MALIBU BOATS, INC.

Overview and Primary Sources of Cash

Our primary uses of cash have been for funding working capital and capital investments, repayments under our debt arrangements, acquisitions, cash distributions to members of the LLC, cash payments under our tax receivable agreement and stock repurchases under our stock repurchase program. For both the short-term and the long-term, our sources of cash to meet these needs have primarily been operating cash flows, borrowings under our revolving credit facility and short and long-term debt financings from banks and financial institutions. We believe that our cash on hand, cash generated by operating activities and funds available under our revolving credit facility will be sufficient to finance our operating activities for at least the next twelve months and beyond.

Material Cash Requirements

Our typical uses of cash are for capital expenditures, debt service obligations, payments under our tax receivables agreement, our lease obligations, and return of capital to our stockholders, which has typically been accomplished through our stock repurchase programs. In addition, we borrowed $140 million under our revolving credit facility in March 2026 to partially fund our purchase of Saxdor. Our acquisition of Saxdor also provides for up to €71.3 million or $84.2 million in potential earnout payments (the “earnout consideration”) to the sellers during the calendar years 2027, 2028 and 2029 based on the results of the remainder of calendar year 2026 and the subsequent two calendar years (the "earnout period"), subject to the achievement of certain specified post-closing operating and financial targets. The earnout consideration may be paid in the form of cash, Common Stock or a combination thereof. The form of earnout consideration to be paid is at our sole discretion.

Capital Expenditures.

During fiscal year 2026 and 2025, we incurred approximately $24.7 million and $27.9 million in capital expenditures, respectively, primarily for investments in new models, capacity enhancements and vertical integration initiatives.

Principal and Interest Payments.

Our Third Amended and Restated Credit Agreement (the “Third A&R Credit Agreement”) provides us with a revolving credit facility in an aggregate principal amount of up to $350.0 million. As of June 30, 2026, we had $165.0 million outstanding borrowings under our revolving credit facility and $1.8 million in outstanding letters of credit with $183.2 million available for borrowing. That revolving credit facility was set to mature on July 8, 2027.

On July 10, 2026, we entered into the Fourth Amended and Restated Credit Agreement (the "Credit Agreement") providing up to $250.0 million and a term loan facility in an aggregate principal amount of up to $100.0 million, each with a maturity date of July 10, 2031. See below under "Revolving Credit Facility" for additional information regarding our Fourth Amended and Restated Credit Agreement, including the interest rate applicable to any borrowing under such facilities. Assuming no additional repayments or borrowings on our term loan or revolving credit facility after July 10, 2026, our expected cash interest payments, including accrued interest outstanding at July 10, 2026, would be approximately $8.2 million within the next 12 months based on the weighted average interest rate at July 10, 2026 of 4.95%.

Tax Receivable Agreement.

We entered into a tax receivable agreement with our pre-IPO owners at the time of our initial public offering. 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. We estimate that approximately $0.1 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, 2027.

Operating Lease Obligations.

Lease commitments consist principally of leases for our manufacturing facilities. For fiscal year 2027, our expected operating lease payments will be $5.6 million and our total committed lease payments are $13.0 million as of June 30, 2026. Additional information regarding our operating leases is available in Note 12, Leases, of the Notes to Consolidated Financial Statements included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.

Purchase Obligations.

In the ordinary 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 2027. We or the vendor can generally terminate the purchase orders at any time. These purchase orders do not contain any termination payments or other penalties if canceled. As of June 30, 2026, we had purchase orders in the amount of $84.8 million due within the next 12 months.

Return of Capital/Stock Repurchase Program.

In June 2025, our Board of Directors authorized the 2026 Repurchase Program to allow for the repurchase of up to $50.0 million of our Class A Common Stock and the LLC’s LLC Units for the period from July 1, 2025 to June 30, 2026. On December 18, 2025, our Board of Directors authorized an increase to the Company's existing 2026 Repurchase Program, raising the authorized amount from $50.0 million to $70.0 million. During the fiscal year ended June 30, 2026, we repurchased 1,243,996 shares of Class A Common Stock for $33.9 million in cash including related fees and expenses under the 2026 Repurchase Program. On June 23, 2026, our Board of Directors authorized the 2027 Repurchase Program to allow for the repurchase of up to $70.0 million of our Class A Common Stock for the period from July 1, 2026 to June 30, 2027. Our 2027 Share Repurchase Program does not obligate us to repurchase a minimum amount of shares. Under the program, shares of Class A Common Stock may be repurchased from time to time in privately negotiated or open market transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended at the discretion of management, subject to strategic considerations, market conditions, and other factors. To date, we have returned capital to our stockholders through the repurchase of our stock and have not declared any dividends.

