Hello and good morning. I'm Bruce Beckman, Chief Financial Officer, and on behalf of the entire Malibu Boats team, I'd like to welcome you to our 2025 Investor Day. We have a great lineup of presentations for you today, followed by a 30-minute Q&A session. We have QR codes for those of you in the room to log your questions, and we'll also be taking questions from those joining us virtually. For those in the room, our team will pass around the mic for you to ask your question, and for those attending virtually, our team will be moderating. Please log your questions during the presentation, and again, the question and answer session will be at the end.
For those of you in the room and following along, before I start, I want to remind you that, as stated in the Safe Harbor statement behind me, during today's presentations, we will be making forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those discussed in the forward-looking statements. For a full discussion of potential risks and uncertainties, please refer to the risk factors listed in our most recent SEC filings. During these presentations, we will also be referring to certain non-GAAP financial information. Reconciliations of GAAP to non-GAAP are included in the presentation at the end of today's slides, and they can also be found in the Investor Relations section of the company's website. With that, I'd like to welcome Steve Menneto, Chief Executive Officer of Malibu Boats.
Thank you. Thank you. Morning, everyone. I think we're off to a good start. No one fell in the water in the docks, right? No boats crashed. It was a good morning, and the rain kind of held off for us. Welcome those joining us virtually. We have a good day for you planned today. The question came up as to why are we doing this. The reason why we picked now to do this is we have a new management team in place. We want to be able to make sure that everyone can meet those people, the ones presenting as well as the ones in the room who will be joining us for lunch. You'll be able to interact with the new management team here. We also want to share where are we going. We haven't done one of these since 2018.
We want to be able to talk about where are we going to take the company over the near to mid-term to long-term as we kind of look at Malibu Boats, Inc. and its future. That's what we're going to do today. We got a great roster of speakers for you, and the agenda you can all see. We'll go through the major parts of the businesses. You may have met some of these folks out on the docks, but I'll be speaking, Bruce, and then the three leaders of our businesses, Rachel, Jason, and Chris, will come up and talk about their areas that they lead, and we'll go into some real interesting stuff today. We'll get going here with the overall, where are we taking the company, what's our strategy, what's the overall path forward.
Before we do that, we want to start with the foundation of the company. We started in 1982 out in California building Malibu Boats. We moved over here to Tennessee, kind of where a lot of boats are being made, and you know, a very skilled workforce, very experienced labor market, as well as a lot of other brands here. It's kind of that area to do fiberglass boats. Through that time period, in 2009, we added to the Axis line. We came out with Surfgate in 2012, 2013 model year, really kind of leaped the market with that technology. We went public in 2014 and really became an accelerator through a lot of M&A where we brought on the Cobalt line in 2018, then Pursuit to follow, and then MBG after that.
Our business has grown, and you can see the stats on it, eight manufacturing locations, over 300 dealers around the globe that support our brands. We have a lot of models that we work with, crossed over 85 models that we are able to satisfy the market in a bunch of different segments. 2,000 people working for us. We're the number one manufacturer of fiberglass boats with our eight iconic brands that we go to market with. Right now, that's kind of the history of the company and where we've been. Where we want to go, it starts with what are our enablers. Of course, it always comes back with being customer-obsessed. Our customers are our enablers, and we have to make sure that we're getting that voice of customer back into the business to create a better experience for them. We have a new strategy, build, innovate, and grow.
We'll talk to you, what does that mean? What does that mean in each of our businesses as we go forward? We have the scalability to really, as that upcycle returns, we can really leverage our infrastructure to be able to meet that demand and capitalize on that growth. We've been disciplined in our M&A practices. That's another enabler. We've shown a great history of being able to acquire premium brands, and then not only once we acquire them, but make them better and have them grow and gain share. Our model, our robust cash flow, the ability of a strong balance sheet that allows us more opportunity for the future. That's the enablers that we're going to take as we move forward. It starts with our people. What we're trying to assemble here is the best team in marine to really drive this business forward.
What we think about is the boater at the center of our business. How are we going to satisfy that boater? How are we going to give them a great on-the-water experience? What are we going to do for that person that keeps coming back to our premium brands, that family that wants to spend time together? Even though we have young kids who want to do social media, tell me one thing, is it better to do social media sitting on your couch or sitting in a boat? Right? That's where families start trying to spend time together, and that's what we want to be able to accomplish. That boater at the center of our business, we follow our values, the PACE values, where it's people, accountability, customer experience, and then execution and excellence. That's how we drive our business as we go forward.
Our build, innovate, and grow strategy, what does that really mean? How do we build a culture that is putting that customer at the center of our business? How do we get a deeper relationship with our dealers as we've grown to grow this business and we want to move forward? We're going to tighten up those relationships, support them better as we've shown here in the past when we're working through their inventory, making sure that we have them right-sized in a down cycle. We also want to be able to drive the local markets with them, and we'll talk about that as we go forward. Operational excellence: how do we have that continuous improvement, driving the quality, driving the efficiency, making sure we're chasing better margins all the time? Part of your business, that's how we want to react.
What we need to do is a constant building of our business, right? It never stops in that kind of bucket. Move to innovation. When you look at innovation, there are a lot of good things in our history that we've done. There's a lot more to come. We're going to focus on that innovation. How do we drive new things in our boats to satisfy customers, to make that family experience better? We'll continue to introduce not only just product innovations, but services as well. We want to focus on how is that total 360 ecosystem of boating for the family and that person. How do we do that? How do we make that event better through innovation of products and services? Finally, growth. We look at what we have already in our portfolio. We have great brands in our portfolio, great products.
We can continue to gain share, find those ways to grow our business with what we have now, and look at opportunities in the M&A space to continue to add to our portfolio that drives value creation. Premium brands, keep with that. You know, we've been successful with those brands. We're going to continue to do that. That's our build, innovate, and grow strategy. We want to keep it simple, but powerful for us as we move forward. When you look at that, where are the focus areas that we want to play in? It's in marine. We're not looking to go in a different space. We're going to stay in marine, but four places in marine we'll talk about. One, where we're very core to our business, building boats. We know how to build boats. We know how to build premium boats.
You saw that if you were here with us today. Those boats are beautiful, well-appointed, high-quality boats for a discerning customer. We're going to continue to do that, but we have the opportunities to expand geographically, more segments with our current brands and with future brands. We're excited about being boat builders. We're going to continue to do that. We see a bigger ecosystem. We see the opportunity to grow beyond just being a boat builder. What we want to be able to grow is in technology and connectivity. The technology around the boats is going to continue to drive upgrading boats, new customers coming to the marketplace. We want to make sure we're a leader in that space.
When you look at parts and accessories, an opportunity for us to go even deeper into our boats, what we offer, how do we appoint better boats, excuse me, more usability, more favorability from the families when they're using our boats. Finally, marine services. How do we offer more services to create that 360 experience around owning a boat with our customers? We're going to continue to follow those opportunities and drive our business in these four focus areas. Okay, let's take a deeper look. What's the size of the prize? Current boat building is about a $6 billion total addressable market. When you start to add the total ecosystem, it more than doubles. There's an opportunity for us to play in a market that's huge that we haven't played in previously. How do we go do that?
We're building capabilities, and we formed two newly formed businesses in our overall portfolio, Marine Components and MBI Acceptance. They're just getting launched right now. Marine Components is taking the vertical integration, those things that we do well, trailers, flooring, engines, towers, wiring harnesses, things like that, that we can continue to not only utilize in our brands, but also sell to other OEMs. There are opportunities as you go to end users. We're going to explore opportunities as to how do we actually offer through our dealers to our end customers more parts and accessories and grow our components business. MBI Acceptance is another, it's a strategic alliance between MBI, Wells Fargo, and Aqua Finance. It's not a captive, but it's a strategic alliance where we can offer financial products.
We're going to go out testing with Malibu right here, and we're going to test low-rate financing, maybe deferred financing, extended service contracts, things like that that help our dealers close more sales, gain more market share, and satisfy our customers in the total ownership of their boat. How do we drive forward on our strategy, on our build, innovate, grow strategy is our MBI advantage. It's why we were able to acquire businesses and make them better. The seven items on the left are what we do really well, right? Lean manufacturing, vertical integration, innovation, and our balance sheet, the strength, the financial strength of the company. We've talked to you about that before. The three highlighted in blue are some of the new areas that we're adding, right?
Central sourcing, category management, pulling all of our volume together to really work with our suppliers for more efficiency, higher quality, more delivery on time, becoming a better manufacturer, brand management, and go-to-market capabilities. We've talked about that's really an opportunity for us. We have amazing brands, but you've got to be able to communicate those brands and then bring tools to be able to drive local market share gains and talk to your customers and support your customers and dealers in a better way. Our premium dealer network and customer experience, we have the envy of the industry in our dealer network, and we want to get closer to them, support them, so we have that dominance in those local markets to drive our brands forward.
When you look at what gives us the right to win, we're not going to go through all the words on the page, but we're pretty confident that we've shown our ability to do this, and then we're going to take those attributes that we've had and the value that we've created with our dealers and bring them forward as we go into the marketplace and expand our business. When you look at the MBI advantage, what does that mean financially? For about the last year, we've talked to you about the mid-cycle, right? If the market returns back to that 2017 to 2019 period, and we do not add more market share, we do not add more products or brands, we look at our opportunity to be about $1.3 billion. You can see 17.5% EBITDA margin, $130 million of free cash flow.
