914
Income before provision for income taxes	$	40,845	$	3,369	$	—	$	766	$	(6	)	$	44,974	$	44,717	$	5,193	$	—	$	1,236	$	(16	)	$	51,130

	As of December 31, 2018			As of June 30, 2018
Assets
Malibu U.S.	$	385,568		$	327,181
Cobalt	147,930			157,616
Pursuit	111,594			—
Malibu Australia	20,969			20,128
Eliminations	(227,118		)	(139,157		)
Total assets	$	438,943		$	365,768

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Organization, Basis of Presentation, and Summary of Significant Accounting Policies (Details) $ in Thousands		6 Months Ended
	Oct. 15, 2018 USD ($)	Dec. 31, 2018 Segment
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of reportable segments | Segment		4
Pursuit
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Total purchase price | $	$ 100,073

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Revenue Recognition (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2017
Disaggregation of Revenue [Line Items]
Net sales	$ 165,793	$ 114,373	$ 289,276	$ 217,914
North America
Disaggregation of Revenue [Line Items]
Net sales	152,286		265,118
International
Disaggregation of Revenue [Line Items]
Net sales	13,507		24,158
Boat and trailer sales
Disaggregation of Revenue [Line Items]
Net sales	163,090		282,440
Part and other sales
Disaggregation of Revenue [Line Items]
Net sales	2,703		6,836
Malibu US
Disaggregation of Revenue [Line Items]
Net sales	82,721	68,081	151,951	128,941
Malibu US | North America
Disaggregation of Revenue [Line Items]
Net sales	82,282		150,140
Malibu US | International
Disaggregation of Revenue [Line Items]
Net sales	439		1,811
Malibu US | Boat and trailer sales
Disaggregation of Revenue [Line Items]
Net sales	81,028		147,108
Malibu US | Part and other sales
Disaggregation of Revenue [Line Items]
Net sales	1,693		4,843
Cobalt
Disaggregation of Revenue [Line Items]
Net sales	45,846	39,367	94,106	76,285
Cobalt | North America
Disaggregation of Revenue [Line Items]
Net sales	43,171		88,145
Cobalt | International
Disaggregation of Revenue [Line Items]
Net sales	2,675		5,961
Cobalt | Boat and trailer sales
Disaggregation of Revenue [Line Items]
Net sales	45,360		92,799
Cobalt | Part and other sales
Disaggregation of Revenue [Line Items]
Net sales	486		1,307
Pursuit
Disaggregation of Revenue [Line Items]
Net sales	29,927	0	29,927	0
Pursuit | North America
Disaggregation of Revenue [Line Items]
Net sales	26,833
Pursuit | International
Disaggregation of Revenue [Line Items]
Net sales	3,094
Pursuit | Boat and trailer sales
Disaggregation of Revenue [Line Items]
Net sales	29,852
Pursuit | Part and other sales
Disaggregation of Revenue [Line Items]
Net sales	75
Malibu Australia
Disaggregation of Revenue [Line Items]
Net sales	7,299	$ 6,925	13,292	$ 12,688
Malibu Australia | North America
Disaggregation of Revenue [Line Items]
Net sales	0		0
Malibu Australia | International
Disaggregation of Revenue [Line Items]
Net sales	7,299		13,292
Malibu Australia | Boat and trailer sales
Disaggregation of Revenue [Line Items]
Net sales	6,850		12,681
Malibu Australia | Part and other sales
Disaggregation of Revenue [Line Items]
Net sales	$ 449		$ 611

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Non-controlling Interest - Ownership (Details) - shares	Dec. 31, 2018	Jun. 30, 2018
Class of Stock [Line Items]
Units (in shares)	21,681,081	21,598,534
Ownership percentage	100.00%	100.00%
Non-controlling LLC Unit holders ownership in Malibu Boats Holdings, LLC | Malibu Boat LLC
Class of Stock [Line Items]
Units (in shares)	844,652	1,043,186
Ownership percentage	3.90%	4.80%
Malibu Boats, Inc. ownership in Malibu Boats Holdings, LLC | Parent Company
Class of Stock [Line Items]
Units (in shares)	20,836,429	20,555,348
Ownership percentage	96.10%	95.20%

