MasterCraft Boat Holdings, Inc. Reports Fourth Quarter and Fiscal 2019 Results
Fourth Quarter Highlights:
- Net sales increased to
$122.8 million , up 28.7 percent from$95.4 million in the prior-year period. - GAAP diluted earnings (loss) per share were
$(0.54) , including a$31.0 million , or$(1.65) per share, goodwill and other intangible asset impairment charge related to NauticStar (the “NauticStar Charge”). - Fully diluted Adjusted Net Income per share, a non-GAAP measure, grew
$0.17 , or 25.0 percent, to$0.85 , up from$0.68 in the prior-year period. - Adjusted EBITDA, a non-GAAP measure, rose 19.9 percent to
$23.8 million from$19.8 million in the prior-year period.
Full Year Highlights:
- Net sales increased to
$466.4 million , up 40.2 percent from$332.7 million in the prior-year period. - GAAP diluted earnings (loss) per share decreased to
$1.14 , including the NauticStar Charge, or$(1.65) per share. - Fully diluted Adjusted Net Income per share, a non-GAAP measure, grew
$0.66 , or 30.7 percent, to$2.81 , up from$2.15 in the prior-year period. - Adjusted EBITDA, a non-GAAP measure, grew 23.9 percent to
$79.3 million from$64.0 million in the prior-year period. - Cash debt repayments totaled
$41.3 million , driven by the company’s strong cash generation.
Fourth Quarter Results
Net Sales for the fourth quarter were
- an increase at MasterCraft of
$6.0 million , or 8.1 percent, primarily due to an increase in unit sales volume, favorable product mix and price increases; - the inclusion of Crest, which incrementally added net sales of
$23.3 million ; and partially offset by - a decrease at NauticStar of
$1.9 million , or 8.8 percent, primarily due to a reduction in volume as production was slowed to match wholesale shipments with retail demand, partially offset by favorable product mix and price increases.
Gross profit increased
- the increases in MasterCraft unit sales volumes, price increases, and favorable product mix, partially offset by a year-over-year increase in warranty expense resulting from the favorable one-time warranty adjustment taken in the fourth quarter of 2018;
- the inclusion of Crest, which contributed
$4.3 million to gross profit; and partially offset by - a
$1.1 million decrease in gross profit for NauticStar, principally due to the decrease in volume.
Given the above-mentioned factors, gross margin decreased to 25.6 percent for the fourth quarter compared to 29.2 percent for the prior-year period.
Operating expenses increased
As a result of the company’s annual goodwill analysis at
As has previously been disclosed, NauticStar is developing new, larger models which will improve operating margins and mitigate lower demand for smaller boats in the future.
Commented McNew, “While the saltwater fishing market has experienced a slowdown this past year, further exacerbated by poor weather this selling season, we are bullish about the NauticStar brand and its long-term prospects. Our dealer pipeline at NauticStar ended the year at healthy levels given our prudent decision to pull back on wholesale production earlier in the year, and both the 251 Hybrid and 32-foot XS center console will help mitigate the declines in the smaller boat market. In the near-term, this market slowdown has delayed the initial growth projections developed at the time of the acquisition, but NauticStar remains a leading brand in the market it serves. Combined with the new product development strategies we are deploying – including the introduction of larger, in-demand models – and the early stages of several operating initiatives we are driving, we believe the brand will be positioned better than ever to take advantage of a market recovery, leading to greater operating efficiencies and long-term profitable growth.”
Operating expenses, as a percentage of net sales, increased by 25.6 percentage points to 35.0 percent for the fourth quarter compared to 9.4 percent for the prior-year period. This impact resulted primarily from the NauticStar Charge. Excluding this non-cash impairment charge, acquisition-related and integration costs, and start-up costs for the company’s new Aviara brand, operating expenses as a percentage of sales decreased 0.2 percentage points to 9.0 percent for the fourth quarter compared to 9.2 percent for the prior-year period.
Net Income (loss) for the fourth quarter was
Adjusted EBITDA was
See “Non-GAAP Measures” below for a reconciliation of Adjusted EBITDA, Adjusted EBITDA margin and Adjusted Net Income to the most directly comparable financial measures presented in accordance with GAAP.
