Good morning and welcome to the Malibu Boats Conference Call to discuss Second Quarter Fiscal 2016 Results. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. Please be advised that reproduction of this call in whole or in part is not permitted without written authorization of Malibu Boats and as a reminder, this conference call is being recorded. On the call today from Management are Mr. Jack Springer, Chief Executive Officer and Mr. Wayne Wilson, Chief Financial Officer. I’ll now turn the call over to Mr. Wilson to get started. Please go ahead, sir.

Thank you and good morning, everyone. Ritchie Anderson, the Company’s Chief Operating Officer is also on the call today. Jack will provide commentary on the business, and I will discuss our second quarter financials and outlook for fiscal 2016. We will then open the call for questions. A press release covering the Company’s second quarter results was issued this morning and a copy of that press release can be found in the Investor Relations section of the Company’s Web site. I also want to remind everyone that Management’s remarks on this call may contain certain forward-looking statements including predictions, expectations, estimates or other information that might be considered forward-looking and that actual results could differ materially from those projected on today’s call. You should not place undue reliance on these forward-looking statements, which speak only as of today and the Company undertakes no obligation to update them for any new information or future events. Factors that might affect future results are discussed in our filings with the SEC and we encourage you to review our SEC filings for a more detailed description of these risk factors. Please also note that we will be referring to certain non-GAAP financial measures on today’s call such as adjusted EBITDA, adjusted EBITDA margin, adjusted fully distributed net income and adjusted fully distributed net income per share. Reconciliations of these non-GAAP financial measures to GAAP financial measures are included in our earnings release. I’ll now turn the call over to Jack Springer.

Thank you, Wayne, and welcome everyone to our call. We had another good quarter of inline our better results. Our net sales increased 9%, adjusted EBITDA margin remain very strong at 18.5%, and fully distributed net income per share increased 15%. This is the 8th consecutive quarter where we’ve delivered such results and done exactly what we said we were going to do. We’ve been steadfast in the execution of our business plan and achievement of our growth targets. This plan has served us well. We want to own the technology in innovation side of the industry. Malibu wants to offer the best integrated wake and surfing package on the market. We want to drive demand through consistent new product and feature launches. We want to vertically integrate production to maximize quality and lower cost. We want to drive and control distribution through partnering with the best dealers around the globe and we want to drive higher returns across the organization through a disciplined planning and production process. We are doing all these things very well and continue to perform at a very high level. However, there are also some things that are outside of our control that we’re managing around. The decline in the foreign currency markets, the decline in oil prices, and the volatility in the U.S macro environment are the primary headwinds we continue to face. We’ve managed all of these outside factors to this point and have delivered against our growth targets. The U.S market has been in a recovery trend and it continues to be strong. Thus far the strength in the U.S market has more than offset the weaknesses in the foreign markets, but the foreign markets, especially Canada have been weaker than we anticipated. We hope that the U.S strength will continue to…

Thanks, Jack. Our second quarter results were inline with our expectations. It’s important to point out that the second quarter results are the first quarter to contain Australian business and the consolidated financials in both the current and year-ago periods, albeit the year-ago period was three weeks short of a full quarter. That means we’re now essentially apples-to-apples for the first time when we look at the quarterly financials on a year-over-year basis. As you recall, this was not the case last quarter and the inclusion of the Australian business impacted various comparisons. The other factors to keep in mind is the increase in our daily average production rate in October last year. As we’ve discussed before we match our production rate with our annual demand forecast and increased production rates at the appropriate time. This impacted the comparisons in the first quarter of the fiscal year, but we’ve now fully anniversaried the last rate increase and the second quarter is also on apples-to-apples comparison. With that said, net sales in the second quarter increased 9.1% to $60.5 million; unit volume increased 2.4% to 867 boats, including 81 units from Australia. The volume number was right in line with our expectation and the total revenue growth was slightly ahead of our expectation, given the strength in our new larger more expensive models. Both Malibu and Axis performed well in the quarter with Malibu representing approximately 68% of unit sales at 591 units and Axis representing approximately 32% of unit sales at 276 boats. Consolidated net sales per unit increased 6.5% to approximately $69,787. The increase was primarily driven by year-over-year price increases and higher mix of larger Malibu models. Gross profit in the quarter increased 12.1% to $15.9 million and gross margin increased approximately 70 basis points to 26.2%. The…

Thank you. [Operator Instructions] And our first question comes from Mike Swartz of SunTrust. Your line is now open. Please go ahead.