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Non-controlling Interest - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Jun. 30, 2018
Noncontrolling Interest [Line Items]
Tax distributions payable to non-controlling LLC Unit holders			$ 319	$ 361
Non-controlling LLC Unit holders ownership in Malibu Boats Holdings, LLC
Noncontrolling Interest [Line Items]
Tax distributions payable to non-controlling LLC Unit holders			$ 319		$ 511
Tax distributions paid to non-controlling LLC Unit holders	$ 909	$ 602
Class A Common Stock
Noncontrolling Interest [Line Items]
Issuance LLC Units (in shares)			305,288
Treasury Stock, Common
Noncontrolling Interest [Line Items]
Treasury stock, shares, retired (in shares)			24,207

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Acquisitions - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands			6 Months Ended	12 Months Ended
	Oct. 15, 2018	Jul. 06, 2017	Dec. 31, 2018	Jun. 30, 2018
Business Acquisition [Line Items]
Goodwill			$ 51,410	$ 32,230
Pursuit
Business Acquisition [Line Items]
Fair value of total consideration transferred	$ 100,073
Goodwill	19,502
Acquisition related costs			$ 2,809
Cash consideration paid	$ 100,073
Cobalt Boats, LLC
Business Acquisition [Line Items]
Fair value of total consideration transferred		$ 130,525
Goodwill		$ 19,791
Acquired finite-lived intangible assets, weighted average useful life		19 years 9 months 18 days
Acquisition related costs				$ 3,056
Cash consideration paid		$ 129,525
Equity consideration paid		$ 1,000
Business acquisition, share price (in dollars per share)		$ 25.47
Dealer relationships | Pursuit
Business Acquisition [Line Items]
Acquired finite-lived intangible assets, weighted average useful life	20 years
Dealer relationships | Cobalt Boats, LLC
Business Acquisition [Line Items]
Useful Life (in years)		20 years
Acquired finite-lived intangible assets, weighted average useful life		20 years
Patent | Cobalt Boats, LLC
Business Acquisition [Line Items]
Useful Life (in years)		15 years
Common Stock | Cobalt Boats, LLC | Class A Common Stock
Business Acquisition [Line Items]
Issuance of Class A common stock for offerings, net of underwriting discounts (in shares)		39,262

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Acquisitions - Estimated fair value of the assets acquired and liabilities (Details) - USD ($) $ in Thousands	Oct. 15, 2018	Jul. 06, 2017	Dec. 31, 2018	Jun. 30, 2018
Recognized amounts of identifiable assets acquired and (liabilities assumed), at fair value:
Goodwill			$ 51,410	$ 32,230
Pursuit
Consideration:
Cash consideration paid	$ 100,073
Fair value of total consideration transferred	100,073
Recognized amounts of identifiable assets acquired and (liabilities assumed), at fair value:
Inventories	8,332
Other current assets	373
Property, plant and equipment	17,454
Identifiable intangible assets	57,900
Current liabilities	(3,488)
Fair value of assets acquired and liabilities assumed	80,571
Goodwill	19,502
Total purchase price	$ 100,073
Cobalt Boats, LLC
Consideration:
Cash consideration paid		$ 129,525
Equity consideration paid		1,000
Fair value of total consideration transferred		130,525
Recognized amounts of identifiable assets acquired and (liabilities assumed), at fair value:
Inventories		14,343
Other current assets		363
Property, plant and equipment		12,934
Identifiable intangible assets		89,900
Current liabilities		(13,108)
Cash		3,973
Accounts receivable		2,329
Fair value of assets acquired and liabilities assumed		110,734
Goodwill		19,791
Total purchase price		$ 130,525