Fiscal 2019 Results
Net Sales for fiscal 2019 were
- an increase at MasterCraft of
$45.5 million , or 17.1 percent, primarily driven by an increase in unit sales volume, favorable product mix and price increases, offset by higher discounts to support ourCanadian and European Union dealers impacted by retaliatory import tariffs; - the inclusion of Crest, which grew net sales by
$76.6 million ; and - a net
$11.6 million increase in net sales for NauticStar, driven by the inclusion of NauticStar in our fiscal 2019 first quarter results, partially offset by a decrease in volume due to softness in NauticStar’s core market.
Gross profit increased
- an increase in MasterCraft unit sales volumes, price increases, and favorable product mix, offset by increased warranty costs and higher discounts to support
Canadian and European Union dealers impacted by retaliatory import tariffs; - the inclusion of Crest, which contributed
$13.6 million to gross profit; and partially offset by - a net
$1.2 million decrease in gross profit for NauticStar, driven by a decrease in volume, partially offset by the inclusion of NauticStar in our fiscal 2019 first quarter results.
Given the above-mentioned factors, gross margin decreased to 24.3 percent for fiscal 2019 compared to 27.2 percent for fiscal 2018.
Operating expenses increased
- the NauticStar Charge;
- the inclusion of Crest, which increased operating expenses by
$6.5 million ; - an increase of
$2.3 million in startup costs related to Aviara; - the incremental inclusion of NauticStar in our fiscal 2019 first quarter results, which added
$1.9 million ; and - an increase of
$1.9 million in intangible asset amortization, which includes the effects of both the NauticStar and Crest acquisitions, principally for dealer networks.
Operating expenses, as a percentage of net sales, increased by 6.8 percentage points to 17.1 percent for fiscal 2019 compared to 10.3 percent for fiscal 2018. This increase resulted primarily from the NauticStar Charge. Excluding this non-cash impairment charge, acquisition-related and integration costs, and start-up costs for Aviara, operating expenses as a percentage of sales decreased 0.1 percentage points to 9.5 percent for fiscal 2019 compared to 9.6 percent for fiscal 2018.
Net Income for fiscal 2019 was
Adjusted EBITDA was
See “Non-GAAP Measures” below for a reconciliation of Adjusted EBITDA, Adjusted EBITDA margin and Adjusted Net Income to the most directly comparable financial measures presented in accordance with GAAP.
Outlook
Said McNew, “We remain bullish on the long-term prospects of both the markets we serve and the brands we own, irrespective of any near-term fluctuations. We firmly believe our long-tenured, industry-veteran leadership team and seasoned and dedicated employees, together with our low-fixed cost, highly-variable cost structure, best-in-class net working capital management, and strong balance sheet, position the company to perform in all economic environments.
“At MasterCraft, retail trends throughout the first nine months of our fiscal 2019 were running ahead of plan, with year-to-date internal warranty registrations up significantly year-over-year at the end of our fiscal third quarter. However, adverse weather conditions across the country during the all-important selling season, along with eroding dealer sentiment – driven by macro-economic and political uncertainty – resulted in a significant decline in retail activity. As such, our fiscal 2020 outlook contemplates lower wholesale shipments at MasterCraft compared to prior-year, particularly in the first half of our fiscal year. We believe it’s prudent to holdback wholesale production to allow for healthy dealer pipelines at MasterCraft heading into the calendar 2020 selling season, in anticipation of continued growth in the overall performance sport segment.
“At NauticStar, our quick reaction to the retail declines in the saltwater fishing market resulted in pulling back wholesale production earlier in the year, resulting in healthy dealer pipelines levels at fiscal 2019 year-end. We will continue to be disciplined with NauticStar’s dealer pipeline, while beginning to realize the AUSP benefits from new, larger models introduced late last year.