Hi, good morning guys.

Good morning.

Good morning.

Jack, you spent some time talking about California and the West Coast, and the potential for improvement there with obviously the rain and some of the snow pack that we’re seeing and hearing about. Could you maybe give us just quantification in terms of how big those markets used to be and maybe where they stand today?

Yes. If we go back to prior to the recession the 2006, 2007 timeframe, California was our largest market by a considerable margin; Texas was second at that point in time. When the recession occurred, what I’ll call the South West which is primarily going to be driven by California; it dropped effectively 89%, whereas I think the rest of the marine industry in the country saw around a 65% to 70% drop. So it dropped much further. It had a lot further to come back. So over time what we would hopefully expect to see is that California comes back and its on a par with Texas or maybe even it surpasses Texas at some point again, and it will pick up several 100 units, if that were to do that. But I think that we’re looking at the entire South West region when we speak to that.

And to add to that, Mike, the -- if you look our 10K, you can see that in the fiscal year 2006, the South West region as we define it was almost 3,800 units, and in calendar 2014, it was under 800. So in terms of the degree of magnitude, it still has a lot of potential and the weather there, that impact is still TBD [ph].

Okay, great. And then just on the -- on the commentary around some of the new models that you’ve introduced for model year ’16, and talking about how the orders coming out of boat shows have been, I guess greater year-over-year. Is there any way to provide some kind of quantification on what exactly that means? I mean, some of these boats are obviously going to be replacing some prior models. So, I guess, what is the incremental with some of these new products coming out?

Well, as we know the M235 is a brand new boat. So it was what we consider and call a wide space for us. It is an area where we did not have a previous model. So all of that is going to be gain whatever that turns out to be, and that is a relatively new model just brought out for the boat show season. The 25 LSV is a boat that replaced completely our 247, which we call that boat. And that boat in the first six months generated considerably more orders than the 247 had done all of last year. So this has been a very, very strong model for us. That 20 VTX crossover boat is a boat that we already own the number one market share, and we expect that that’s going to continue to drive market share, because that’s -- as I touched on, that is a very unique customer. Generally that customer is someone that grew up skiing, they want that ski wake, but they now have that family or they now have those friends that want to wakeboard and wakesurf. And so this boat gives them that ability to have tournament [ph] wakes yet also get out behind the boat a little bit later in the day to wakeboard or to wakesurf. And then the other boats that are not necessarily new, but just continue to be stewards [ph] is that 23 LSV, the best selling boat of all time. Every single year, it sells more boats than any other boat in our segment. That A22 for Axis has been the leading selling boat since 2010 in that entry level or that value segment. So -- and that’s what we’re seeing in the boat shows, so we continue to see our product drive Malibu along and generate the results that we’re seeing.

Okay. Thanks guys.

Thank you.

Thanks.

Thank you. And our next question comes from Tim Conder of Wells Fargo Securities. Your line is now open. Please go ahead.

Thank you. Wayne, in the summary of your updated guidance, maybe just sort of go with the puts and takes from last quarter. If we’re hearing you right, is the gross margin maybe the adjusted EBITDA was just a [indiscernible] lower, and it sounds like that could be emanating from what you’ve seen in Canada, just to clarify that. And other than that it didn’t sound like you had changed much at all, so one question there. And then, is there anything else on the litigation front other than what you mentioned Jack as far as the timeline for the trial in May. Is there anything else about ruling on summary judgment or anything else that may be there on the calendar? Thank you.

I’ll answer your litigation question first, and then Wayne can follow-up. Outside of the scheduling order which lays out the discovery and all of the parameters for getting to the trial date, there’s really not an update. It just ends with that schedule trial. There has not been any movement on the summary judgment motion to this point.