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Acquisitions - Intangible Assets Acquired (Details) - USD ($) $ in Thousands	Oct. 15, 2018	Jul. 06, 2017	Dec. 31, 2018	Jun. 30, 2018
Acquired Finite-Lived Intangible Assets [Line Items]
Total intangible assets			$ 149,206	$ 94,221
Pursuit
Acquired Finite-Lived Intangible Assets [Line Items]
Definite-lived intangibles	$ 25,400
Indefinite-lived intangible	32,500
Total intangible assets	57,900
Pursuit | Dealer relationships
Acquired Finite-Lived Intangible Assets [Line Items]
Definite-lived intangibles	$ 25,400
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	20 years
Cobalt Boats, LLC
Acquired Finite-Lived Intangible Assets [Line Items]
Definite-lived intangibles		$ 58,900
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life		19 years 9 months 18 days
Indefinite-lived intangible		$ 31,000
Total intangible assets		89,900
Cobalt Boats, LLC | Dealer relationships
Acquired Finite-Lived Intangible Assets [Line Items]
Definite-lived intangibles		$ 56,300
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life		20 years
Useful Life (in years)		20 years
Cobalt Boats, LLC | Patent
Acquired Finite-Lived Intangible Assets [Line Items]
Definite-lived intangibles		$ 2,600
Useful Life (in years)		15 years

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Acquisitions - Pro forma (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2017
Pursuit
Business Acquisition [Line Items]
Net sales	$ 172,219	$ 143,689	$ 330,918	$ 275,300
Net income (loss)	15,553	(4,773)	31,083	2,241
Net income (loss) attributable to Malibu Boats, Inc.	$ 14,784	$ (5,633)	$ 29,394	$ 796
Basic earnings per share (in dollars per share)	$ 0.71	$ (0.28)	$ 1.42	$ 0.04
Diluted earnings per share (in dollars per share)	$ 0.70	$ (0.28)	$ 1.41	$ 0.04
Cobalt Boats, LLC
Business Acquisition [Line Items]
Net sales	$ 165,793	$ 114,373	$ 289,276	$ 217,914
Net income (loss)	14,998	(6,271)	27,013	496
Net income (loss) attributable to Malibu Boats, Inc.	$ 14,257	$ (7,018)	$ 25,555	$ (805)
Basic earnings per share (in dollars per share)	$ 0.68	$ (0.34)	$ 1.23	$ (0.04)
Diluted earnings per share (in dollars per share)	$ 0.68	$ (0.34)	$ 1.22	$ (0.04)

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Inventories (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Jun. 30, 2018
Inventory Disclosure [Abstract]
Raw materials	$ 46,838	$ 28,851
Work in progress	11,099	6,164
Finished goods	10,528	9,253
Total inventories	$ 68,465	$ 44,268

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Property, Plant and Equipment (Details) - USD ($)	3 Months Ended				6 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Dec. 31, 2017	Sep. 30, 2017	Dec. 31, 2018	Dec. 31, 2017	Jun. 30, 2018
Property, Plant and Equipment [Line Items]
Property equipment, gross	$ 83,906,000				$ 83,906,000		$ 63,518,000
Less: Accumulated depreciation	(23,713,000)				(23,713,000)		(22,673,000)
Property, plant and equipment, net	60,193,000				60,193,000		40,845,000
Historical cost		$ 3,285,000		$ 2,122,000
Depreciation expense	2,495,000		$ 1,687,000		4,358,000	$ 3,417,000
Disposal Group, Not Discontinued Operations
Property, Plant and Equipment [Line Items]
Property, plant and equipment, net	0		$ 0		0	$ 0
Land
Property, Plant and Equipment [Line Items]
Property equipment, gross	2,194,000				2,194,000		634,000
Building and leasehold improvements
Property, Plant and Equipment [Line Items]
Property equipment, gross	28,156,000				28,156,000		20,110,000
Machinery and equipment
Property, Plant and Equipment [Line Items]
Property equipment, gross	42,177,000				42,177,000		32,471,000
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property equipment, gross	5,828,000				5,828,000		4,667,000
Construction in process
Property, Plant and Equipment [Line Items]
Property equipment, gross	$ 5,552,000				$ 5,552,000		$ 5,636,000