“Similarly, our Crest brand was impacted by the adverse weather conditions and decline in dealer sentiment, wiping out the strong retail performance Crest experienced during our first six months of ownership. Accordingly, we are tempering our wholesale production at Crest for fiscal 2020 to allow for healthy dealer pipeline levels entering the calendar 2020 selling season. Recall Crest was acquired during our fiscal second quarter last year. We are very optimistic on Crest and the pontoon segment overall, and anticipate that the product development and operational initiatives we are driving will contribute to long-term market share and profitability gains.
“Beginning in fiscal 2020, our new Aviara brand began shipping to
Given the above-mentioned factors, the company’s consolidated fiscal 2020 outlook is as follows:
- Net Sales – down low-single digit percent
- Adjusted EBITDA Margin – down 50 to 100 basis points
- Adjusted Earnings per Share – down high-single digit percent
“We strongly believe in the long-term value that the full breadth of our brands and capabilities can provide, despite any near-term market uncertainties. Maintaining our focus on developing best-in-class, innovative products across our portfolio and driving continued operational excellence at all our businesses will drive meaningful value for consumers, while improving our bottom line and generating attractive returns for shareholders over the long-term,” concluded McNew.
Conference Call and Webcast Information
For an audio replay of the conference call, dial (855) 859-2056 (domestic) or (404) 537-3406 (international) and enter audience passcode 2245679. The audio replay will be available beginning at 12 p.m. ET on Thursday, September 12, 2019, through 11:59 p.m. ET on
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Forward-Looking Statements
This press release includes forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). Forward-looking statements can often be identified by such words and phrases as “believes,” “anticipates,” “expects,” “intends,” “estimates,” “may,” “will,” “should,” “continue” and similar expressions, comparable terminology or the negative thereof, and include statements in this press release concerning an exciting pipeline of launches; our ability to continue our operating momentum, capture additional market share and deliver continued growth; expectations regarding driving margin expansion, sales increases and organic growth; our fiscal 2020 outlook and key growth initiatives; and our anticipated financial performance for fiscal 2020.
Forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, including general economic conditions, demand for our products, changes in consumer preferences, competition within our industry, our reliance on our network of independent dealers, our ability to manage our manufacturing levels and our large fixed cost base, the successful integration of
Any such forward-looking statements represent management's estimates as of the date of this press release. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release. We undertake no obligation (and we expressly disclaim any obligation) to update or supplement any forward-looking statements that may become untrue or cause our views to change, whether because of new information, future events, changes in assumptions or otherwise. Comparison of results for current and prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.
Use of Non-GAAP Financial Measures
To supplement the Company’s condensed consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company uses certain non-GAAP financial measures in this release. Reconciliations of the non-GAAP financial measures used in this release to the most comparable GAAP measures for the respective periods can be found in tables immediately following the condensed consolidated statements of operations. Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for the Company’s financial results prepared in accordance with GAAP.
