MALIBU BOATS, INC.

The recreational power boat industry continues to be challenged by macro-economic factors, including inflation and elevated interest rates, that have increased the cost of production and taken many interest rate sensitive buyers out of the market. In the past year, additional tariffs have also been introduced or proposed, as discussed below, and we are monitoring the impact they may have on cost of production, pricing and demand. Simultaneously, less price sensitive buyers have been purchasing larger, more feature-rich boats with higher average selling prices.

Dealer inventories declined during fiscal 2026 as we maintained a disciplined approach to wholesale shipments, and we expect a modest further reduction in dealer inventories in fiscal year 2027. We expect retail demand to remain soft in fiscal 2027 amid continued macroeconomic uncertainty, and we expect promotional activity and dealer incentive costs, including floor plan interest support, to remain elevated relative to historical levels.

We aim to increase our market share across the boating categories in which we compete through new product development, improved distribution, new models, and innovative features. We believe our strong brands, new product pipeline, strong dealer network and ability to increase production will allow us to maintain, and potentially expand, our leading market positions. Our newest acquisition, Saxdor, is in the early stages of integration into the business and expected synergies have the potential to be realized over the coming years. We believe enhancing manufacturing capabilities combined with diligent management of dealer networks will position Saxdor for continued growth.

Our financial results and operations have been, and will continue to be, impacted by events outside of our control, including trade policies and tariffs, inflationary pressures, interest rates, material shortages, weather events, foreign currency fluctuations and global economic uncertainty. The current international trade and regulatory environment is subject to significant ongoing uncertainty. Beginning in calendar year 2025, the U.S. presidential administration has imposed substantial new tariffs affecting a wide range of products and jurisdictions. In response, some countries have implemented, and other countries may implement, countermeasures in response to U.S. tariffs. We estimate that 18-20% of our cost of sales for our brands located in the U.S. are sourced from outside the United States. In addition, following our acquisition of Saxdor, we manufacture boats in Finland and Poland, a portion of which are imported into the United States and are subject to applicable U.S. tariffs on European-origin goods. As a result we have the potential to be materially impacted by tariffs in future periods. We are continuing to monitor the potential long-term impact of tariffs and are taking a proactive approach to mitigating material supply chain risks. We expect to incur material costs in fiscal year 2027 due to new tariff exposure of approximately 1.5% to 3% of cost of sales, which includes Saxdor boats shipped to the U.S. and is assuming current tariff rates. We expect to largely offset these added costs by recent price increases.

With the addition of our European operations after our acquisition of Saxdor, we are also more sensitive to fluctuations in foreign currency exchange rates.

In the near term, we expect to continue to experience reduced retail consumer demand for our products and a competitive promotional environment. However, we will maintain our disciplined approach to dealer health and leverage our strong balance sheet, and cash generation to continue investing in the business.

In July 2026, we entered into an amended and restated credit agreement providing a $250 million revolving credit facility and a $100 million term loan maturing in 2031, which, together with our $70 million share repurchase authorization, provides flexibility to continue investing in growth while returning capital to shareholders.