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Goodwill and Other Intangible Assets - Carrying Amount of Goodwill (Details) $ in Thousands	6 Months Ended
	Dec. 31, 2018 USD ($)
Goodwill [Roll Forward]
Goodwill as of June 30, 2018	$ 32,230
Addition related to the acquisition of Pursuit	19,502
Effect of foreign currency changes on goodwill	(322)
Goodwill as of December 31, 2018	$ 51,410

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Goodwill and Other Intangible Assets - Other Intangible Assets (Details) - USD ($) $ in Thousands	6 Months Ended
	Dec. 31, 2018	Jun. 30, 2018
Goodwill [Line Items]
Gross Carrying Amount	$ 141,410	$ 116,193
Accumulated Amortization	(55,704)	(52,972)
Total definite-lived intangible assets, net	85,706	63,221
Indefinite-lived intangible	63,500	31,000
Total other intangible assets, net	149,206	94,221
Reacquired franchise rights
Goodwill [Line Items]
Gross Carrying Amount	$ 1,270	1,333
Estimated Useful Life (in years)	5 years
Weighted Average Remaining Useful Life (in years)	9 months 20 days
Dealer relationships
Goodwill [Line Items]
Gross Carrying Amount	$ 111,349	86,062
Weighted Average Remaining Useful Life (in years)	18 years 9 months 20 days
Patent
Goodwill [Line Items]
Gross Carrying Amount	$ 3,986	3,986
Weighted Average Remaining Useful Life (in years)	13 years 6 months
Trade name
Goodwill [Line Items]
Gross Carrying Amount	$ 24,667	24,667
Estimated Useful Life (in years)	15 years
Weighted Average Remaining Useful Life (in years)	2 years 8 months 11 days
Non-compete agreement
Goodwill [Line Items]
Gross Carrying Amount	$ 49	52
Estimated Useful Life (in years)	10 years
Weighted Average Remaining Useful Life (in years)	5 years 9 months 20 days
Backlog
Goodwill [Line Items]
Gross Carrying Amount	$ 88	$ 93
Estimated Useful Life (in years)	3 months 22 days
Weighted Average Remaining Useful Life (in years)	1 day
Minimum | Dealer relationships
Goodwill [Line Items]
Estimated Useful Life (in years)	8 years
Minimum | Patent
Goodwill [Line Items]
Estimated Useful Life (in years)	12 years
Maximum | Dealer relationships
Goodwill [Line Items]
Estimated Useful Life (in years)	20 years
Maximum | Patent
Goodwill [Line Items]
Estimated Useful Life (in years)	15 years

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Goodwill and Other Intangible Assets - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2017
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization of intangible assets	$ 1,538	$ 1,304	$ 2,818	$ 2,612

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Goodwill and Other Intangible Assets - Future Amortization (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Jun. 30, 2018
Goodwill and Intangible Assets Disclosure [Abstract]
Remainder of 2019	$ 3,138
2020	6,137
2021	6,058
2022	4,557
2023	4,420
Thereafter	61,395
Total definite-lived intangible assets, net	$ 85,706	$ 63,221