Results of Operations for the Three and Twelve Months Ended
MASTERCRAFT BOAT HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS - UNAUDITED
(Dollars in thousands, except share and per share data)
Three Months Ended | Fiscal Year Ended | |||||||||||||||
June 30, 2019 |
June 30, 2018 |
June 30, 2019 |
June 30, 2018 |
|||||||||||||
NET SALES | $ | 122,809 | $ | 95,430 | $ | 466,381 | $ | 332,725 | ||||||||
COST OF SALES | 91,316 | 67,545 | 353,254 | 242,361 | ||||||||||||
GROSS PROFIT | 31,493 | 27,885 | 113,127 | 90,364 | ||||||||||||
OPERATING EXPENSES: | ||||||||||||||||
Selling and marketing | 3,913 | 3,042 | 17,670 | 13,011 | ||||||||||||
General and administrative | 7,130 | 5,385 | 27,706 | 19,773 | ||||||||||||
Amortization of intangible assets | 988 | 520 | 3,492 | 1,597 | ||||||||||||
Goodwill and other intangible asset impairment | 31,000 | — | 31,000 | — | ||||||||||||
Total operating expenses | 43,031 | 8,947 | 79,868 | 34,381 | ||||||||||||
OPERATING INCOME | (11,538 | ) | 18,938 | 33,259 | 55,983 | |||||||||||
OTHER EXPENSE: | ||||||||||||||||
Interest expense | 1,684 | 947 | 6,513 | 3,474 | ||||||||||||
INCOME BEFORE INCOME TAX EXPENSE | (13,222 | ) | 17,991 | 26,746 | 52,509 | |||||||||||
INCOME TAX EXPENSE (BENEFIT) | (3,160 | ) | 4,847 | 5,392 | 12,856 | |||||||||||
NET INCOME | $ | (10,062 | ) | $ | 13,144 | $ | 21,354 | $ | 39,653 | |||||||
EARNINGS PER COMMON SHARE: | ||||||||||||||||
Basic | $ | (0.54 | ) | $ | 0.71 | $ | 1.14 | $ | 2.13 | |||||||
Diluted | $ | (0.54 | ) | $ | 0.70 | $ | 1.14 | $ | 2.12 | |||||||
WEIGHTED AVERAGE SHARES USED FOR COMPUTATION OF: | ||||||||||||||||
Basic earnings per share | 18,658,701 | 18,622,154 | 18,653,892 | 18,619,793 | ||||||||||||
Diluted earnings per share | 18,658,701 | 18,740,723 | 18,768,207 | 18,714,531 | ||||||||||||
MASTERCRAFT BOAT HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - UNAUDITED
(Dollars in thousands, except share and per share data)
June 30, | June 30, | ||||||||
2019 | 2018 | ||||||||
ASSETS | |||||||||
CURRENT ASSETS: | |||||||||
Cash and cash equivalents | $ | 5,826 | $ | 7,909 | |||||
Accounts receivable — net of allowances of $281 and $51, respectively | 12,463 | 5,515 | |||||||
Income tax receivable | 951 | — | |||||||
Inventories — net | 30,660 | 20,467 | |||||||
Prepaid expenses and other current assets | 4,464 | 3,295 | |||||||
Total current assets | 54,364 | 37,186 | |||||||
Property, plant and equipment — net | 33,636 | 22,265 | |||||||
Goodwill | 74,030 | 65,792 | |||||||
Other Intangible assets — net | 79,799 | 51,046 | |||||||
Deferred income taxes | 6,240 | — | |||||||
Deferred debt issuance costs — net | 451 | 383 | |||||||
Other | 253 | 252 | |||||||
Total assets | $ | 248,773 | $ | 176,924 | |||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
CURRENT LIABILITIES: | |||||||||
Accounts payable | $ | 17,974 | $ | 17,266 | |||||
Income tax payable | 426 | 705 | |||||||
Accrued expenses and other current liabilities | 41,421 | 27,866 | |||||||
Current portion of long-term debt, net of unamortized debt issuance costs | 8,725 | 5,069 | |||||||
Total current liabilities | 68,546 | 50,906 | |||||||
Long-term debt, net of unamortized debt issuance costs | 105,016 | 70,087 | |||||||
Deferred income taxes | — | 1,427 | |||||||
Unrecognized tax positions | 2,895 | 1,982 | |||||||
Total liabilities | 176,457 | 124,402 | |||||||
COMMITMENTS AND CONTINGENCIES | |||||||||
STOCKHOLDERS' EQUITY: | |||||||||
Common stock, $.01 par value per share — authorized, 100,000,000 shares; issued and outstanding, 18,764,037 shares at June 30, 2019 and 18,682,338 shares at June 30, 2018 | 188 | 187 | |||||||
Additional paid-in capital | 115,582 | 114,052 | |||||||
Accumulated deficit | (43,454 | ) | (61,717 | ) | |||||