That's if we just return to those timeframes. What we want to show is when we really focus on the MBI advantage and really drive execution and excellence in our own business, there is an outperformance opportunity that we have. We can move that mid-cycle to even better results, so about $1.5 billion, 20% EBITDA margin with over $200 million of free cash flow. That takes us executing better as a company. That's what we're focused on right now. If the mid-cycle is delayed or it doesn't materialize to the level that it was in 2017 and 2019, that improvement is still there for us to go get. That's what we're focused on as a team. It will take us the near term to midterm to get there on that improvement. We're working on it, we're focused on it, and we're going to drive towards those results.
Going a little deeper, lean manufacturing, quality, we have the ability to move forward with scale in our business. This central sourcing category management, how do you control the inflow of your materials better? How do you become a higher quality, more efficient at what you do? The vertical integration won't stop. It's been a cornerstone of our business. We'll continue to have that as a cornerstone of our business. There's more opportunity, and then we have capacity in place. Over the last few years, we've put capacity in place. You'll see that when the business leaders come up, and we have the ability to scale to growth. We can meet the needs of the next upturn without having to go spend a lot of money, a lot of CapEx on driving more infrastructure in our business. We're ready for those opportunities in front of us.
The continuous improvement is really a day-to-day grind on how do you make your business better. This is where we're seeing as a company, we're dual sourcing, quality screening, right? Rationalization of suppliers and products, design to value, all the different things that a company can do that can drive better margins, more efficiency, and make manufacturing a powerhouse more than what it is today, and have the opportunity to expand our margins. That's what we're chasing, but that is a daily work that every good manufacturer should be in, and that we're adopting in our business and leveraging what's already been here, and then amping it up to the next level as we go forward. When you look at brand management and go-to-market, it's really enabling retail execution.
The MBI Acceptance is a really good tool to have for our dealers to provide tools to test things at what's going to help a person buy a boat, right? We're all open ears on that, working with our dealers, working with our financial partners. We're returning back co-op that was here prior, but we're bringing that back on as a tool to help our dealers drive retail in their local markets. How we engage with them with events, the dealers doing customer events, and getting more people in boats to test our boats and to get them on the water to enjoy our product before purchase. A lot of opportunities there. I can go to the next level of detail, but what we're going to do is turn it over and let the dealers talk to you.
My parents opened up Minnesota Inboard in 1992, and we've been a proud partner of Malibu since day one.
When Malibu Boats bought Maverick Boat Group, it gave us the opportunity to diversify our brand offerings with both Pursuit boats and Cobalt boats. This has allowed us to retain customers longer by giving our existing Cobia and Pathfinder customer base the opportunity to move up into a beautiful new Pursuit, or if their boating lifestyle changes, we can move them sideways into a great offering from Cobalt.
In 1992, we had the opportunity to become the Cobalt dealer. Cobalt has always been the benchmark and the standard of the sterndrive industry. Nobody builds a better boat than a Cobalt, and it's been a great relationship for many years. In 2007, we had the opportunity to become the Malibu dealer, followed by Axis boats. For years, Malibu has been the highest quality, most innovative, best performing, most versatile boat in the tow boat industry. We're very fortunate to have these two brands, and with these two brands, we've been able to absolutely dominate the market.
We are proud to represent Pursuit, Cobalt, and Cobia because of the quality products that they are, but also for MBI's consistent investment in super cool features and consistent investment in new models, the lifeblood of sales.
Malibu wins at retail for quite a few different reasons. Customer satisfaction, if a customer comes in with a problem, our service department can diagnose it quite easily. We've had several opportunities to bring in competing brands, but our mission has always been to focus on the brand that best fits with our company. Nearly 34 years later, I can confidently say that that brand is still Malibu. There's something special about being able to offer a really innovative, performance-driven product and be able to back it up with exceptional service and customer experience that very few can match.
We love the products, and we equally love the people. They're passionate. They're knowledgeable. I feel like they're at the forefront doing battle with us every day, every week. The more that we can continue to do that, the more we're going to win, the more our sales team and the rest of our service teams as well feel proud, and that pride comes across to our both prospects and existing repeat clients.
Malibu has always been a culture-driven company. The relationships that we have with the sales team, customer service, and production teams have always been great.
For the name, it's allowed me to hold a higher margin.
Having the best products in the industry makes all the difference. We are very grateful to Malibu and to Cobalt to be able to be the dealer for these products. We look forward to great success in the future.
I'm very excited about the future of Malibu, but I think good things are to come.
It's great to hear from our dealers. You know, where there's a change of how the management team looks at dealers and how we can partner with them and how we can drive success in the future. That's what we're bringing here with a new management team. That's why we wanted to share that video with you. They did a great job. Moving on, we'll talk about our innovations. We continue to be the brands that refresh their portfolios fast, the fastest in the market than any other competition, competitor. We are always on the forefront of trying to bring new boats to market. It helps us drive the market share. It helps us satisfy customers. It gives a reason for those long-term customers to repurchase, right? Trade in and repurchase.
We're going to continue our commitment to engineering growth, even in the down cycle. We have not gotten off the innovation throttle. We're continuing to invest in new boats, new opportunities for us to grow our business, satisfy new customers. As we came here, we're launching an innovation team. We're grabbing all the engineers across all of our business, working together and saying, what are the big challenges in marine that we can solve together as a collective team? We've kicked that off since we've joined the company here. We're pretty excited about our future and where we go in product. You can see that in some of the products that we've already brought to market to satisfy customers. The splash and stow option on Cobalt, the movable second seat in Pursuit.
When you look at our command center on Malibu, all things that drive that allegiance to our brand, that better experience for our customer, and it helps our dealers retail more boats when we're always upgrading our boats and bringing new technologies. When you do that, you make that all happen. We can accelerate the growth of this business. When we look at market growth, where should we be in new segments? Where can we be in new geographies and so forth? We'll continue to go there. Share growth, bring that innovation, new boats to market to continue to drive share, and then, of course, strategic M&A, creating value, not just grabbing any business out there. It has to fit in our strategy. It has to fit in our focus areas, and it has to be that premium brand that drives the value for our shareholders and for our dealers.
When we do that, like I said, we kind of showed you this is, hey, when the mid-cycle returns and we work to that opportunity to outperformance with our capacity in place, our premium channel, that innovation, the strong supplier partnerships that we're building, and the vertical integration that has been a cornerstone of our business, we can drive these results. We're pretty excited about where we can go. The last slide is we're going to continue our discipline. We've been disciplined in our M&A strategy. We've been disciplined in how we invest our capital, our CapEx into new products and so forth, and how we manage the costs of our teams as we're in the down cycles. We're going to continue to do that. We're going to follow our growth enablers as I've outlined here in the beginning.
Really look forward to those opportunities that fit our strategic criteria as we look forward now as a company. We have a plan to move forward, right? Build, innovate, and grow in our four focus areas in marine. That is where we're going to take this company. That's where our opportunities are. We have our disciplined financial guidelines that are in place to make sure that we're always doing this well managed and well disciplined as we go forward. Thanks for the time. I'm going to hand it over to Rachel. She'll take you through Malibu and Axis.
All right. Thank you, everybody, and good morning. I've had the privilege of working at Malibu Boats for over 13 years. I've led departments from, been part of our product development team, a part of our engine development, process improvements, and more recently with vertical integration. Currently, I'm leading the Malibu and Axis segment as our SVP. Outside of that, you know, this isn't just a profession for me. It's also a passion. It's something that's a lifestyle for myself and my family. You saw the picture of me with the dog. I mean, the dog's name is Malibu. It is a part of our family. You know, I've owned three Malibus prior to working here. I'm really excited today to walk you through the product because this is something that's near and dear to me.
To kick things off, I want to start by setting the framework and the presentation outline and some of the key takeaways and the themes that you're going to hear today. Axis and Malibu, premium brands, were recognized in the industry for their leading innovation and in supporting the robust and highly engaged dealer network. Our premium brands are in the ski and wake market, and they differentiate us. Innovation is in our DNA, and that's something that year after year we pride ourselves in, meaningful product and enhancements. Introducing new features to the market and offering consumer-driven performance, that's something that we're best in class in solutions. We continue to strengthen our dealer partnerships every single day, and we deliver on efficiencies and create value through our vertical integrations and our operational excellence.
Vertical integration, this is not something that just allows us to bring the cost down, but it allows us to be first to market, control the supply chain, and have better control over the quality and the features that we're bringing to you. These key enablers allow us to further penetrate the market and maintain our market leadership position. They serve as our guiding principles and drive the strategies and actions that enable us to deliver the results that you see. At a snapshot, Malibu and Axis account for 39% of Malibu Boats' total revenue in fiscal 2025, and then the EBITDA of roughly $60 million. We have really deep, strong relationships with our dealers, as you see, over 100 dealer locations worldwide, and those partnerships are lasting over 12 years. That's unprecedented. You won't hear that anywhere else out there. 18 models are in our portfolio.