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Product Warranties (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Jun. 30, 2016
Movement in Standard Product Warranty Accrual [Roll Forward]
Beginning balance	$ 17,999	$ 14,725	$ 17,217	$ 10,050
Add: Warranty expense	3,107	1,717	6,023	4,725
Additions for acquisitions	1,872	0	1,872	4,404
Less: Warranty claims paid	(2,035)	(925)	(4,169)	(3,662)
Ending balance	$ 20,943	$ 15,517	$ 20,943	$ 15,517
Malibu and Axis Brand Boats
Product Warranty Liability [Line Items]
Standard product warranty, period (up to)			1 year		5 years
Malibu Brand Boats
Product Warranty Liability [Line Items]
Standard product warranty, period (up to)					3 years
Axis Boats
Product Warranty Liability [Line Items]
Standard product warranty, period (up to)					2 years
Cobalt
Product Warranty Liability [Line Items]
Standard product warranty, period (up to)			3 years
Structural warranty, period (up to)			10 years
Pursuit
Product Warranty Liability [Line Items]
Bow-to-stern warranty on all components			5 years

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Financing - Outstanding Debt (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Jun. 30, 2018
Debt Disclosure [Abstract]
Term loans	$ 110,000	$ 110,000
Revolving credit loan	35,000	0
Less unamortized debt issuance costs	(1,324)	(1,513)
Total debt	143,676	108,487
Less current maturities	0	0
Long-term debt less current maturities	$ 143,676	$ 108,487

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Financing - Narrative (Details) - USD ($)						1 Months Ended	3 Months Ended		6 Months Ended
	Aug. 17, 2017	Aug. 14, 2017	Jul. 06, 2017	Jun. 28, 2017	Jul. 01, 2015	Dec. 31, 2018	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Jun. 30, 2018	Jun. 29, 2017
Line of Credit Facility [Line Items]
Long-term debt						$ 143,676,000	$ 143,676,000		$ 143,676,000		$ 108,487,000
Proceeds from long-term borrowings									0	$ 105,000,000
Repayments of debt									15,000,000	0
Debt issuance costs						1,324,000	1,324,000		1,324,000		1,513,000
Derivative, term of contract					5 years
Fixed quarterly interest rate					1.52%
Derivative notional amount					$ 39,250,000
Outstanding balance, percent (equal to)					50.00%
Derivative, loss on derivative							$ 129,000		$ 132,000
Derivative, gain on derivative								$ 172,000		$ 203,000
Credit Agreement
Line of Credit Facility [Line Items]
Long-term debt			$ 105,000,000	$ 55,000,000
Proceeds from long-term borrowings			105,000,000	55,000,000
Incremental term loan				50,000,000
Line of credit, incremental term loan borrowing capacity				$ 35,000,000								$ 85,000,000
Ticking fee rate (in percentage)				0.30%
Debt issuance costs											671,000
Credit Agreement | Term Loan
Line of Credit Facility [Line Items]
Long-term debt				$ 160,000,000
Credit Agreement | Revolving Credit Facility
Line of Credit Facility [Line Items]
Maximum borrowing capacity (up to)				$ 35,000,000
Repayments of debt	$ 50,000,000					$ 15,000,000
Credit Agreement | Long-term Debt
Line of Credit Facility [Line Items]
Repayments of debt		$ 50,000,000
Long-term debt, weighted average interest rate						4.20%	4.20%		4.20%
Write off of deferred debt issuance cost		$ 829,000
Credit Agreement | Federal Funds | Revolving Credit Facility
Line of Credit Facility [Line Items]
Debt instrument, basis spread on variable rate				0.50%
Credit Agreement | Base Rate | Revolving Credit Facility
Line of Credit Facility [Line Items]
Debt instrument, basis spread on variable rate				1.00%
Credit Agreement | Minimum | Base Rate | Revolving Credit Facility
Line of Credit Facility [Line Items]
Debt instrument, basis spread on variable rate				0.75%
Credit Agreement | Minimum | LIBOR | Revolving Credit Facility
Line of Credit Facility [Line Items]
Debt instrument, basis spread on variable rate				1.75%
Credit Agreement | Maximum | Base Rate | Revolving Credit Facility
Line of Credit Facility [Line Items]
Debt instrument, basis spread on variable rate				2.00%
Credit Agreement | Maximum | LIBOR | Revolving Credit Facility
Line of Credit Facility [Line Items]
Debt instrument, basis spread on variable rate				3.00%
Credit Agreement | Debt Instrument, Redemption, Period One | Long-term Debt
Line of Credit Facility [Line Items]
Debt instrument, periodic payment			1,300,000	$ 700,000
Credit Agreement | Debt Instrument, Redemption, Period Two | Long-term Debt
Line of Credit Facility [Line Items]
Debt instrument, periodic payment			2,000,000	1,000,000
Credit Agreement | Debt Instrument, Redemption, Period Three | Long-term Debt
Line of Credit Facility [Line Items]
Debt instrument, periodic payment			$ 2,600,000	1,400,000
Term Loan | Credit Agreement
Line of Credit Facility [Line Items]
Purchase of stock (up to)				2,000,000
Share repurchase (up to)				20,000,000
Dividend and distributions (up to)				$ 6,000,000
Deferred finance costs											$ 2,074,000
Term Loan | Credit Agreement | Minimum | Revolving Credit Facility
Line of Credit Facility [Line Items]
Line of credit facility, unused capacity, commitment fee percentage				0.25%
Term Loan | Credit Agreement | Maximum | Revolving Credit Facility
Line of Credit Facility [Line Items]
Line of credit facility, unused capacity, commitment fee percentage				0.50%