Total stockholders' equity | 72,316 | 52,522 | |||||||
Total liabilities and stockholders' equity | $ | 248,773 | $ | 176,924 | |||||
Supplemental Operating Data
The following table sets forth certain supplemental operating data for the periods indicated:
Three Months Ended | Fiscal Year Ended | ||||||||||||||||||
June 30, | June 30, | % | June 30, | June 30, | % | ||||||||||||||
2019 | 2018 | Variance | 2019 | 2018 | Variance | ||||||||||||||
(Dollars in thousands) | (Dollars in thousands) | ||||||||||||||||||
Unit volume: | |||||||||||||||||||
MasterCraft | 826 | 814 | 1.5 | % | 3,435 | 3,068 | 12.0 | % | |||||||||||
NauticStar | 440 | 533 | (17.4) | % | 1,831 | 1,687 | 8.5 | % | |||||||||||
Crest | 675 | — | 2,078 | — | |||||||||||||||
MasterCraft sales | $ | 79,768 | $ | 73,774 | 8.1 | % | $ | 311,830 | $ | 266,319 | 17.1 | % | |||||||
NauticStar sales | 19,740 | 21,656 | (8.8) | % | 77,995 | 66,406 | 17.5 | % | |||||||||||
Crest sales | 23,301 | — | 76,556 | — | |||||||||||||||
Consolidated sales | $ | 122,809 | $ | 95,430 | 28.7 | % | $ | 466,381 | $ | 332,725 | 40.2 | % | |||||||
Per Unit: | |||||||||||||||||||
MasterCraft sales | $ | 97 | $ | 91 | 6.6 | % | $ | 91 | $ | 87 | 4.6 | % | |||||||
NauticStar sales | 45 | 41 | 9.8 | % | 43 | 39 | 10.3 | % | |||||||||||
Crest sales | 35 | — | 37 | — | |||||||||||||||
Consolidated sales | 63 | 71 | (11.3) | % | 64 | 70 | (8.6) | % | |||||||||||
Gross margin | 25.6 | % | 29.2 | % | 24.3 | % | 27.2 | % |
Non-GAAP Measures
We define EBITDA as earnings before interest expense, income taxes, depreciation and amortization. We define Adjusted EBITDA as EBITDA further adjusted to eliminate certain non-cash charges and other items that we do not consider to be indicative of our ongoing operations, including goodwill and intangible impairment charges, transaction expenses associated with acquisitions, acquisition related inventory step-up adjustment, certain litigation charges, an out-of-period adjustment to correct an immaterial error related to our warranty reserve, new brand startup costs, and our stock-based compensation. We define Adjusted EBITDA margin as Adjusted EBITDA expressed as a percentage of net sales. We define Adjusted Net Income as net income adjusted to eliminate certain non-cash charges and other items that we do not consider to be indicative of our ongoing operations, including goodwill and intangible impairment charges, transaction expenses associated with acquisitions, acquisition related inventory step-up adjustment, certain litigation charges, an out-of-period adjustment to correct an immaterial error related to our warranty reserve, new brand startup costs, amortization of acquired intangible assets, and our stock-based compensation. Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net Income are not measures of net income or operating income as determined under accounting principles generally accepted in
- Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and Adjusted EBITDA does not reflect any cash requirements for such replacements;
- Adjusted EBITDA does not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments;
- Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
- Adjusted EBITDA does not reflect our tax expense or any cash requirements to pay income taxes;
- Adjusted EBITDA does not reflect interest expense, or the cash requirements necessary to service interest payments on our indebtedness; and
- Adjusted Net Income and Adjusted EBITDA do not reflect the impact of earnings or charges resulting from matters we do not consider to be indicative of our ongoing operations, but may nonetheless have a material impact on our results of operations.
In addition, because not all companies use identical calculations, our presentation of Adjusted EBITDA and Adjusted Net Income may not be comparable to similarly titled measures of other companies, including companies in our industry.