It's a wide variety of models. We're coming out with four of those. New ones are just new for just this year, and we continue that cadence again year after year. We're continually pushing innovation at the pace. You won't find that anywhere else where people are coming out with models, that many new models every single year. We're keeping the product fresh. We're keeping that portfolio new. In addition to that, we have three facilities ranging from Tennessee to California to Australia, over 625,000 manufacturable square feet collectively across those, and we're supporting our innovation in all three of those facilities. The depth and breadth of our portfolio is unmatched. We touch every part of the consumer demand needs for these types of boats.
Throughout the presentation, you're going to hear us talk about consumer-centric focus and that we like to meet the customers where they're at in their buyer's journey. Everything from the entry-level Axis all the way up to the premium, ultra-premium Malibu M-Series. We're multi-sport, so we're covering anyone that wants to come in if they want to ski, if they want to go out and go wakeboarding, if they want to wake surfing. You probably saw some of that today, some of the foiling out on the water. Those are all the multi-sports that you can do behind the boat. We're split, as you see here, between the two different product segments. You have the Axis line, which is a great product for those entry-level buyers that are coming in and wanting to get into the product. It covers the skiing, it covers the wakeboarding, it covers surfing.
You can do all of that behind the boat for a good competitive price. On the Malibu side, 45 years of legacy there. We've been doing this. It's a name, a brand that you recognize in this industry. It's a wide variety of models that we have there. Again, covering everything from skiing, surfing, wakeboarding, the crossover industry. It's a great value that's driven through its legacy and through that name that you see. The current addressable market is estimated to be roughly $1 billion. Malibu and Axis hold the majority of the market, they're one of the market share leaders in this industry. When the market improves, we will return to mid-cycle, and we are positioned for 50% revenue growth.
The things that are going to get us here are a well-balanced mix of buyers that shape and drive our market, ranging from customers who finance their boats to those who buy outright with disposable income. This diverse buyer base provides a natural level of insulation against the market fluctuations. With the rise of the disposable income, we're also seeing a trend in first-time buyers that are more sports and activity-focused. I was one of those. They seek boats that align with their active lifestyle. This makes our product especially attractive to first-time buyers in our target financial demographic as they offer recreation tailored for their specific interests. While this is all happening, Malibu will continue to be innovating and leading in that industry. Let's set the table with the three elements that Steve laid out previously with build, innovate, and grow. First, we'll talk about building.
Vertical integration remains a key priority for us. We seek new opportunities. Our recent Sheet Metal was one of those prime examples. We're committed to being strong partnerships with our dealers and engaging directly with customers to understand what matters most to them. Next is innovation. Our NextGen LT4, our Malibu touchscreens, year after year, we're coming out with exciting products and features, all the while making sure we are focused on the customer and identifying what they need and where they want to be and meeting them where they are in their journey. Lastly is grow. We're going to continue to create new market opportunities, addressing white spaces in the market and answering customers' needs before they even realize what they are. We're going to meet them.
We've had proven success over the years with this in entering some new white spaces like the T250 and the 25 LSV, and we're going to continue to seek opportunities. Vertical integration is a part of who we are. Throughout our history, we're continually expanding our in-house capabilities, strengthening margins, enhancing quality, improving our supply chain. This is all reflected in the timeline that you see here. For us, vertical integration means managing the entire value of the supply chain and the manufacturing process from start to finish. We do just that. Vertical integration started back with towers in billet in California, and we continue to build on top of that. We're designing into, we're still today designing the towers in Tennessee and manufacturing those in California. We work closely in parallel with those two teams.
We recently started to pick up momentum in 2016 with trailers, and then shortly after that with engines and then harnesses and sheet metal. We realized it was a great opportunity not only for Malibu, but across our portfolio. You'll see soft grip flooring inside a Maverick or Cobalt. In 2022, we acquired wiring harnesses and moved that up from Alabama to Tennessee to our Tennessee headquarters, and you'll get the chance to see that later today. All of this has given greater control over the supply chain process, allowing us to be on the front end of innovation and shaping the technologies that really set us apart. Vertical integration delivers enhanced quality control. It reduces the supply chain risk, accelerated time to market, greater cost efficiencies, and faster innovation speeds. Our dealer relationships are essential to our success, and we pride ourselves with really strong relationships across the country.
As I noted earlier, 180 dealer locations worldwide, and these partnerships run deep. We have over 12 years on the average of those partnerships with our dealers. That's one of the things that really sets us apart. You'll see, as I noted here, 86% of the markets, we're number one or number two in market share in those areas. Whenever possible, we're going to pursue exclusive partnerships with our dealers to protect against dealer saturation. They continually come back to us as a partner of choice because of the robust portfolio that we offer, the high quality, and listening to the customers and delivering on what those demands are. Double-clicking into that, I wanted to unpack a recent case study we had. We had an opening in the Detroit market, and Club Royale jumped on that opportunity. This was a great opportunity for them and for us as well.
It's proven, in a matter of 12 months, we grew 8% in market share in the Detroit area, going from 20% all the way up to 28%. Rob Davis was one of the gentlemen in the video that you just watched, and he was a testament to, he talked about, the quality we have and the customer-centric focus that we have on these customers. I think that just goes to show this great partnership that we have with our dealers. As an innovative company, it's table stakes that we keep our portfolio fresh and consistently coming out with new models. You know, on your way in, you probably pass by the 22 LSV and the T250 in the parking lot. That's just two of the four new models that we came out with just this year. We do this every single year.
We're coming out with four new models for every single year for the past 10 years. That's 44 new models since 2015. No other tow boat in the market can match this pace. You won't find that with any other tow boat manufacturers out there. More importantly, we're utilizing the real-time customer data and the voice of the customer to feed our engineering team. That directly supports the needs of our customers. In a continuous feedback loop, we provide the best results, the best features on the boat. Everything from the 360 camera to e-steering is all meant to make that experience more smooth on the water and easier for the customer to operate. That comes from us listening to the customers and taking that feedback loop back to our engineering team.
Innovation runs deep in our history, from being the first to introduce the onboard computer to our recent launch of the NextGen LT4, this was the most powerful engine in the market. We pride ourselves in these relationships with our partnerships with strong partners such as GM Marine. That was one that we came out with the most powerful engine in the market, the NextGen LT4 that was just released this year. You have other features like the NextGen, like the touchscreens, the Malibu cut touchscreens, which is one of the largest screens out there. 15.8-inch display is something that we power, and we're proud of this relationship that we have with them.
When you partner with people like GM, they have a dedicated team of calibrators that are on staff that we worked with to come out with custom engine calibrations that allow us to have smooth cruise control and smooth shifting and throttle. All of that comes from our strong partnerships with these suppliers and allows us to be first to market with some of the best features that really deliver on meeting where the customer is and those needs that they have on the water. This has allowed us to accelerate our innovation, grow faster, and on the flip side, our resources create a relationship that is synergistic in nature, allowing true performance to come to life. To wrap this up, I want to leave you with the Malibu and Axis segment growth strategy.
We are well positioned to capture growth as the market recovers with the mid-cycle baseline of $460 million and a 20% adjusted EBITDA margin. In addition to that, we also see this opportunity to provide incremental growth through white space opportunities, and we're going to continue to capitalize on them. We're particularly looking at larger, higher model boats. Customer centricity is at the heart of everything that we do, not only meeting existing needs, but in creating entirely new opportunities. We're analyzing trends and identifying what customers want. We don't just listen to our customers, but we observe their behaviors through their entire boating life cycle. On top of that, we're looking at trends in the industry, everything from agriculture to textile. We're monitoring those trends and incorporating that into everything that we do. You've heard me highlight the depth of our engineering team.
It's embedded in our factory alongside our products that help us build, and our team has a deep understanding of the operations that enable us to design for manufacturing and quickly scale through our vertical integration opportunities. With those incremental opportunities, we think we can get an additional 300 basis points to take us to a 29% adjusted EBITDA margin. I'm very excited. Our team is focused right now on where our strategy is headed to build. We're going to continue to lean into innovation. It's something that we're known for, and we're going to grow and capitalize on these vertical integration opportunities. With that, I'm going to hand it over to Jason. Thank you.
Good morning, everybody. My name is Jason Turner. I've been in the marine industry, gosh, for 25 years. That's the only thing I've ever done. I worked on boats a long time before that. I've had the pleasure of being at Cobalt now for about eight years. About the time that the acquisition happened, I came on board at Cobalt in engineering as a VP of Engineering. Since about 2021, I've been leading the brand in the position that I'm in today. Similar to the other presentations, just kind of setting the table here, what are our key enablers? These four themes we'll touch on throughout the next few slides. First, our best-in-class dealer network, we've mentioned that a couple of times, that really remains a cornerstone of our success.
It not only supports the market share and leadership, it also provides a powerful and compelling advantage through its reach, its customer engagement, and the alignment with our brand. Number two, we just completed a facility expansion, which we'll tour later today. It's really meaningfully increased our capacity. This advancement enhances our operational agility and positions us to scale throughput in response to the market, both anticipated and current. Number three, innovation continues to be a defining capability for us. We have a pretty disciplined, forward-looking product development process, and it enables consistent delivery of those new models that's going to meet those ever-evolving customer needs, which we consistently see. Last, number four, the integration into the broader portfolio is really yielding those clear benefits. We're unlocking operational efficiencies and leveraging those shared resources and expanding margins, all while strengthening that long-term profitability profile for the business.