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Tax Receivable Agreement Liability - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Dec. 31, 2018	Dec. 31, 2017	Jun. 30, 2018
Income Tax Contingency [Line Items]
Tax receivable agreement, percentage of realized cash saving in tax to pass through			85.00%
Adjustment to tax receivable agreement liability	$ 30,317		$ 0	$ (27,702)
Investment in subsidiaries			$ 110,435		$ 107,293
Other Operating Income (Expense)
Income Tax Contingency [Line Items]
Adjustment to tax receivable agreement liability		$ 6,047

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Tax Receivable Agreement Liability - Schedule of Tax Agreement Liability (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended		12 Months Ended
	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Jun. 30, 2018
Tax Receivable Agreement [Roll Forward]
Payable pursuant to tax receivable agreement		$ 55,046	$ 82,291	$ 82,291
Additions (reductions) to tax receivable agreement:
Adjustment for change in estimated tax rate	$ 30,317	0	$ (27,702)
Payments under tax receivable agreement		0		(4,293)
Payable pursuant to tax receivable agreement		57,599		55,046
Less current portion under tax receivable agreement		(3,932)		(3,932)
Payable pursuant to tax receivable agreement, less current portion		53,667		51,114
Exchange of LLC Units for Class A Shares
Additions (reductions) to tax receivable agreement:
Exchange of LLC Units for Class A Common Stock		2,553		1,685
Adjustment for change in estimated tax rate		$ 0		$ (24,637)

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Fair Value Measurements (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Jun. 30, 2018
Assets
Interest rate swap not designated as cash flow hedge	$ 286	$ 418
Total assets at fair value	286	418
Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets
Interest rate swap not designated as cash flow hedge	0	0
Total assets at fair value	0	0
Significant Other Observable Inputs (Level 2)
Assets
Interest rate swap not designated as cash flow hedge	286	418
Total assets at fair value	286	418
Significant Unobservable Inputs (Level 3)
Assets
Interest rate swap not designated as cash flow hedge	0	0
Total assets at fair value	$ 0	$ 0

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Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Jun. 30, 2018
Income Tax Disclosure [Abstract]
Deferred tax assets, valuation allowance	$ 13,215		$ 13,215		$ 12,716
Effective income tax rate reconciliation, percent	21.50%	344.90%	22.20%	98.40%