The following table sets forth a reconciliation of net income as determined in accordance with GAAP to Adjusted EBITDA and Adjusted EBITDA margin for the periods indicated (UNAUDITED):
Three Months Ended | Fiscal Year Ended | |||||||||||||||
June 30, |
June 30, |
June 30, |
June 30, |
|||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
(Dollars in thousands) | (Dollars in thousands) | |||||||||||||||
Net income | $ | (10,062 | ) | $ | 13,144 | $ | 21,354 | $ | 39,653 | |||||||
Income tax expense (benefit) | (3,160 | ) | 4,847 | 5,392 | 12,856 | |||||||||||
Interest expense, net | 1,684 | 947 | 6,513 | 3,474 | ||||||||||||
Depreciation and amortization | 2,337 | 1,421 | 7,787 | 5,086 | ||||||||||||
EBITDA | (9,201 | ) | 20,359 | 41,046 | 61,069 | |||||||||||
Goodwill and other intangible asset impairment(a) | 31,000 | — | 31,000 | — | ||||||||||||
Transaction expense(b) | 333 | 11 | 2,377 | 1,744 | ||||||||||||
Inventory step-up adjustment – acquisition related(c) | — | — | 382 | 501 | ||||||||||||
Warranty Adjustment(d) | — | (1,033 | ) | — | (1,033 | ) | ||||||||||
New brand start-up costs(e) | 1,140 | 204 | 2,840 | 561 | ||||||||||||
Stock-based compensation | 519 | 305 | 1,678 | 1,186 | ||||||||||||
Adjusted EBITDA | $ | 23,791 | $ | 19,846 | $ | 79,323 | $ | 64,028 | ||||||||
Adjusted EBITDA Margin | 19.4 | % | 20.8 | % | 17.0 | % | 19.2 | % | ||||||||
(a) Represents a non-cash charge recorded in the NauticStar segment for a
(b) Represents acquisition related costs and other integration costs associated with our acquisitions of Crest and NauticStar in fiscal 2019 and 2018, respectively.
(c) Represents post-acquisition adjustment to cost of goods sold for the fair value step up of inventory acquired all of which was sold during respective fiscal years.
(d) Represents an out-of-period adjustment to correct an immaterial error related to our warranty accrual calculation identified during the fiscal year ended
(e) Represents startup costs associated with Aviara, a completely new boat brand in an industry category neither MasterCraft, NauticStar nor Crest serve.
The following table sets forth a reconciliation of net income as determined in accordance with U.S. GAAP to Adjusted net income for the periods indicated (UNAUDITED):
Three Months Ended | Fiscal Year Ended | |||||||||||||||
June 30, 2019 |
June 30, 2018 |
June 30, 2019 |
June 30, 2018 |
|||||||||||||
(Dollars in thousands, except share and per share amounts) |
(Dollars in thousands, except share and per share amounts) |
|||||||||||||||
Net income | $ | (10,062 | ) | $ | 13,144 | $ | 21,354 | $ | 39,653 | |||||||
Income tax expense (benefit) | (3,160 | ) | 4,847 | 5,392 | 12,856 | |||||||||||
Goodwill and other intangible asset impairment(a) | 31,000 | — | 31,000 | — | ||||||||||||
Transaction expense(b) | 333 | 11 | 2,377 | 1,744 | ||||||||||||
Inventory step-up adjustment – acquisition related(c) | — | — | 382 | 501 | ||||||||||||
Warranty adjustment(d) | — | (1,033 | ) | — | (1,033 | ) | ||||||||||
New brand start-up costs(e) | 1,140 | 204 | 2,840 | 561 | ||||||||||||
Amortization of acquisition intangibles | 962 | 493 | 3,385 | 1,490 | ||||||||||||
Stock-based compensation | 519 | 305 | 1,678 | 1,186 | ||||||||||||
Adjusted Net Income before income taxes | 20,732 | 17,971 | 68,408 | 56,958 | ||||||||||||
Adjusted income tax expense(f) | 4,665 | 5,212 | 15,392 | 16,518 | ||||||||||||
Adjusted Net Income | $ | 16,067 | $ | 12,759 | $ | 53,016 | $ | 40,440 | ||||||||
Pro-forma Adjusted Net Income per common share | ||||||||||||||||
Basic | 0.86 | 0.68 | 2.84 | 2.17 | ||||||||||||
Diluted | 0.85 | 0.68 | 2.81 | 2.15 | ||||||||||||
Pro-forma weighted average shares used for the computation of: |
||||||||||||||||
Basic Adjusted Net Income per share | 18,710,233 | 18,639,028 | 18,653,892 | 18,619,793 | ||||||||||||
Diluted Adjusted Net Income per share | 18,851,352 | 18,807,100 | 18,843,155 | 18,794,260 |
(a) Represents a non-cash charge recorded in the NauticStar segment for a
(b) Represents fees, expenses and integration costs associated with our acquisitions of Crest and NauticStar in fiscal 2019 and 2018, respectively.