Just a snap of Cobalt as a business. Last year, we were about $215 million, and that makes up about 27% of total MBI revenue. Our segment-adjusted EBITDA is $18 million, but during the next few slides, we'll see some info and some plans on how we're going to grow those margins and really improve that number. We've got about 130 unique dealers in 177 different locations. With the average dealer relationship over a decade, I'll tell you, we just got back from our national dealer meeting, and there's at least a dozen that are 40 and 50 years. There's a big range in our dealership age. We have two facilities now. Total square footage on the roof is about 750,000 square feet. We're building 24 models, and four of those were just introduced in the last 12 months or so.
Quick product overview, I think dividing Cobalt into three main segments is probably the easiest way to look at that. The first we'll call Stern Drive. That's your traditional versatile boats. You can use those for a very adaptable day on the water, general cruising, light water sports. We've got 10 different models in those, ranging from small to large, as you see there. Second, we'll call our surf segment, which would be anything with a forward-facing drive and our surf wave generating technology, which is surf gates and ballast. With that, we're pretty proud of that segment. We create an industry-leading surf wave. Currently, we have about seven models in there, ranging from 23 to 35 feet. We hold a very commanding share leadership position in the runabout surf market. That's a clear testament to the strength of that offering.
Lastly, our outboard segment represents our largest growth opportunity, really. Today, we offer seven models, ranging from 24 to 35. That includes the Cobalt R31 outboard that was released just earlier this week that you guys saw at the dock this morning. Taking a look at where the market is going, the dynamics that are shaping our growth strategy at Cobalt, and the center total addressable market. You can see the section of the pie there of how much of that market that Cobalt has. Now, looking ahead, we see a compelling opportunity for approximately 90% mid-cycle revenue growth. That's driven really by three main initiatives. One, we're very well positioned to capture that market recovery, thanks to that additional capacity that we've just added. We plan to grow share in both outboards and stern drive surf through those product introductions and innovation.
We're going to be targeting white space opportunities, segments that we don't currently play in or have limited exposure to, but see a strong potential for growth. In doing that, there's how we're going to do that, those market drivers. Our customers often live on or near the water, so boating is really a natural lifestyle for them, a natural fit. They value versatility, whether it's leisure cruising or water sports. We see consistent repeat buyers for those. Maybe most importantly, our customers have a clear preference for premium products. That very much aligns with our brand identity. You've heard us talk about the build, innovate, grow strategy throughout today's presentation, and for good reason, right? That's the foundation for how we're going to drive that impact across the entire brand portfolio. For Cobalt in the build segment, we're expanding our footprint to support that vertical integration.
Access to a broader talent pool and future growth. On the dealer side, we're implementing more data-driven processes to enhance performance, including ongoing dashboard developments to better understand share by dealership and by territory. We're enhancing the order process and dealer marketing tools to elevate that overall customer experience. The beta version of our new boat builder website was actually rolled out last week at our dealer meeting. That'll be an industry or certainly a segment best when that rolls out, and certainly a great step forward for our brand. In the innovate section, we've got a robust pipeline of new product development with four new models that were just recently released. We're going to have continued momentum with the monsoon surf integration. We're gaining strong traction and making real impacts with those products.
Commercially, we're deepening those relationships with our technology partners like Garmin and some of our engine suppliers. That's going to allow us to stay aligned with those customer priorities and lead in innovation with some of the horsepower that those companies bring. We're also strengthening the voice of the customer through recently formed dealer councils and giving us visibility into market trends and product feedback while expanding our customer insights capabilities. In the growth segment, the outboard and stern drive surf, we're going to drive market share through new products and new innovations in those segments. White space, the boats or the areas, the segments that we don't currently play in, really capitalizing on the manufacturing footprint that we have now to bring in those new models and new segments, very interested in larger boats per se. Operational excellence, just the margin growth through those operational initiatives.
Looking at improving material costs and labor efficiencies is a big part for how we're going to take the margins to the next level. We're very proud to introduce our new state-of-the-art facility in Rome County here in East Tennessee. Outside of Florida, East Tennessee is actually probably one of the bigger boat building centers in the country. The facility here eliminates about 700 miles from all of the East Coast dealerships, which is good, but maybe more importantly, it gives us access to a skilled labor market that's approximately six times what we had in Kansas. The facility is multi-purpose built to optimize production while upholding those high manufacturing standards. With that built-in capacity for future market share growth, it positions us to meet rising demand without compromising quality.
Speaking of quality, our production ramp-up at the new facility has been carefully designed to support both flexibility and long-term scalability. That site upholds exceptionally high manufacturing standards, and it's engineered to accommodate future model additions as demand grows. You'll see that on the tour today. There's ample space for expansion. The infrastructure is already in place for that additional capacity when needed. Equally important is the team that we're building here. I mentioned that East Tennessee is one of the bigger boat building or most populated boat building regions for boat builders and marine component suppliers. That gives us access to a significantly broader talent pool than we had in the past. This enables us to attract and develop a skilled workforce, essentially to maintain quality standards and drive those operational excellence projects. Vertical integration, that strategy plays a key role in this success.
It gives us greater control over cost and quality and supply chain, all while streamlining our manufacturing processes to better respond to the market recovery and the production ramp-up when it happens. One example you'll see, Rachel touched on it, is today when we go to the tour, our wiring harness shop is moved to the Roane County facility. That really exemplifies how we're bringing those critical capabilities under one roof. A great example of the MBI advantage that Steve was speaking of at Cobalt is the integration of monsoon engines. A lot of you that know Malibu know that Malibu's been building monsoon engines for a while now, several years. We successfully brought that engine package into the Cobalt engine portfolio. That move really reflects a broader strategy for vertical integration and complements our other engine brand offerings to add some flexibility and responsiveness.
By developing those in-house capabilities, we've gained greater control over performance tuning and customization and speed to market. It also allows us to better align with customer expectations and deliver a much more tailored experience. The Monsoon engine gives us a stronger horsepower to dollar ratio, which is important in the latest boating environment. It's going to enhance the value for the customers while improving cost control and supply chain resilience. Ultimately, this initiative is reducing complexity and shortening lead times, and it's enabling us to respond quickly to market needs, all while continuing to work collaboratively with our external partners where it makes sense. We've talked about our strong dealer network a few times now, but it's worth taking a minute to underscore just how foundational they are to our success. We're consistently the partner of choice as a best-selling stern drive brand.
We've got deep penetration into the key markets and longstanding relationships with our dealers. Our dealers are almost always right on the water. That gives customers a chance to see the boats firsthand, similar to what you experience today. Imagine lining that up next to a competitor model. It's powerful in understanding the Cobalt difference by having that. It also gives them a good point of service after the sale and being in that setting, as most of our customers or a lot of our customers live on or near the water. What sets us apart is the discipline behind our dealer strategy. We take a highly data-driven approach to identifying untapped markets and apply rigorous criteria when selecting those expansion partners. We prioritize high-performing dealers, of course, who deliver exceptional service and align with the premium service experience that our customers really expect from the Cobalt brand.
Whenever possible, we'll pursue exclusivity relationships with those dealers, and obviously that avoids oversaturation and entrenched competition, really ensuring that those dealers have the best support and opportunity to win. We've established a dealer advisory council to amplify that voice of the customer and voice of the dealer, and that's going to ensure that we remain tightly aligned with those market needs. This collaboration really strengthens our role as a true strategic partner to our dealers, many of whom see us as the top of their revenue ladder. These aspects make Cobalt appealing, right, when partnering with new dealers, especially in that outboard segment, which we identified as growth and will reinforce that market share in those East Coast regions where most of the outboards would be sold. Product development.
If we look at the innovate pillar of our build, innovate, grow strategy, we recently launched those four new models that you see here, one of those being at the dock earlier this morning. Those all address different areas of the market, all the boats that were recently launched. We've introduced new features that allow for greater convenience and improved comfort, greater enjoyment on the water. We invest millions in R&D spending. We've got numerous projects in the IP pipeline right now, and we've launched 28 new models since MBI acquired Cobalt in 2017. That's a greater rate than any of our competitors. All this to say, we're deeply committed to innovation. We continually invest in new technologies, design advancements, performance enhancements, and all that keeps us ahead of the evolving customer expectations, industry trends, and that's going to really ensure that Cobalt stays on top. The Monsoon Surf System.
This is another good case for innovation, our surf system. The challenge we faced with this was having third-party surf control technology that put limitations on everything that we thought we could do or wanted to do for wave shaping features because the system itself didn't have enough, call it, digital inputs to control extra surface shaping technology. To address that, our team engineered a proprietary control system that allowed for the installation of additional, call it, dynamic tabs on the bottom of the boat that really amplify the effect of the surf gates, which Malibu brought over with the acquisition. That has been pretty profound in wave shaping technology and is really taking the waves that we have that were already industry-leading really to the next level.