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Stock-Based Compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands			3 Months Ended		6 Months Ended
	Nov. 01, 2018	Aug. 22, 2018	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Jan. 01, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted (in shares)					50,000
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted (in shares)		50,000
Fair value assumptions, exercise price (in dollars per share)		$ 42.13
Vesting period		4 years
Fair value of option awards		$ 733
Risk free rate		2.70%
Expected volatility		38.40%
Expected term		4 years 3 months
Dividend yield		0.00%
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share price granted (in dollars per share)					$ 42.05
Stock compensation expense			$ 655	$ 488	$ 1,131	$ 850
Long-Term Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares reserved for issuance in the Long-Term Incentive Plan (in shares)							1,700,000
Remaining shares available for future issuance (in shares)			880,541		880,541
Vesting period	4 years
Grant date fair value of awards	$ 3,474
Share price granted (in dollars per share)	$ 41.85
Long-Term Incentive Plan | Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)	35,000
Long-Term Incentive Plan | Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)	48,000
Tranche One | Long-Term Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting percentage	71.00%
Tranche Two | Long-Term Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting percentage	29.00%

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Stock-Based Compensation - Stock Options (Details)	6 Months Ended
	Dec. 31, 2018 $ / shares shares
Shares
Total outstanding options at beginning of year (in shares) | shares	144,000
Options granted (in shares) | shares	50,000
Options exercised (in shares) | shares	(28,500)
Outstanding options at end of period (in shares) | shares	165,500
Price or range per share
Total outstanding options at beginning of year (in dollars per share)	$ 27.24
Options granted (in dollars per share)	42.13
Options exercised (in dollars per share)	(26.29)
Total outstanding options at end of year (in dollars per share)	$ 31.91
Exercisable at end of period (in shares) | shares	7,500
Exercisable at end of period (in dollars per share)	$ 30.87
Minimum
Price or range per share
Options exercised (in dollars per share)	(25.85)
Total outstanding options at end of year (in dollars per share)	25.85
Maximum
Price or range per share
Options exercised (in dollars per share)	(30.87)
Total outstanding options at end of year (in dollars per share)	$ 42.13

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Stock-Based Compensation - Summary of Changes in Non-vested Restricted Shares (Details) - Restricted Stock	6 Months Ended
	Dec. 31, 2018 $ / shares shares
Number of Restricted Stock Units and Restricted Stock Awards Outstanding
Total Non-vested Restricted Stock Units at beginning of period (in shares) | shares	227,154
Granted (in shares) | shares	97,702
Vested (in shares) | shares	(98,625)
Forfeited (in shares) | shares	(1,600)
Total Non-vested Restricted Stock Units at end of period (in shares) | shares	224,631
Weighted Average Grant Date Fair Value
Total Non-vested Restricted Stock Units at beginning of period (in usd per share) | $ / shares	$ 20.84
Granted (in usd per share) | $ / shares	42.05
Vested (in usd per share) | $ / shares	(22.61)
Forfeited (in usd per share) | $ / shares	(22.21)
Total Non-vested Restricted Stock Units at end of period (in usd per share) | $ / shares	$ 29.28

