MPX - Malibu Boats: Headwinds Deepen As Tommy's Lawsuit Alleges Delivery Scheme

2024-06-06 19:04:16 ET

Summary

• Malibu Boats, Inc.'s financial performance has worsened, with deeper revenue declines than was previously guided for. Yet, margins have remained relatively strong.
• Malibu Boats faces a lawsuit by Tommy's Boats alleging ~$100 million in fraudulent deliveries to boost the stock during industry turbulence. A class action lawsuit for securities fraud has also been filed.
• Announced in February, the CEO stepped down, but a replacement has not yet been announced. The leadership shift is alleged to be related to the alleged fraudulent delivery scheme.
• The Malibu Boats valuation continues to be attractive despite the significant risk as I anticipate a medium-term industry recovery.

Malibu Boats, Inc. ( MBUU ) has issued two quarterly reports since my previous article on the stock. The company’s demand continues to be distributed, and as a result, revenue declines have deepened into a weaker level than I previously anticipated. Still, the company has continued to keep profitability at a fairly good level considering the weak revenues. A lawsuit has also been filed against Malibu Boats after my previous article, now acting as a significant threat to the investment with allegations of securities wrongdoing related to questionable sales....

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