It's not only did this innovation allow for a better performance, it's much more affordable with the Monsoon package and addressed those needs in the surf market for continuously improving the surf wave. Shifting to the growth pillar, looking ahead, we're very well positioned to capitalize on the market recovery. The expanded output capacity is already in place across both facilities, and when the time is right, we are ready to go and return to those historical margins and revenues, which is just the first tab here. This is just when the market recovers. In addition to when that market returns, we intend to gain traction in that outboard segment. We've built strong capabilities and have a really killer lineup of exciting new products on the horizon. Innovations we believe will reignite share growth in that space, especially along the East Coast area.
We continue to lead in the market for stern drive surf performance. That's driven by our ongoing enhancements and improvements, and we're committed to investing in that space to really maintain our strength in an already dominant share position. We're focused on expanding those white space models, those segments that we don't currently play, but we see a lot of opportunity for growth. Underpinning all that is the focus on operational excellence, executing growth initiatives through improved material cost management and labor efficiencies, and just generally overall smart operational strategies that are going to support that long-term profitability and share growth. I'll wrap this up by noting that with our growth strategies clearly defined and momentum literally building in every single category, we're very excited about the future and where it goes for us. With that, I think we are going to take a break, right, Chris?
Break returning around 11:10 A.M. Just a quick reminder to use the QR codes at your video. All right. Good morning. We'll go ahead and get started. My name is Christopher Gratz. I'm the Saltwater Vice President. A little bit about myself, I like to joke that my career pursuit started when I was in third grade. Family got a well-loved Pursuit when I was in third grade, and I grew up boating on that. On a more serious note, I started with the brand 20 years ago. I've been in the saltwater segment my entire professional career, and I'm certainly fortunate because it really aligns with my passions. As we look at saltwater and the key enablers that we see as unlocking growth, you know they're here in front of us. The first and foremost is the diversity of the product line. We'll touch on that in a minute.
We really have a very broad scope, especially when you look at our peers in the industry on the amount of the diversity in our portfolio and the different markets we serve. Second, we've got a very strong acquisition history. When Pursuit was onboarded, the investment and the strategy and the ability to unlock growth was very strong for the Pursuit brand. We continue to work on that and that runway and trajectory with the MPG brand under the Saltwater Group. Within Saltwater, we certainly have a house of iconic brands, very highly sought after in the dealer network. They seek doing business with us, again, because of the brand recognition, the brand history, the quality we provide, and the margins and the contributions to their business and how it supports them. Within that, though, we certainly have opportunity to optimize within our dealer network. We're focused on that.
We also have the opportunity to expand our geographic footprint. The last component you've heard is a through line throughout the day. Our facility investments have been strong. We have capacity in place. We're well poised for that mid-cycle growth and the additional growth we've been talking about throughout the morning. The segment snapshot overall, again, saltwater is a very important component of MBI revenue overall at about 35%, $280 million. EBITDA in the $27 million range. Our geographic footprint on dealer locations, we've got about 150 locations, so a very strong footprint there, and very deep-rooted dealer relationships that are over a decade, at that 12-plus range on average. I already touched on the iconic brands. Our capacity is very impressive at just under a million square feet amongst the plants within saltwater. We've got a portfolio of 44 models within the different brands.
We introduced seven new models this past model year, one of those being the S328, which you can see pictured there. A lot of the brands, of the 44 models, we certainly have a lot of award-winning models like this 328 that received the Boating Industry Top Products Award this past year. That scope and breadth of the portfolio is significant. This helps to highlight it. Hopefully, some of you guys got to see a small piece of that at the water this morning. The portfolio ranges from 16 feet all the way up to 46 feet. That's a pretty broad range. If you look at the markets that that serves, it's certainly notable as well. From a retail price standpoint, you know, we enter the market in that $45,000 range, but we extend all the way up into the $1.4 million range as starting price with our products.
If we look at Pursuit first, the differentiators there are certainly a luxury product. The quality expectation is very high. The yacht quality appointments are certainly notable. Ultimately, that cross-functionality is a pillar and strength within the brand. Within Pursuit, we participate in three main categories within saltwater: the center console, which we call the sport category, the offshore cabin boat category, as well as the dual console category. We shift over to Cobia, really focused on quality and functionality, but at a more reasonable level for the consumer base. We participate with Cobia in both the dual console segment and that center console segment. Both the Cobia and Pursuit products are considered offshore products. When we shift to Pathfinder, that's really termed nearshore, so lower freeboard, lower gunnels, easy boats to operate, easy boats to get out, enjoy the water, fish. They are certainly at their DNA.
They're good fishing vessels, but they also have a lot of blended function, which is in line with consumer expectations for that multifunction and use and enjoyment on the water. As we shift to Hewes and Maverick, those are our skiff products. Hewes and Maverick are designed for shallow water inshore use, with Maverick being the most technical poling skiff where you actually go in the backcountry and you pole and you fish off of that product. Ultimately, the through line throughout the product is exceptional quality, diverse features, innovation, and ultimately driving to deliver ultimate value to our consumer base. Taking a look at the overall total addressable market within saltwater, it's certainly notable here at $4 billion. You can see a representation of our share in that fiberglass outboard segment.
It shouldn't be a surprise, probably most in this room, within fiberglass outboards, certainly a lot of builders and models fall within that overall envelope. Grounding the discussion back to the mid-cycle we've been talking about this morning, if we baseline that off of fiscal year 2025, we see about 40% growth within the saltwater division on that mid-cycle recovery. We're positioned very well to capture that volume with the capacity we have in place throughout our facilities. What we see unlocking that mid-cycle growth and turning that dial in the market are listed as our key drivers there. Certainly, the stability and overall economic macros are big. That certainly ties into shift in interest rate pressure. New product, new technology that we've talked about, those unlock that growth as well and certainly a key focus.
The last piece is a long-term and sustained shift into outboard product, which has been a long trend and seems to continue, so taking advantage of that trend within our portfolio. All that combined, certainly opportunity to grow within our market-leading position in this space. The build, innovate, and grow components and how they relate to saltwater. Under the build pillar, vertical integration is also key within our business. We've recently launched the tooling facilities within the saltwater on our saltwater campus. Product development is the lifeblood of all of what we do within all the brands, so that's fundamentally important. In that facility, we're building the molds that drive that new product development cycle, and it's really unlocked a lot of in-house capability for us. We're not reliant on third-party vendors for that process, which is key.
At this time, we've actually extended that, and we're building tooling across all brands within Malibu Boats, Inc. We're building on customer experience programs. Driving that unmatched customer experience in the industry is important to us. We've got a lot of customer programs that have targeted delivering that experience. We're continuing to grow and build on what those programs are and how we engage with our customers. From a dealer engagement standpoint, we're building on a pretty proven playbook within part of our saltwater group, and we're extending that across the saltwater divisions to drive that dealer engagement, that dealer feedback, and really feed that into how we build and innovate within the portfolio. On the innovation front, our product development pace is, again, certainly notable in the industry. We've released seven new models within saltwater in model year 2025.
If we shift that focus over to MPG, we're working to evolve and create a next-gen portfolio within those brands. I'll talk about that a little bit more later. We're also very focused on voice of customer, leveraging our longstanding processes, implementing new processes across the brands to ensure we hit the markets where the customers are at and where their expectations are at. The growth pillar, we see growth within our share through dealer network expansion and optimization. Those are really key. We also see opportunities in white space. That could look like white space internal to our existing product lanes or in adjacent spaces to our portfolio. The last piece is really leveraging our operational excellence initiatives through efficiency, through supply chain management, which Steve touched on earlier, and continuing to improve the business and our operations.
Taking a look at an MBI advantage point here, as MBI acquired Pursuit, you can see in that picture that in the foreground, plant one, that was the extent of our footprint upon acquisition. We were capacity constrained at that point. If we then look over to the bar chart, you can see represented in gray there, that was actually contract built. We certainly had margin pressure on that. We weren't able to build to the marketplace. Very quickly upon acquisition, we purchased 80 acres adjacent to our property. We set a pretty comprehensive strategic plan to build out 200,000 square feet on that space to introduce three new models and invest in the portfolio to create good ROI on that investment. You can see we were able to capture that volume and capture that growth through the subsequent years.
All that, again, lines up to having that capacity in place for that mid-cycle to return. Taking a look at the operating efficiencies across saltwater, if you think about building a 16-foot boat and a 46-foot boat, certainly very different scale. We are very strategic in how we lay out our production. We have eight production lines throughout all of saltwater. We're very flexible with how we do that. It also creates lots of operational efficiencies within that. One thing that allows us to do is really leverage and align to markets. As the market moves and consumer demand and preferences move, we can align to that and leverage ASP opportunities and growth opportunities within saltwater because of our flexibility there.
How we've laid out that new facility I referenced earlier was really focused around large boats and growing the portfolio within the Pursuit brand, and also enabled us to be one of the industry leaders in our cycle time to build large boats and be able to produce demand as that emerging market on larger outboards has grown. I touched on vertical integration relative to tooling earlier, but it extends deeper within our brands as well. We also build all of our interior cabinetry and our cabin boats, wood and veneered surfaces, floors. All that furniture is built in-house at our facilities. We also build all of our exterior furniture, the poly, the cabinetry, the things that are on top sides of the boats. That's all built within our walls as well. We're vertically integrating electrical harnesses, a key component to the construction.