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Net Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2017
Basic:
Net income (loss) attributable to Malibu Boats, Inc.	$ 14,257	$ (6,383)	$ 25,555	$ (498)
Shares used in computing basic net income per share:
Basic weighted-average shares outstanding (in shares)	20,875,243	20,429,627	20,758,095	19,804,192
Basic net income per share (in dollars per share)	$ 0.68	$ (0.31)	$ 1.23	$ (0.03)
Diluted:
Net income (loss) attributable to Malibu Boats, Inc.	$ 14,257	$ (6,383)	$ 25,555	$ (498)
Shares used in computing diluted net income per share:
Basic weighted-average shares outstanding (in shares)	20,875,243	20,429,627	20,758,095	19,804,192
Diluted weighted-average shares outstanding (in shares)	20,990,313	20,429,627	20,883,868	19,804,192
Diluted net income per share (in dollars per share)	$ 0.68	$ (0.31)	$ 1.22	$ (0.03)
Antidilutive securities excluded from computation of earnings per share, amount (in shares)	904,652	1,274,484	924,652	1,274,484
Class A Common Stock
Shares used in computing basic net income per share:
Basic weighted-average shares outstanding (in shares)	20,689,779	20,263,999	20,577,182	19,644,918
Shares used in computing diluted net income per share:
Basic weighted-average shares outstanding (in shares)	20,689,779	20,263,999	20,577,182	19,644,918
Restricted Stock
Shares used in computing diluted net income per share:
Restricted stock units granted to employees (in shares)	94,654	0	117,374	0
Employee Stock Option
Shares used in computing diluted net income per share:
Restricted stock units granted to employees (in shares)	20,416	0	8,399
Fully Vested/Participating | Restricted Stock
Shares used in computing basic net income per share:
Basic weighted-average shares outstanding (in shares)	185,464	165,628	180,913	159,274
Shares used in computing diluted net income per share:
Basic weighted-average shares outstanding (in shares)	185,464	165,628	180,913	159,274

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Commitment and Contingencies (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Jun. 30, 2018
Commitments and Contingencies Disclosure [Abstract]
Repurchase obligations	$ 266,565	$ 163,626
Financing receivable	$ 633	$ 453

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Segment Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Jun. 30, 2018
Segment Reporting Information [Line Items]
Net sales to external customers	$ 165,793	$ 114,373	$ 289,276	$ 217,914
Income before provision for income taxes	19,117	44,974	34,715	51,130
Assets	438,943		438,943		$ 365,768
Malibu US
Segment Reporting Information [Line Items]
Net sales to external customers	82,721	68,081	151,951	128,941
Income before provision for income taxes	10,850	40,845	19,079	44,717
Cobalt
Segment Reporting Information [Line Items]
Net sales to external customers	45,846	39,367	94,106	76,285
Income before provision for income taxes	5,417	3,369	12,264	5,193
Pursuit
Segment Reporting Information [Line Items]
Net sales to external customers	29,927	0	29,927	0
Income before provision for income taxes	2,521	0	2,521	0
Malibu Australia
Segment Reporting Information [Line Items]
Net sales to external customers	7,299	6,925	13,292	12,688
Income before provision for income taxes	460	766	917	1,236
Operating Segments
Segment Reporting Information [Line Items]
Net sales to external customers	165,793	114,373	289,276	217,914
Operating Segments | Malibu US
Segment Reporting Information [Line Items]
Net sales to external customers	86,760	70,226	157,707	133,258
Assets	385,568		385,568		327,181
Operating Segments | Cobalt
Segment Reporting Information [Line Items]
Net sales to external customers	45,846	39,367	94,106	76,285
Assets	147,930		147,930		157,616
Operating Segments | Pursuit
Segment Reporting Information [Line Items]
Net sales to external customers	29,927	0	29,927	0
Assets	111,594		111,594		0
Operating Segments | Malibu Australia
Segment Reporting Information [Line Items]
Net sales to external customers	7,299	6,925	13,292	12,688
Assets	20,969		20,969		20,128
Intersegment Eliminations
Segment Reporting Information [Line Items]
Net sales to external customers	(4,039)	(2,145)	(5,756)	(4,317)
Income before provision for income taxes	(131)	(6)	(66)	(16)
Assets	(227,118)		(227,118)		$ (139,157)
Intersegment Eliminations | Malibu US
Segment Reporting Information [Line Items]
Net sales to external customers	4,039	2,145	5,756	4,317
Intersegment Eliminations | Cobalt
Segment Reporting Information [Line Items]
Net sales to external customers	0	0		0
Intersegment Eliminations | Pursuit
Segment Reporting Information [Line Items]
Net sales to external customers		0		0
Intersegment Eliminations | Malibu Australia
Segment Reporting Information [Line Items]
Net sales to external customers		$ 0		$ 0