Good morning and welcome to Malibu Boats Conference Call to discuss First 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 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 will 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 first quarter financials and initial outlook for fiscal 2016. We will then open the call for questions. A press release covering the company’s first 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 website. 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, and adjusted fully distributed net income. Reconciliations of these non-GAAP financial measures to GAAP financial measures are included in our earnings release. Now let me turn the call over to Jack Springer.

Thank you, Wayne and I'd like to welcome everyone to our call. Malibu had another good quarter of inline results and the trends across our business remained consistent. Highlights for the quarter include net sales increased by 20.1% over 2015. Unit volume was up by nearly 23%. Our gross profit for the first quarter increased by 21% and fully distributed net income increased 32% over the first quarter of 2015. The U.S. market remained strong driven by the continued recovery in the broader boating industry and shared gains in the performance sports boat category. As all of you know, the U.S. performance sports boat market has been strong for some time increasing in the low double-digits annually for the past three years. Even with this increase the industry is still approximately 42% below the peak volume levels that we saw back in 2006 and 2007 which suggests that there is a lot of room for growth ahead. The international markets remain a mixed bag. Australia and Asia remain very strong for Malibu but we continue to see currency related headwinds in other international markets such as Canada, South American and Europe. Despite this challenge we are executing well against our vertical integration in global growth initiatives and we feel good about the positioning of our business into the new model year. Since July we have introduced and began production on three new boats for 2016. As we discussed on the last earnings call, we are launching a total of four new boats this year, three Malibu branded boats and one Axis branded boat. The first three new introductions were the Malibu Wakesetter 25 LSV, the Malibu Wakesetter 20 VTX and the Axis A20. All of these have been very well received by our dealers and there is tremendous excitement heading…

Thanks Jack. As we discussed on the fourth quarter call back in September, our first quarter results would be impacted by two things; the inclusion of our Australia business in the consolidated financials and our higher daily production throughput compared to the first quarter of last year. These two factors were expected to positively impact unit volume. The Australian inclusion was expected to negatively impact net sales per unit and gross margin in the first quarter. All of this was fully factored into our projections for the quarter and full year and our first quarter was in line with our expectations. Net sales increased 20.1% to $57.2 million; unit volume increased 22.6% to 825 boats and included 79 units from Australia. Unit volume was per our expectation and was driven by our higher daily throughput. Both Malibu and Axis performed well in the quarter with Malibu representing 65% of unit sales at 534 boats and Axis representing 35% of unit sales at 291 boats. The mix of Axis in the quarter was higher than our annual projection and was boosted by strong retail and dealer inventory restocking. Consolidated net sales per unit decreased 2% to approximately $69,400 and was impacted by the inclusion of the Australian business and modest promotional efforts in certain international markets. As a reminder, the Australian units carry out lower average selling price because of the elimination of previously recognized revenue in our U.S. segment. Now that we will be anniversering the Australia acquisition in our financial results in the second fiscal quarter, this year-over-year dynamics should be less of a factor going forward. Gross profit in the quarter increased 21.6% to $14.7 million and gross margin increased 30 basis points to 25.7%. The increase in gross margin was primarily driven by our trailer business. This…

Thank you. [Operator Instructions] And our first question or comment comes from the line of Mike Swartz with SunTrust. Your line is now open.

Hey, good morning guys.

Good morning, Mike.

Good morning.

I just wanted to touch on some of the new product coming out and specifically the new 25 LSV and understanding you had some positive commentary around that and some of the early ordering you’re seeing is coming in ahead of expectations. But maybe just taking a step back, could you provide some context to that kind of larger ski performance boat market whether you wanted to define it as 24 feet plus. Just how big is that market, how fast is that market growing really relative to your legacy business and if you define that maybe between 20 and 23 feet?

I think that over the two to three years Mike, we have seen the same I call it 24-foot grow a little bit better than it had been and I think some of that is fueled by new product to market for example we brought out the 24 MXZ first premium pick of four as well as the Axis A24. We've seen a little bit of a migration to the larger boats. I think people were wanting to really be out on that boat for a longer period of time and they performed sports behind the boat, which is one of the key reasons that we thought that that 25 LSV which replaced our 247 was important to take it to a full 25 feet. So we’re seeing demand in that 24-foot category and up increase, still the middle of the plate so to speak is that 22 and 23-foot market, that is the largest market by far and then that 24, 25 feet as well as the 20 and 21 feet boats are following that.