We also have canvas and upholstery capabilities in-house. All that's underpinned by a very passionate team. We're actually the largest manufacturing employer within the county, which creates a very, very large talent pool across our five plants. We have the privilege and advantage that all five plants are actually in very close proximity. They're all within a mile and a half of each other at our facilities in Fort Pierce, Florida. The capacity is in place. The operational pieces are in place to really capture that mid-cycle demand that we're outlining here this morning. Product development, the lifeblood of the business. You can see a handful of new model introductions there and a pretty broad range in where they target the market, all the way from a 245cc all the way up to a 388 sport on the Pursuit side.
The 305, hopefully, some of you guys got to get out and see trial her earlier this morning. One thing to highlight with how we think about new product development is we invest really from bow to stern. We invest kind of on full-scale projects. What that enables us to do with that level of investment is really take what we learn about the customer, what we learn about the markets, and really embed that as we work from keel all the way to the top sides of the boats and make sure that we're addressing those consumer needs. Focusing on premium features has been key across saltwater. Expectations are very high there. Being very strategic with how we set up those options, we're able to unlock growth potential there with those options as we work on the development projects.
All in all, this comprehensive approach really allows us to target products and align with that customer base, which is critical. If you look at our new product development pace since respective acquisitions, which for Pursuit was in 2018 and for MPG was in 2020, we've released 28 new models to the market in that time frame. We continue to have a very robust new product development pipeline as well. If we take a look at MPG and the integration of MPG, there was certainly some runway for the portfolio upon acquisition. That first focus was within the Pathfinder brand and really working on the products and aligning with current consumer preferences and that multifunction, and put a lot of investment in that area and certainly saw some good returns there.
We've seen market share growth within Pathfinder, and we've dropped the average age of that portfolio by 30% since acquisition. Focus started to shift in the last 12 to 18 months, really more pointedly at Cobia. Again, same thing, making sure that we've got that multifunction, making sure we've got those fishing characteristics, bringing those technologies up to date within that product line. We've dropped the average age of that portfolio by 50%. The last piece, again, is leveraging. I talked about the proximity of our facilities and the capabilities we have across all the lines. We're able to leverage those operational facilities across the teams, adopt best practices, adopt best processes, and really help drive efficiencies across the saltwater brands and the efficiencies that come with those. The dealer network I already touched on as well, that's certainly an opportunity as we work on that dealer network.
All these are coming together on the operational efficiency front. We've seen actually a 30% reduction in our on-time delivery, which has been fantastic. That's in the recent history in the second half of 2025. Leveraging this MBI advantage, evolving the portfolio, driving that innovation certainly are all going to continue to help propel MPG as we look forward. Shifting to the Pursuit product development strategy, consumer insights have been key within this brand for a long time. I've got a small picture there of one of our dealer council meetings. You can kind of see some snippets of renderings. Behind that, there's actually a full-scale mockup. That vessel was significant in length. It doesn't matter if it's a 20-foot or a 44-foot. We build the entire thing out of plywood and cardboard. We bring focus groups in. We bring our dealer councils in.
We use that as a platform for feedback. Really understanding the consumer and targeting the consumer is key. Also, doing deep dives into the market and understanding white space. The white space might come in different forms. Like I said, it could come internal to the portfolio. It could come in adjacent areas to the portfolio. Some white space, you know, you've got to make other portfolio moves to create and unlock those markets. That's a key component to the product development strategy of Pursuit. All that coming together with a very strong portfolio in those three categories that I mentioned earlier between sports, dual consoles, and offshores. Within the competitive set, we have an industry-leading average portfolio age for that Pursuit product.
If we think about the growth strategy to get to that mid-cycle recovery, again, with that capacity in place to meet the demand, $400 million revenue over the 2025 targets, we've got a 16% EBITDA at that baseline. The team is laser-focused on the outperformance initiatives and that strategy that combines that share growth, those white space initiatives, and our operational excellence initiatives that would drive that to an incremental 300 basis point increase on that EBITDA and a $520 million revenue point. Amongst saltwater, certainly excited. We've got a bright outlook in front of us. We're hard at work driving these overperformance initiatives and executing on what we discussed this morning. With that, I will turn it over to Bruce Beckman, our CFO.
Hello again. I'm Bruce Beckman, CFO of Malibu. I've been at Malibu for nearly two years. I've been working in public manufacturing companies for over 30 years, companies that are known for their innovation, their quality people, premium brands, operational excellence, and value creation. I joined Malibu because I see all of these capabilities and core strengths. I see the potential that we have for growth going forward. I'm excited to share that with you today. I'm excited to discuss the power of our business model to demonstrate how we are poised for significant growth and value creation. We have several key growth enablers that I'll unpack for you today. The first one is the return of the market to mid-cycle levels represents a significant growth opportunity from where we stand today. Second, we have numerous opportunities to outperform on both market share and margin.
Three, our past investments in capacity and our dynamic business model will enable increasing levels of free cash flow generation. Our disciplined approach to capital allocation, combined with our proven M&A track record, provide us with additional growth and value creation opportunities that go beyond the numbers that we'll be discussing today. It's no secret to any of you that the last few years have been a challenging period with the marine industry in the fifth year of a down cycle. There are many macroeconomic factors contributing to this down cycle, principal among them high interest rates. However, we are encouraged that participation and interest in boating remains high. We are also encouraged by the recent Fed rate cut. In our 40 years in the industry, we've seen this movie before. We are confident that the industry will turn.
When we think about a more normalized environment, we think about the average of the pre-COVID 2017 to 2019 period. During that period of time, the market was roughly 196,000 units, about 40% higher from where we stand today. We definitely have a strong opportunity for growth as the company or as the industry returns to mid-cycle. There are several phases to every market cycle. With the industry in decline over the last couple of years, we've been in the phase where our wholesale shipments have needed to be below retail demand in order to maintain dealer health. We were among the first in the industry to respond in fiscal 2024 and have remained clearly focused on dealer health since that time. The blue checkbox in the center of the slide really highlights where we find ourselves today.
I think I'll take this moment to reaffirm the guidance that we gave a month ago for fiscal year 2026. We are expecting the markets in which we compete to be down mid to high single digits and for our revenue to be flat to down mid-single digits and our adjusted EBITDA to be between 8% and 9%. The next phase of the market is when the market flattens, when the retail market flattens out. At this point, we no longer need to continue to reduce channel inventories and are able to return the company to growth simply by allowing our wholesale volumes to track with retail. The last and the most exciting phase, of course, is when the market returns to growth.
At this point, our wholesale volumes will benefit from not only the increased retail activity but also restocking of the channel, essentially the reverse of what we've been experiencing for the last couple of years. We are excited by the growth potential of our company. This illustrative revenue bridge brings that to life. First, a return of the market to mid-cycle levels at our current market share will enable us to grow our revenue to $1.3 billion. That represents 60% growth over where we are today. At mid-cycle, these initiatives provide a second. Our division leaders described for you moments ago how many initiatives they have in place to drive serve market expansion and market share gains. At mid-cycle, these initiatives provide a framework for outperformance, enabling our revenue to achieve $1.5 billion, over 80% growth from our current levels.
Even more compelling, these revenue figures do not include any revenue from future capital allocation. I'll talk about that more in a minute. These are really kind of the business that we have today. Very compelling, very compelling growth opportunity. Importantly, we already have the capacity in place to support this growth with upside remaining. Over the last five years, we've done the hard work of expanding our production facilities, first in Pursuit, then in the Maverick Boat Group, and most recently in Cobalt. These capacity expansions have put us in position to support a mid-cycle market as well as the outperformance framework that the division leaders shared with you, with additional capacity remaining to support an even stronger market. One of the lessons from COVID was you can't always predict the next surge of market demand. You can't fight for market share when you're out of capacity.
We really have made that a focus and are excited to have that capacity in place to support. With these capacity expansions behind us, it'll be a key enabler of increasing our free cash flow conversion rate. I'll discuss that a little bit more in a second as well. In addition to available capacity, we have a very flexible business model, you know, ready to support growth. Our cost structure is highly variable, 80%- 90% variable, with the vast majority of that being in materials and direct labor. Our factories are also capital efficient, and our manufacturing processes do not rely on expensive robots or automation equipment. This flexibility allows us to scale up to support growth and scale down to preserve profitability and cash in a downturn.
Operational efficiency on the right-hand side of the page has long been a strength of our company and the reason for our industry-leading margins. We intend to build on that strength by adding centralized sourcing and supply chain management as a new vector of efficiency while maintaining our focus on vertical integration and continuous improvement. Simply put, our business is built to achieve profitable growth. Revenue and operational efficiency is a powerful combination, as this illustrative margin bridge demonstrates. A return of the market to mid-cycle levels will enable our business model to generate adjusted EBITDA margins of 17.5% by simply leveraging our current cost structure. Including the outperformance framework, divisional efficiency, and market share initiatives shared earlier, the margin opportunity grows by 250 basis points. In combination, a return to mid-cycle market and our outperformance framework will enable our business model to achieve adjusted EBITDA levels of 20%.