Insurance Litigation related to Batchelder matters

During fiscal year 2024, we had a one-time payment of $100.0 million with respect to a settlement agreement entered in connection with the settlement of all Batchelder-related product liability matters. We maintain liability insurance applicable to the Batchelder-related matters with coverage up to $26.0 million. As of June 30, 2025 and June 30, 2026, we had received approximately $21.0 million in insurance coverage proceeds, subject in certain cases to reservation of rights by the insurance carriers. We contend that the insurance carriers are responsible for the entirety of the $100.0 million settlement amount and related expenses, and therefore the insurers’ payments to date are well below what they should have tendered to Boats LLC. Accordingly, on July 3, 2023, Boats LLC filed a complaint against Federal Insurance Company and Starr Indemnity & Liability Company alleging that the insurers unreasonably failed to comply with their obligations by refusing, negligently and in bad faith, to settle covered claims within their available policy limits prior to trial. On April 8, 2024, the Court dismissed Starr, noting that only Chubb had the contractual right and duty to settle the Batchelder matters prior to trial. The Court subsequently granted the Company's motion for partial summary judgment, which precludes Chubb from apportioning liability to Starr. Chubb filed a notice of appeal on September 26, 2024, with respect to the dismissal of Starr and the order granting partial summary judgment against Chubb. On March 12, 2026, the Georgia Court of Appeals denied both aspects of Chubb's appeal. On April 14, 2026, Chubb filed a petition for awrit of certiorari with the Georgia Supreme Court. We intend to vigorously pursue our claims against the insurance carriers to recover the full $100.0 million settlement amount and expenses (less any monies already tendered without reservation by the carriers). However, the Company cannot predict the outcome of such litigation.

Potential earnout Payments for Saxdor Acquisition

Under the Purchase Agreement for the Saxdor acquisition, the Sellers can receive a maximum of €71.3 million or $84.2 million in potential earnout consideration to be paid out in calendar year 2027, 2028, and 2029 based on the results of the remainder of calendar year 2026 and the subsequent two calendar years (the “earnout period”), respectively, if certain requirements are met. The current fair value of potential earnout consideration is €26.2 million, or approximately $29.9 million. The earnout consideration may be paid in the form of cash, common stock or a combination thereof, as calculated and determined in accordance with the Purchase Agreement. The form of earnout consideration to be paid is at our sole discretion.

The Purchase Agreement also includes certain operating covenants, restrictions, and acceleration provisions applicable during the earnout period. An amount of €1.5 million or approximately $1.7 million related to post-closing adjustments to the purchase price was recorded during our fourth quarter as an offset to the contingent earnout liability as the Company intends, and has the legal right, to withhold such amount from future earnout payments. See Note 4 - Acquisition for further details on changes from the initial measurement at the date of acquisition.

Our future capital requirements beyond the next 12 months will depend on many factors, including the general economic environment in which we operate and our ability to generate cash flow from operations, which are more uncertain as a result of inflation, changing interest rates and volatile fuel prices. Our liquidity needs during this uncertain time will depend on multiple factors, including our ability to continue operations and production of boats, the performance of our dealers and suppliers, potential strategic acquisitions, the impact of the general economy on our dealers, suppliers and retail customers, the availability of sufficient amounts of financing, and our operating performance.

The following table summarizes the cash flows from operating, investing and financing activities (dollars in thousands):

Cash Flows From Operating Activities

Net cash provided by operating activities was $67.5 million for fiscal year 2026, compared to $56.5 million for the same period in 2025, an increase of $11.0 million. The increase in cash provided by operating activities primarily resulted from a net increase in operating assets and liabilities of $24.6 million, partially offset by a decrease of $13.6 million in net income (after consideration of non-cash items included in net income (loss), primarily related to depreciation, amortization, deferred tax assets and non-cash compensation). Net cash provided by operating activities was $56.5 million for fiscal year 2025, compared to $55.6 million for the same period in 2024, an increase of $0.9 million. The increase in cash provided by operating activities primarily resulted from a net increase in operating assets and liabilities of $12.2 million.

Cash Flows From Investing Activities

Net cash used in investing activities was $142.6 million for fiscal year 2026 compared to $27.4 million for the same period in 2025, an increase of cash used in investing activities of $115.3 million. The increase in cash used in investing activities was primarily driven by cash paid for the acquisition of Saxdor compared to the same period in 2025. Net cash used in investing activities was $27.4 million for fiscal year 2025 compared to $75.8 million for the same period in 2024, a decrease of cash used in investing activities of $48.4 million. The decrease in cash used in investing activities was primarily related to decreased capital expenditures in fiscal year 2025. We experienced higher capital expenditures in fiscal year 2024 primarily related to the completion of our Roane County, Tennessee facility.

Cash Flows From Financing Activities

Net cash provided by financing activities was $111.7 million for fiscal year 2026 compared to net cash used in financing activities of $18.8 million for fiscal year 2025, an increase of $130.5 million. During fiscal year 2026, we borrowed $147.0 million, net of repayments, under our revolving credit facility to partially fund the acquisition of Saxdor, which was partially offset by our repurchases of $33.9 million of our Class A Common Stock under our current stock repurchase program.