Okay, thanks Jack. And then just, I think you kind of mentioned in the press release but going to the kind of five-year standard warranty for model year 2016 product and I think you had said that has a mitigating impact on gross margin. But is there, one I guess is there any way to quantify what that impact is and two, was that already predicated in your gross margin outlook when you gave it a couple of months ago?

Yes, this is Wayne. It was predicated in our – it was part of our gross margin outlook. That is why the gross margin outlook hasn’t really changed. It’s just one of the offsetting factors in terms of the trailer business being positive and we’re able to obviously take some level of price to cover that cost increase as well. So it is an incremental cost that dilutes the margin a little bit, but we have other offsetting factors and we just called that out as an incremental cost.

Okay, great. Thanks guys.

Thank you.

And our next question or comment comes from the line of Tim Conder with Wells Fargo. Your line is now open.

Thank you. Gentlemen, a couple of things continued on the gross margin question, Wayne and I apologize if we missed this here, but how much did FX weigh on the quarter? And then what is factored into that gross margin for the year? And then is there any as you mentioned some of the marketing type of cost is impacting SG&A, how much of that incremental or that marketing piece is related to Canada, Australia and the International side?

Yes, so first things first, on the FX side, the translation is not an issue, right FX translation is not an issue on a year-over-year basis because the prior year period doesn’t have Canadian – sorry Australian income or revenue in the quarter and so we will start to quantify that and give you that on a year-over-year basis next quarter. So with respect to Australia, what we are seeing from an FX perspective, the Australian dollars continue – is that about $0.71 and so I think that has continued to be a little bit of a headwind for us and been a little bit of a challenge in the Australian business. They’re about six months behind us in terms of the model year change. So they will shift to model year 2016 product consistent with the 2016 calendar year and we will be able to increase prices there on the model year 2016 product as of Jan 01. And so I think from - we will deal with the translation issue next quarter specifically quantifying that right now looking at that within the quarter there is still a little bit of pressure there just given the degree of the magnitude or the move of the Aussie dollar, but specifically translation would touch on next quarter.

Okay. And then within the marketing and SG&A portion, how much of that was related to Canada, Australia or anything from that perspective?

None of that, those are some very specific initiatives that we had in place and budgeted for first quarter and some of those would be just not ongoing, continuous expenses to the business. Any of those initiatives that are being put in certain international markets are flowing through net revenue.

Okay. And then geographically gentlemen, you talked about it a little bit and you have seen it from other power sports related companies' reports. Western Canada there was an oil field area impact there and then impacting incomes and demand and the same thing in Texas. So could you maybe address that and color potentially as we progress through the quarter and what the dealers saw and what the I guess the overall the ski wakes or segment is seen in those markets, if you could comment on that from the industry subsegment and then what you are seeing specifically in your business, the cadence as it has come over the last 90, 120 days in particular?

I would echo, as it relates to Canada, I would echo, somebody's dog, I would echo what we have heard from a lot of other manufacturers in that, Canada is definitely depressed more so from, in our opinion, from the translation or the FX than from the oil. We’re not hearing a lot about the oil, but we are hearing that currency at a $1.31 versus the dollar is really the barrier in Canada. I think that as it relates to Malibu, we've probably experienced very similar declines in Canada as what other people have. It is not what it has been over the last couple of years because of that. I will make a statement that I believe in Canada. We don’t have to get back down to that 112 or 115. I think that if we start seeing some moderation in that FX rate, then it will definitely have the impact of generating additional sales. From a Texas perspective, I will say that the oil and gas prices are really not having any impact on boats sales. We are seeing among all of our Texas dealers, they’re having some of the best years that they have ever had and I think part of that is Texas is probably not recognized as that well-diversified state as it really is and so even in an area that would be strong oil and gas, Houston, Texas we are experiencing very good numbers. And then I would also point to one other factor that I think that is having play in that is, for a couple of year Texas was in drought and arguably we heard more about the drought than the oil and gas prices. Now Texas is out of drought over the last two weeks has had another 10 to 20 inches of rain across the State and so I think Texas is very well positioned going forward.

Okay. Okay gentlemen, thank you very much.

Thank you.

[Operator Instructions] Our next question or comment comes from the line of Joe Hovorka with Raymond James. Your line is now open.