(c) Represents post-acquisition adjustment to cost of goods sold for the fair value step up of inventory acquired all of which was sold during the respective fiscal years.
(d) Represents an out-of-period adjustment to correct an immaterial error related to our warranty accrual calculation identified during the fiscal year ended
(e) Represents startup costs associated with Aviara, a completely new boat brand in an industry category neither MasterCraft, NauticStar nor Crest serve.
(f) Reflects income tax expense at an estimated annual effective income tax rate of 22.5% for fiscal 2019, 29% for fiscal 2018.
The following table shows the reconciliation of diluted net income per share to diluted Adjusted Net Income per share for the periods presented (UNAUDITED):
Three Months Ended | Fiscal Year Ended | |||||||||||||||
June 30, 2019 |
June 30, 2018 |
June 30, 2019 |
June 30, 2018 |
|||||||||||||
Net income per diluted share | $ | (0.54 | ) | $ | 0.70 | $ | 1.14 | $ | 2.12 | |||||||
Impact of adjustments: | ||||||||||||||||
Income tax expense (benefit) | (0.17 | ) | 0.26 | 0.29 | 0.69 | |||||||||||
Goodwill and other intangible asset impairment(a) | 1.65 | — | 1.65 | — | ||||||||||||
Transaction expense(b) | 0.02 | — | 0.13 | 0.09 | ||||||||||||
Inventory step-up adjustment – acquisition related(c) | — | — | 0.02 | 0.03 | ||||||||||||
Warranty adjustment(d) | — | (0.06 | ) | — | (0.06 | ) | ||||||||||
New brand start-up costs(e) | 0.06 | 0.01 | 0.15 | 0.03 | ||||||||||||
Amortization of acquisition intangibles | 0.05 | 0.03 | 0.18 | 0.08 | ||||||||||||
Stock-based compensation | 0.03 | 0.02 | 0.09 | 0.06 | ||||||||||||
Adjusted Net Income per diluted share before income taxes |
1.10 | 0.96 | 3.65 | 3.04 | ||||||||||||
Impact of adjusted income tax expense on net income per diluted share before income taxes(f) |
(0.25 | ) | (0.28 | ) | (0.82 | ) | (0.88 | ) | ||||||||
Impact of increased share count(g) | — | — | (0.02 | ) | (0.01 | ) | ||||||||||
Adjusted Net Income per diluted pro-forma weighted average share |
$ | 0.85 | $ | 0.68 | $ | 2.81 | $ | 2.15 | ||||||||
(a) Represents a non-cash charge recorded in the NauticStar segment for a
(b) Represents fees, expenses and integration costs associated with our acquisitions of Crest and NauticStar in fiscal 2019 and 2018, respectively.
(c) Represents post-acquisition adjustment to cost of goods sold for the fair value step up of inventory acquired all of which was sold during respective fiscal years.
(d) Represents an out-of-period adjustment to correct an immaterial error related to our warranty accrual calculation identified during the fiscal year ended June 30, 2018.
(e) Represents startup costs associated with Aviara, a completely new boat brand in an industry segment neither MasterCraft, NauticStar nor Crest serve.
(f) Reflects income tax expense at an estimated annual effective income tax rate of 22.5% for fiscal 2019, 29% for fiscal 2018.
(g) Reflects impact of increased share counts giving effect to the exchange of all restricted stock awards, the vesting of all performance stock units and for the dilutive effect of stock options included in outstanding shares.
Investor Contacts:
MasterCraft Boat Holdings, Inc.
George Steinbarger
Vice President, Business Development
(423) 884-7141
George.Steinbarger@mastercraft.com
Padilla
Matt Sullivan
(612) 455-1709
Matt.Sullivan@padillaco.com
Source: MasterCraft Boat Holdings, Inc.