Net cash used in financing activities was $18.8 million for fiscal year 2025 compared to net cash used in financing activities of $31.7 million for fiscal year 2024, a decrease of $12.9 million cash used. During fiscal year 2025, we borrowed $18.0 million, net of repayments, under our revolving credit facility, compared to no borrowings, net of repayments during fiscal year 2024. We repurchased $36.0 million of our Class A Common Stock under our stock repurchase program in fiscal year 2025 compared to repurchases of $29.3 million in fiscal year 2024.

Credit Facility

Our indirect subsidiary, Malibu Boats, LLC, or the Borrower, has an outstanding term loan of $100.0 million and a $250.0 million revolving credit facility, each with a maturity date of July 10, 2031, governed by the Credit Agreement. Malibu Boats, LLC has the option to request that lenders increase the amount available under the revolving credit facility by, or obtain incremental term loans of, up to the sum of $100.0 million plus such additional amounts so long as the consolidated leverage ratio as of the most recent date for which financial statements have been delivered does not exceed 2.50:1.00, subject to the terms of the Credit Agreement and only if existing or new lenders choose to provide additional term or revolving commitments.

Upon the closing of the Credit Agreement on July 10, 2026, Malibu Boats, LLC borrowed the full $100.0 million under the term loan facility and used the net proceeds to repay amounts outstanding under its revolving facility governed by the prior credit agreement. Malibu Boats, LLC had $65.0 million outstanding under the revolving credit facility after such repayment.

Borrowings under the Credit Agreement bear interest at a rate equal to either, at the Borrower’s option, (i) the highest of the prime rate, the Federal Funds Rate plus 0.5%, or one-month Term SOFR plus 1% (the “Base Rate”), (ii) SOFR, (iii) alternative currency term rate, or (iv) alternative currency daily rate, in each case plus an applicable margin ranging from 1.25% to 2.00% with respect to SOFR borrowings, alternative currency term rate loans, and alternative currency daily rate loans, and 0.25% to 1.00% with respect to Base Rate borrowings. The applicable margin is based upon the consolidated leverage ratio of the LLC and its subsidiaries. The Borrower is required to pay a commitment fee for the unused portion of the revolving credit facility, which will range from 0.15% to 0.30% per annum, depending on the LLC’s and its subsidiaries’ consolidated leverage ratio. Malibu Boats, Inc. was not a party to the prior credit agreement and is not a party to the Credit Agreement. As with the prior credit agreement, the obligations of the Borrower under the Credit Agreement are guaranteed by its parent, the LLC, and, subject to certain exceptions, the present and future subsidiaries of the Borrower, and all such obligations are secured by substantially all of the assets of the LLC, the Borrower and such subsidiary guarantors.

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 consisting of a minimum ratio of EBITDA to interest expense and a maximum ratio of total debt to EBITDA. The Credit Agreement contains certain customary restrictive covenants, among others, regarding indebtedness, liens, fundamental changes, investments, restricted payments, disposition of assets (including material intellectual property), transactions with affiliates, negative pledges, hedging transactions, certain prepayments of indebtedness, accounting changes and governmental regulation, in each case, subject to customary exceptions.

The Credit Agreement also contains customary events of default. If an event of default has occurred and continues beyond any applicable cure period, the Administrative Agent may (i) accelerate all outstanding obligations under the Credit Agreement or (ii) terminate the commitments, amongst other remedies. Additionally, the lenders are not obligated to fund any new borrowing under the Credit Agreement while an event of default is continuing.

Repurchase Commitments

Our dealers have arrangements with certain finance companies to provide secured floor plan financing for the purchase of our boats. These arrangements indirectly provide liquidity to us by financing dealer purchases of our products, thereby minimizing the use of our working capital in the form of accounts receivable. A majority of our sales are financed under similar arrangements, pursuant to which we receive payment within a few days of shipment of the product. In most cases, we have agreed to repurchase products repossessed by the finance companies if a dealer defaults on its debt obligations to a finance company and the boat is returned to us, subject to certain limitations. Our financial exposure under these agreements is limited to the difference between the amounts unpaid by the dealer with respect to the repossessed product plus costs of repossession and the amount received on the resale of the repossessed product. During fiscal year 2025, we repurchased 22 units under our repurchase agreements, including 19 boats that were related to the bankruptcy with Tommy's Boats totaling $2.5 million. For fiscal year 2026, we did not repurchase any boats under our repurchase agreements. An adverse change in retail sales could require us to repurchase repossessed units upon an event of default by any of our dealers, subject to the annual limitation. Refer to Note 18 to the audited consolidated financial statements included elsewhere in this Annual Report for further information on repurchase commitments.