Before I leave this slide, it's important for you to know that we are not waiting for the mid-cycle market to begin capitalizing on the 250 basis points of outperformance opportunities. Turning our attention to cash flow, and on this slide specifically, CapEx. Since fiscal year 2020, we have invested roughly $100 million in facility expansions, as indicated by the dark blue boxes on these bars. With the facility expansions behind us and the capacity in place, we can support our ongoing growth initiatives and innovation with a much lower level of CapEx. In the near term, we are expecting CapEx to be between $30 million- $35 million per year. Longer term, we'd expect CapEx to sustain at roughly 3% of sales per year. Our history of strong and consistent free cash flow is a testament to our resilient and capital-efficient business model.
Even in the challenging markets of the last couple of years, we've continued to generate healthy levels of free cash flow thanks to our highly variable cost structure and working capital efficiency. While the past is impressive, the future is even more exciting. The combination of volume leverage, margin expansion, and moderating CapEx is a winning formula for increasing free cash flow conversion. In combination, a return to a mid-cycle market and our division all-performance initiatives will enable our business model to support $200 million of free cash flow at a 65% free cash flow conversion rate. Let me say that again, $200 million of free cash flow and a 65% free cash flow conversion rate. We have weathered the recent market challenges well and have a very strong financial foundation. We are net cash positive with over $300 million of available liquidity.
As you can tell from the previous page, we are poised to generate significant amounts of cash. We have a well-established and very disciplined approach to capital allocation. First, we will continue to prioritize organic investment. As we've been discussing today, we have many exciting initiatives to invest in. Second, we will continue to look for value-creating acquisition opportunities. I'll discuss that more in a minute. Third, when we have debt, we will prioritize paying that debt down as quickly as possible. Lastly, we will not allow cash to build up on our balance sheet, as we have done with the $65 million of stock buybacks that we've executed over the last two fiscal years. Digging a little deeper into M&A, Malibu Boats, Inc. has a proven track record of successful M&A.
As you can see on the right-hand side of the page, the premium brands that we've acquired over the last 10 years are among the most respected names in the industry. We have generated strong returns since making those acquisitions, with EBITDA far exceeding the purchase price of those businesses. These acquisitions have made us a much stronger company with more scale advantages and growth opportunities. Many of the MBI advantages that Steve discussed earlier, particularly those in procurement and dealer network, are directly related to the enhanced scale provided by these acquisitions. As you heard earlier from Jason and Chris, their businesses have benefited from becoming part of the MBI company. We are stronger together, truly a win-win. We have a high bar for M&A. While the M&A market has been slow recently, we are actively looking for value-creating opportunities and have the dry powder available to execute.
We are looking for M&A opportunities with strong growth potential, companies that give us the opportunity to expand into new markets and enhance our MBI advantage. We are looking for companies that are a good strategic fit and specifically premium brands with strong synergy potential. Most importantly, we have clear financial guidelines for M&A. While we are willing to take on additional leverage up to 2.5 x for the right acquisition, we will immediately prioritize debt paydown. We are highly focused on value creation and ensuring returns above the cost of capital. To repeat, we have a high bar for M&A. The illustrative framework slide here summarizes the opportunities well. Since we've already discussed everything on this page, I won't take you through it again. I will take a moment to highlight a couple of the key numbers on this page.
First of all, a $1.5 billion revenue opportunity, a 20% adjusted EBITDA opportunity, and $200 million free cash flow opportunity. We are poised to create significant returns for our shareholders and are very excited about the future of our company. I want to thank everyone for joining us today. Now I'd like to turn it back over to Steve for some closing remarks.
Thanks, Bruce. I get asked all the time, that's not my kids. I don't have a dog and so forth. The kids, we were out surfing Sunday night with the whole family. It's always fun to enjoy your product. Let me close it up one slide. We have a simple yet powerful strategy, right? Build, innovate, and grow. It's going to drive our company into the future. When you think about reasons to believe, you just look over to the right. Having that market leader in our brands with the capacity to really leverage the mid-cycle and beyond, having that constant pace of innovation, driving that, listening to the customers, driving that voice of customer into our products, doing the right things to continue to grow there, white space opportunities across all our brands we're excited about.
We're going to continue to control our controls with operational excellence, vertical integration, really look to that. As Bruce just said, a high bar for acquisitions to make sure we add a premium brand when it's time, when it's right for our business. We'll add those premium brands and then continue that strong cash flow and balance sheet. We're excited about the future in our company. We have a great team. I want to thank that team, all the folks, the boat drivers, the team, Teresa, Kathy, Christine, who put this all in, everyone who helped them. They did a phenomenal job this morning. We're not done yet. We still have a Q&A to go, then lunch, and then a tour, right? Great job by the team. Thank you for that. We're going to set up here for about five minutes and get the chairs up.
Then we'll open up the Q&A session. Thanks.
All right. Thank you. We'll go ahead and get started with the Q&A portion. We'll have about 20- 30 minutes on Q&A. I think lunch will be served at 12:15 P.M., so we can probably break early for that. As a reminder, please leverage the QR code. For those attending virtually as well, you can submit questions. We'll be passing mics around. If you're unable to access the QR code, we'll take questions live as well. Try to limit the questions to two and keep the mic close to your mouth so that the folks online can hear it as well. With that, let's go ahead and get kickstarted.
Shine?
The first question comes from Gerrick Johnson at Seaport. We want to pass the mic to Garrick.
My actual first question is, can you talk about the logo? What does that mean? The other question I wanted to ask you was about central sourcing. I guess that means across all of your categories. Would that require more standardization in manufacturing, re-engineering? What are the financial opportunities from that common source?
I'll take that one. First off, the logo is Water Alchemy for Water, so there's actually a connection to answer that question. Central sourcing, we've actually centralized the team there. We've actually installed category managers in, so the expertise in a vertical, right? It could be resins and plastics and so forth, electronics and so on. We're building that internally in the team and we're continuing to build that out. That just got underway here in January, and we're pooling all of the volume of all of our businesses together. We'll continue to do that. As far as what will that return to us, we're working through that right now and looking for those opportunities as we kind of gain that scale and that team comes together. More to come on that when we look at how that will help our margins, but it will definitely help our margins.
We're just getting our hands around the size. Think about four different companies coming together and trying to centralize that. We're on the path the right way of setting the foundation, and then we'll be able to leverage that as we move to the future.
Hey, Scott Stringer from Wolfe Research. There's a lot of talk on the white space across every category. Wondering what is the lowest hanging fruit there or maybe the nearest term tailwind to that specifically?
Sure. The guys in each division and Rachel, you want to talk about some areas that you're thinking about in terms of white space, some segments maybe.
Yeah. I'll start with saying in the Malibu segment, point back to some of the things that we had up on the slide there, some of the successes we've had in our recent white space opportunities, the 25 LSV and the Axis T250. They were both some of the largest and one of the first into those segments. We saw great success with that. In those categories, we were seeing some of the highest market share for those categories in the 25-foot premium and then the 25-foot Axis entry category. We're continuing to look for opportunities like that, not just in the new boats, but also in new products and features as well. We're going to lean into those categories, into those successes we've had, and continue to look for identified trends like that as we go forward.
Yeah. For Cobalt, some similarities there. We're still kind of exploring what those segments are, but, you know, interested in larger boats and also looking at some of the different lifestyle segments that are going on right now to see if our brand could support a different style boat in a different segment.
In saltwater, if you think about the lowest hanging fruit, it's kind of those opportunities that lie kind of within your existing product categories or immediately adjacent. There are certainly opportunities in both of those areas across saltwater. Those are the ones that we're focused on first and foremost.
Next question is from Tim Abbott at Twin Lions. If you want to raise your hand, we can pass you the mic. Yeah, there you go.
Yeah, I was just wondering if you guys could share any more details on the MBI Acceptance initiative and then specifically for, I think you mentioned, low interest or deferred interest type promotions that you might be offering through that. Curious kind of how the economics work there and how the cost of those promotions is shared with the financing partner.
Sure. We can go deeper into that section. It is, like I said, a strategic alliance between Wells Fargo that we will be helping on the wholesale side and Aqua Finance on the retail side, working with our dealer partners on helping them be more efficient and so forth. The tools that we can offer, and we're testing right now, we're going to go out and test with Malibu only, then we'll propagate across our other brands. There are going to be things like no payment for six months, 4.99% financing, see how that works. Think about financing for those who are close to it, right? There are rates that drive floor traffic. There are closing rates. They are two different things. You can offer 0% financing. Not many people get closed on that rate, but it does drive traffic to your store.
We have marketing opportunities with some of the financial products. We have closing opportunities with some of the financial products. We have extended service contracts that we can play, extended warranties, and so on. We're going to test all those, Tim, and see where we can kind of find where the consumers are at and so forth. That is a new capability opportunity that we haven't had before that we can help with our dealers. We'll listen to our dealers and get that feedback. It's an array of opportunities that you see other companies offer that we can start offering now.
We have surveyed some of our customers about their interest in getting financing from the manufacturer. Would that be something that they would value? We've gotten pretty positive survey results and things like that. It becomes another tool for the dealers to leverage to drive traffic and closing.
Just so you're aware, as you see it in the marketplace, it will be branded by the brand. It will be Cobalt Acceptance or Cobalt Financing and so on, Malibu and so on. You won't see MBI Acceptance out in the marketplace. That was only for us to talk about it here today. We want to make sure it's branded as we go to market.