Yes, and further on that, I’m aware we’re just in the middle of the discovery, and that will go on for a bit of time here in depositions et cetera, it will be ongoing I assume, but that’s in its very early stages. On your first question Tim, I think your takeaway is generally accurate in that. There’s a little bit, we moved a couple of things around primarily ASP, our expectations for ASP being up a little bit relative to what we had previously said. We previously said low single digits, and now we’re saying low to mid single digits. That’s on the back of both the strength in our larger boats and just in general, optional feature take rates. So what you’re also seeing is, we moved the gross profit margin indication there from modestly to slightly increasing, and that’s really a function of both, we have higher ASPs coming in, but then we’ve also had some margin impacts from both, Australia and in Canada or international discounting. So, the international discounting is going to be, combined with the impact of both translation in Australia, but really the impact of some of the foreign currency moves there were. We’ve just been really chasing that currency down as we sell parts into there and we set our pricing, that’s been a headwind on the margin in the Australian business so far. And when you quantify both of those in this specific quarter, you’re going to be looking at approaching 100 basis points. So it was a meaningful headwind to us for the quarter. We were able to increase prices in Australia for model year 2016 as of January 1, so that should abate that. I think we also expect that volume mix in Canada is likely to be a little bit lower in the second half. So, I think we’re -- that maybe helped margin a little bit. But those have been the negative headwinds that have impacted our kind of projection, and what we’re saying in terms of guidance. I think when you get that all down to the bottom line that we didn’t move our expectation on EBITDA, and so I think we feel comfortable that we’re in the same ballpark there.

Okay. And then, Jack just to clarify. You said for calendar ’15, you do expect some combined of the two brands, a little bit of market share loss, but it sounded like the calendar Q4 trends at retail were definitely that the new products are improving and do you expect some modest gains here in calendar ’16 and just, if I understood those right?

That’s correct.

Okay. And then lastly, back to the California question. When are you starting to see any movement yet in retail there just -- and maybe dealers commenting on, we’re getting some increased flow, just given that a few lakes have reopened, any -- anything, any color from that perspective.

Yes, it’s really too early for that yet, Tim, because the majority of the shows have not taken place. So there we’re not seeing it at this point. When we can expect to begin seeing that is probably in that March, April timeframe, once the shows take place and Northern California starts to warm.

Okay, great. Thank you, gentlemen.

Thank you.

Thank you. [Operator Instructions] And our next question comes from Gerrick Johnson of BMO Capital Markets. Your line is now open. Please go ahead.

Hi, good morning. Quickies -- one here for me. If you could just quantify what your retail sales were in the U.S. and international on a percent change basis? Thank you.

Sorry, Gerrick, are you talking about for the Q4?

Sorry, whatever quarter we’re in.

Well, so calendar Q4, I mean, the registration data is up significantly for us, I recall 40 plus percent on a year-over-year basis versus the market that was up 10%, but it’s a small quarter. So I think that’s where we’re sitting there seeing the impact of the 2016 product line and seeing a substantial boost. But it is a very, very small quarter.

Okay. Thank you.

Yes.

Thank you. And our next question comes from Rommel Dionisio of Wunderlich Securities. Your line is now open. Please go ahead.

Thanks very much. Good morning. So a question, not to beat a dead horse, on your current check on California and Texas markets, we know they’ve had a tough call with here these last couple of years. Could you just talk to the inventories of used boats as well as the general overall dealer health in those markets? That’s what I’m trying to get at is, if conditions improve, can you really benefit that quickly just given what might be on the loss for used inventory as well as the overall dealer health? Thanks.

Yes, the overall dealer health is very good. We have some of our best dealers certainly in Texas, and California being a stronger space as they have been in the past and are today. Texas has been less impacted and has come back faster certainly than the West Coast. And now that the Empire State really has water, we think that, that will continue to give us that supply from a customer standpoint. We are in a very nice position as it relates to used boats. And the way that I describe this, is if you think about it, we went for four years or so where the market was down 70%, 60%. So the number of new boats coming into the market in previous years was very small, creating a scenario today where that used boat inventory is very tight. And so, one of the advantages that we have is we’re able to offer our Axis product at about the same price as some of that what we call, that three year old nearly new product. And so we’re able to capitalize on that because that market is so tight, and we can generate, we believe further demand from that, because there’s just not a lot of newer used boats.

Great. That’s very helpful. Thanks, Jack.

Thank you. [Operator Instructions] And I’m showing no further questions at this time. I would now like to turn the call over to Mr. Jack Springer for closing remarks.

Thank you. Again we are very pleased with our quarter, and we also thank you for joining Malibu on our call. Have a very good day.