Negative Points

• The company's fiscal 2027 guidance assumes a flat to down market, with continued pressure on the payment-sensitive buyer due to macro disruptions, which could limit growth potential.

• Saxdor's adjusted EBITDA margin in the fourth quarter came in below the guided 10%-11% range due to deliberate investments in domestic manufacturing and higher input costs.

• Full-year fiscal 2026 gross margin declined 180 basis points to 16% due to higher per-unit material and labor costs, and adjusted EBITDA margin also contracted year-over-year.

• GAAP net income for the full year decreased 88.8% to $1.7 million, primarily due to acquisition and integration-related expenses tied to the Saxdor transaction.

• The company expects first-half fiscal 2027 margins to be lower than the second half, driven by the investment and ramp-up at Saxdor, which will weigh on near-term profitability.

• Input cost inflation is expected to be in the low to mid-single-digit range for fiscal 2027, and the company is absorbing tariff costs at currently enacted rates, which could pressure margins.

Q & A Highlights

Q: Can you shed more light on the Saxdor impact on all of fiscal 2027 revenue and adjusted EBITDA guidance? A: David Black (CFO): We expect Saxdor to grow at a low-teens rate on the revenue side, ramping up to the 10%-11% EBITDA margin range we previously discussed. The first quarter will be weighted down due to investments for higher volumes later in the year. Combined with low to mid-single-digit growth in legacy brands, this forms the building blocks for our fiscal 2027 guidance.

Q: What are you thinking in terms of retail growth for the legacy business within your fiscal 2027 guidance? A: David Black (CFO): We expect the market to be flat to down next year, with a similar cadence to this yearsofter in the first half and progressively closer to flattish in the back half. This is what we are baking into our guidance.

Q: Can you elaborate on the Saxdor EBITDA margin being below the guided 10%-11% range and the input cost pressures? A: David Black (CFO): The lower margin was driven by two factors: we deliberately added resources ahead of higher expected volumes, including the accelerated ramp of domestic manufacturing in Fort Pierce, and we absorbed higher input costs in the quarter. The investment is a timing issuewe are speeding up the process to capture demand. We saw some input cost pressure in the legacy business too, but centralized sourcing has helped offset it there.

Q: Can we lift the hood on Cobalt volumes being up 19%? Is this comping production cuts or results of MBI Advantage initiatives? A: David Black (CFO): We did take production down in the prior year to manage dealer inventory. The brand continues to perform well from a market share perspective, and you are seeing that translate through as retail demand remains strong.

Q: Can you bifurcate the margin improvements between volume leverage and centralized sourcing/procurement initiatives? A: David Black (CFO): For the quarter, it is about half and half. There is some volume leverage from the pure units piece, but also benefits from centralized sourcing running through the P&L from the inventory side.

Q: Have you made any changes to plant operations in Finland and Poland from your due diligence post-ownership? A: Steven Menneto (CEO): No, we haven't made any plant changes. We are still manufacturing in Poland and Larsmo. We introduced the 460 production and are working hard to satisfy the amount of orders. Fort Pierce is a new operating line, and we are on schedule with pilot boats.

Q: Can you elaborate on firming dealer inventory levels in pockets of the portfolio, specific to Cobalt and saltwater fishing? A: David Black (CFO): As the year progressed, inventories decreased on a year-over-year basis. The health of that inventory is importantaged inventory across the portfolio is in one of the best spots we've seen in some time. There's not a ton of inventory that will need to be cleared due to aging and required promotional dollars.

Q: Any anecdotes or green shoots on MBI Acceptance uptake? Are you seeing conversion of incremental payment buyers? A: Steven Menneto (CEO): We are seeing momentum behind the program. Dealers are accepting it and using it to retail boats. We see momentum in the number of applications, even during non-promotional periods. We are probably a third to 40% of the way on getting our dealer base signed up. David Black (CFO): We are seeing it touch the lower price point brands in our portfolio.

Q: How are you thinking about the opportunity to grow legacy MBI brands in Europe? A: Steven Menneto (CEO): International retail and shipments are below 5% historically. With Saxdor, we want to take a first step to sell US-manufactured boats internationally at a higher pace. Saxdor's dealer network has been inquiring about carrying our legacy brands. Eventually, if there's enough volume, we could consider manufacturing in Europe, but that's way down the line.

Q: Can you elaborate on your capital allocation priorities between share buybacks, debt paydown, and M&A? A: David Black (CFO): No real change in priorities. We will continue to invest in the business, pay down debt with free cash flow, be opportunistic on share repurchases where we see intrinsic value, and pursue disciplined M&A with a high bar. We demonstrated this philosophy this year by completing the Saxdor acquisition, refinancing debt, and repurchasing 1.2 million shares.

Q: What are you incorporating for input cost inflation in your EBITDA outlook? A: David Black (CFO): We have embedded low to mid-single-digit range from an input cost perspective. There are many determining factors and things change daily, but that is our assumption given the information we have.

Q: On Fort Pierce, do you have metrics on how much more quickly you can get a boat to market or how much more profitable each boat could be? A: Steven Menneto (CEO): Not yet, it's pretty early. We are just running pilot boats and building. We are working out standard work and setting up stations. Until that is completed, we won't have dialed-in numbers on costs and advantages. We are trying to go faster than planned, which is driving some early costs.

Q: What have you done recently in the dealer network to optimize it? A: Steven Menneto (CEO): When we talk about optimization, it's about tools we deliver to the dealer network and how we support them. This includes our co-op program, financing program, and changing the way we do marketing to drive support with our dealer base. It's about how we support retail on an ongoing basis and what tools they need to be successful.

For the complete transcript of the earnings call, please refer to the full earnings call transcript .