Perfect. Next question is from Anna at B. Riley. You want to raise your hand?
Hey, can you speak to the difference in upside opportunity to get to those mid-cycle revenue growth targets by segment? Is it a function of submarket segment growth opportunity as you get to a more mid-cycle growth rate? Is it speaking to kind of the various elements that have affected those segments through macro and maybe some are less macro sensitive and thus have less upside? Just anything there.
Yeah, it's really a function of two things. It was what was the average market size in those years? Then what is our current market share? You do see some differences between the businesses. First of all, you know, saltwater didn't go up as much during COVID, and it hasn't declined as much afterwards. That's a difference. Also, like in our Cobalt business, since we acquired Cobalt, it was kind of at the beginning of that 2017 to 2019 period. We've increased our market share by over 500% since then. Higher market share of a market that returns to those levels also yields more opportunity. That's why you see some of those differences across businesses.
You know, I see you struggling with the QR code. Did you have a question? We'll just get you the mic.
Appreciate it. Jill Altobello, Raymond James. Steve, you mentioned expanding the ecosystem to parts and accessories and technology and services earlier. I guess, one, if we dream the dream, how big could that part of the ecosystem be for you as a potential revenue? Two, does that require incremental investment somewhere on the P&L?
Sure. The market, like we said, really doubles for our total available market. When we look at opportunities for us, we can partner. We've talked to a lot of partners. There's a lot of opportunities for us to bring products to market through partnerships, through strategic alliances, our own development. We are looking at all opportunities to how to enter the market. We're going to start with what we know right now, vertical integration. We already have a smaller manufacturer that actually signed with us, and we're testing out how to be a good partner and supplier to them as well as we go. Those are all good. As we kind of look at opportunities to invest, we will be investing in certain areas to add more products to our portfolio.
Again, as Bruce Beckman pointed out, it's a pretty high bar as we kind of build that business, and we want to make sure we're doing the right things. We can control the quality, be a good supplier, as well as propagate that across our products as well so we create that leverage and that scale advantage for the people who are going to buy from us. Think about when you have an embedded base like we do and we're starting to offer those parts, you're already starting with getting the scale of Malibu Boats, Inc. in those components.
Thanks.
We're pretty excited about that.
If anyone else has an issue with the QR code, just feel free to raise your hand and we'll get the mic over to you in hand. There you go, Craig.
Going old school.
Yeah, we'll do it the old school way.
Hi, it's Craig from Baird. Thank you for hosting this event. Maybe address the acquisition criteria that you have, Bruce. It never seems like the right time. You might be at the bottom of a cycle and people don't want to sell, or you're at the top of a cycle and you might not want to buy. When is the right time to buy a brand? What are the criteria? Are there any specific boat categories that are particularly appealing?
You can want to buy companies all day long, but you have to have somebody willing to sell a company to you. It really, it's hard to dictate that. You can't really dictate that to the seller. You have to find that happy medium of when it makes sense for you and it makes sense for them. When we think about it, we think about what is the value creation opportunity. Where do we have synergy opportunities. We've talked a lot about centralized sourcing and some of those initiatives. Those are initiatives that we have that opportunity because we've done some of these acquisitions. We have more scale, and that gives us the opportunity to create more synergy on the next deal. Similarly, we have a dealer network that's the envy of the industry. There are companies that we could potentially use that dealer network to drive significant revenue synergies.
It really is what is the value creation opportunity. What is the value of the brand that we might be talking about, and where can we add value to it.
I think for folks that are learning our business, we've added a Corporate Development department. We're out talking to people on a consistent basis that makes sense. We're actively working, meeting new people in the current businesses, creating relationships, and so forth.
We have a question from the online audience. Can you speak more about your vertical integration strategy and sheet metal capabilities within Malibu Boats?
Sure. Yeah, we've had quite a bit of success in the vertical integration, you know, as I noted, all the way going all the way back to towers and then in soft grips and engines. Most recently was in the sheet metal capability. You know, that's a facility or a site that we used, some of our facility, and we're able to use the components that are coming out of there in everything from our trailers, our engines, and even into our boats. This allowed us to control supply chain, reduce any risk there, also control the cost, and quicker design evolution cycles so that we can get to market faster with some of these features. It has provided quite a bit of benefit, not only from the supply chain, but from the design and the quality side of it as well.
Next question is from, go ahead.
Thanks. Eric Wold, Texas Capital. Bruce, you made the comment on the margin slide that the 250 basis points, you didn't have to wait to get back to mid-cycle to realize that. Maybe dive a little bit more into that, your ability to do that, how quickly you could, and what components of that can be realized without getting back to volume.
Sure. We talked about operational excellence and some of our initiatives around margin expansion. That was roughly half of that 250 basis point opportunity. We are actively going after that now. Certainly, at a mid-cycle market, you probably get a little lift there. That is really on the market share. The market share component of that was based on a mid-cycle market. If the market is better, maybe that bar is a little bit bigger. If the market is a little bit lower, maybe it's a little bit lower. It's roughly half and half.
Next question is from Noah at KeyBanc Capital Markets in the back.
Hi, thanks for taking my question. Maybe to kind of follow on there, in some ways, this is like maybe the million-dollar question, but how do you think about what needs to happen for the industry to get back towards 2017 to 2019 volume levels? Within that, what gives you, I guess, comfortability that that's the right level to think about in terms of mid-cycle? Thanks.
Yeah, I mean, there's a number of, it's not one factor that put the industry into a five-year down cycle. It probably won't be one factor that gets it out. If there's one to highlight, I would say interest rates is probably the one to highlight. We track what % of our boat sales are made and primarily purchased with cash versus primarily financed. We've seen that pendulum swing towards cash. We know in our own business that we've seen the payment buyers step back. Consumer rates need to fall more than they have. They're not where they were at the peak, but they need to fall more, we think, to bring that payment buyer back. We're excited about this MBI Acceptance.
It's a tool for us to give to our dealers to reach out to their payment-sensitive buyers and give them something to get excited about and hopefully a new tool to close a sale with them and something that's not available to all of our competitors. The industry is not within our control. The last time we had an industry decline of this length in time was right after the Great Recession. The market went on basically a 10-year growth run after that. I don't know, you guys were, some of you were probably in this industry then. I certainly wasn't. Would people have predicted the industry is about to go on a 10-year run back in 2012? So many factors, we'll see. We're prepared to support it. Frankly, we don't need it to actually grow to actually return our company to growth. We just need it to stop declining.
Next question is from Baird. You want to raise your hand?
Hey there. I was wondering if you could talk about cross-pollination of dealers. I mean, in the videos, they talked about improvements in their business when they were a Cobalt dealer and then became a Malibu dealer, or some of the instances of getting Maverick Boat Group and Pursuit together. Is there anything like qualitatively or quantitatively you can share about the improvements that either Malibu sees from a margin or growth perspective, or the dealer themselves when they cross-pollinate different brands amongst their dealership?
I'll start. They can add to it. When we first interact with, from an MBI perspective, what are the tools that we're actually using in all the brands? When each brand was individual, they didn't have the breadth of tools. They didn't have the support that's now.
All of our brands are getting returned to co-op, right? That's that sharing cost sharing model, right? Where you get the dealer's marketing in the local market. When we look at CSIs, how do you handle, you know, service CSI, sales CSI, training, all the things that we can do. MBI brings a level of tools and professionalism to our brands. When you start seeing the dealers mingle, you know, Malibu to co-op or the Saltwater brands, those best practice sharing and those retail best practice sharing start to go across each brand. You start seeing some leverage there in the local markets, as well as they're only dealing with us as one supplier versus multiple suppliers or OEMs. You start to get the confidence in the OEMs, the support of the OEMs.
If you look at how that really works, think about all the second and third tier brands that were able to come alive through COVID, but now are getting shed, right? Because of the lack of focus on those brands. Now they can refocus on the premium brands like we have. That's what we're leveraging to make sure that if a dealer has multiple brands of MBI, they're getting all the tools, a full suite of tools, and a full suite of support from the overall organization. I don't know if you want to.
Yeah, I would certainly echo that. You know, Zach at Route 113 made that comment about Maverick and Pursuit. I think the other thing it does is, you know, the scope and breadth amongst Malibu lets him address his market in ways that he couldn't before. With a backer and a partner that's got this scope and breadth of tools that he's used to that business relationship with, that he has confidence in, it lets him quickly expand his business. I think that's how he highlighted it in that clip.
Our next question from the virtual audience. Can you speak more about your expansion into outboard within the Cobalt segment? How do you view that market, and what initiatives are you taking?
Yeah, so Cobalt probably got started in the outboard segment a little bit later than the competition. Establishing our brand name in the outboard market is still something that we're working to do. I think there's a lot of upside, like I mentioned in the slides, on some of the products and innovations that we have on the horizon to better capture that space, as well as some other dealer opportunities on the East Coast. Those are all things that we're looking into that we think will take us to that next level and grow share.
Any other questions in person audience? With that, I think we will wrap up here. We have lunch served here at 12:15 P.M. and in the next room. You guys can feel free to make your way there. We have dessert outside by the boats. Feel free to, after lunch, take a tour and get to see some of the boats live. Thanks, guys.