Thanks guys. A couple of quick questions. First, I’m looking at your slides that you put out here and you have got a retail slide on here, I just want to clarify is that your retail to high single digit domestic year-to-date?

Yes.

Okay. And that is okay, that is just what I clarified, because this says market commentary, but then you had an industry number next to it. So just want to clarify, secondly is, you talked about your 20-foot segment [BNA] softer or weaker segment for you and the opportunity for share growth for two new boats, is that also true for the 25, is that you’re a little bit weaker there too from a share perspective in this new 25 LSV also gives you an opportunity to put some share growth in 2016?

Yes, you are correct in that Joe. We had in that segment before we had the 247 and the 247 was frankly long in the tooth and we had seen diminishing sales over the last two to three years. So, that 25 LSV is a brand new boat in a segment that we think will be able to capture some of this in the market share.

Okay and then can you comment a bit about what trailers added to or detracted on the gross margin in the quarter, I don’t know if there is any startup costs in the September quarter or if it was incremental?

No, it was definitely incremental in the quarter, I think if you go back to what we had disclosed about our investment there with about a $1 million investment and a payback of less than 2 years, you are going to see north of 30 basis point move in margin because we’re able to actually decrease the price to our dealers as we deliver higher quality and make more money. So we make it cheaper to both the dealer and the retail consumer which helps to expand that margin percentage right, so because the denominator is coming down and numerator is going up so its north of 30 basis points.

It would have been north of 30 in the quarter as well or is that what you would expect on the full year run rate?

Full year, it will be generally in the same line.

Okay, great, that’s all I got, thanks.

Thank you.

Our next question or comment comes from the line of Rommel Dionisio with Wunderlich Securities. Your line is now open.

Yes, thank you, good morning. You know with all the new models coming out and the addition of some of these new technology features like [indiscernible] increasing production if you guys could just talk about the product quality in the last few months and to the extent that you are being able to maintain that and some of the initiatives you are putting in place in order to maintain that high quality, product quality for so many years? Thank you.

Yes, absolutely. One of the things that we add is the same throughput going forward, so it is the same 16 boats a day, that will be one thing I would point to. But in addition to that we have developed since 2009 a very stringent process of [indiscernible] for introducing new product and so this [indiscernible] that redeploy is very structured, very streamlined to make sure that whether the product is coming from inside of Malibu or from suppliers, we are doing everything powerful to make sure that that is a very high quality product. We have seen that our product has continued to gain in quality. An example that I pointed to in my commentary is the hydraulic Surf Gates and power wedge. Hydraulics make a remarkable difference and Malibu is only one that has that to our knowledge.

Okay, thanks very much Jack.

Thank you.

Our next question or comment comes from the line of Gerrick Johnson with BMO Capital Markets. Your line is now open.

Thank you. Good morning.

Good morning.

Good morning, what’s the reason for a change in standard warranty to five-years from three, is that a competitive response? And then my other question is, you mentioned $1 million to $1.5 million in MasterCraft litigation. I think that is for the year. Can you tell us what that was in the quarter? Thank you.

As it relates to the warranty, there were other competitors that did come out with a five-year warranty. Preferentially that’s not - I don’t think that’s anything that you want to sell as a part of your go to business model. So it was somewhat reactive in terms of matching what other competitors were doing, but we also believe that its speaks to the previous question and that is the quality of the Malibu and the Axis boat is, is that five-year warranty just really proves that out. What was your other question, I'm sorry, Gerrick?

Well, actually let's stay on the warranty for a second, so does this mean going forward we’re going to have a higher accrual did you take, this accrual like a lump sum in this quarter that will last for a while? My other question was on the MasterCraft litigation, how much of that was in the first quarter?

Yes, so we did – we will increase the accrual, we’re increasing our accrual rate as we sell wooden boats with five-year warranties. So we did not take a one-time charge upfront. It will be - it will grow through the course of the year and over the next couple of years as we accrue more "years of warranty liability".

MasterCraft?

Yes and then in MasterCraft for the quarter it’s actually a relatively modest number less than $200,000.

All right, great. Thanks guys.

And I’m showing no further questions at this time. So with that said, I would like to turn the call back over to CEO, Jack Springer for closing remarks.

Thank you. I want to thank everyone again for joining Malibu on our call this morning. We look forward to speaking with you again next quarter. Have a great day.

Ladies and gentlemen, thank you for participating in today’s conference. This concludes the program. You may now disconnect.