MasterCraft Boat Holdings, Inc. Reports Fiscal 2020 Third Quarter Results
Third Quarter Highlights:
- Pulled back production rate in early March and suspended production in late March in response to the COVID-19 pandemic.
- Net sales for the third quarter decreased to
$102.6 million , down 20.1 percent from$128.4 million in the prior-year period, due to reduced production in anticipation of slower retail demand from the COVID-19 pandemic. - Enhanced our liquidity, as a precautionary measure, by having drawn down
$35.0 million revolving credit facility and finalizing a proposed amendment to our credit facility to provide additional flexibility. - GAAP diluted net loss was
$(36.7) million or$(1.96) per share, including$56.4 million , or$(3.01) per share, of noncash goodwill and other intangible asset impairment charges related to NauticStar and Crest (“Impairment Charges”). - Diluted Adjusted Net Income per share, a non-GAAP measure, was
$0.46 compared to$0.78 in the prior-year period. - Adjusted EBITDA, a non-GAAP measure, declined 36.2 percent to
$14.0 million from$21.9 million in the prior-year period.
Brightbill continued, “The third quarter delivered some unprecedented challenges and required us to focus on ensuring the health and well-being of our employees while remaining focused on meeting our dealers’ and consumers’ needs. Retail demand across all our brands started the third quarter off on a strong note, with very healthy performance and strong momentum in January, February, and early March, prior to the spread of COVID-19 in the
Third Quarter Results
- a proactive decrease in unit production in anticipation of potential impact on retail demand from the COVID-19 pandemic;
- a continued reduction in unit sales volumes across each of our reportable segments to allow our dealers to right-size pipeline inventory levels;
- partially offset by the addition of our new Aviara brand.
Gross profit decreased
The decrease in consolidated gross margin percentage is primarily attributable to a decrease in overhead absorption due to the lower unit sales volumes across each reportable segment, the transitory
Operating expenses increased
Net loss for the third quarter was
Adjusted EBITDA was
See “Non-GAAP Measures” below for a reconciliation of Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted Net Income per share to the most directly comparable financial measures presented in accordance with GAAP.
Outlook
Concluded Brightbill, “While COVID-19 presented many challenges for MasterCraft in the third quarter, we believe that we have implemented a plan to manage through the near-term headwinds, and position the Company for success as the economy begins to re-open. We firmly believe the steps we have taken during the pandemic, including the enhanced financial flexibility gained from our cost-cutting measures and a proposed amendment to our credit facility will position MasterCraft for success throughout the transition and beyond. We anticipate that we will finalize the proposed credit amendment later this week, which will include temporary relief under our financial covenants.”
As previously disclosed, given the economic uncertainty around the business impact of the COVID-19 pandemic, the Company has withdrawn the fiscal 2020 guidance contained in its second-quarter earnings press release and conference call on
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 6299559. The audio replay will be available beginning at 10:30 a.m. EDT on Wednesday, May 6, 2020, through 11:59 p.m. EDT on
About
Headquartered in
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 the resilience of our business model; our intention to drive value and grow our market share; the potential impact of COVID-19 on our operating results and liquidity; and our intention to amend our credit facility to provide additional financial flexibility.
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, but not limited to: the potential effects of the coronavirus (COVID-19) pandemic on the Company, 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, changes to
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
Results of Operations for the Three and Nine Months Ended
MASTERCRAFT BOAT HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share and per share data)
Three Months Ended | Nine Months Ended | |||||||||||||||
March 29, | March 31, | March 29, | March 31, | |||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Net sales | $ | 102,562 | $ | 128,390 | $ | 311,979 | $ | 343,572 | ||||||||
Cost of sales | 81,288 | 97,033 | 244,030 | 261,939 | ||||||||||||
Gross profit | 21,274 | 31,357 | 67,949 | 81,633 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling and marketing | 4,933 | 5,210 | 13,340 | 13,757 | ||||||||||||
General and administrative | 6,094 | 6,696 | 19,356 | 20,576 | ||||||||||||
Amortization of other intangible assets | 987 | 987 | 2,961 | 2,504 | ||||||||||||
56,437 | — | 56,437 | — | |||||||||||||
Total operating expenses | 68,451 | 12,893 | 92,094 | 36,837 | ||||||||||||
Operating income (loss) | (47,177 | ) | 18,464 | (24,145 | ) | 44,796 | ||||||||||
Other expense: | ||||||||||||||||
Interest expense | 1,086 | 1,867 | 3,667 | 4,829 | ||||||||||||
Income (loss) before income tax expense | (48,263 | ) | 16,597 | (27,812 | ) | 39,967 | ||||||||||
Income tax expense (benefit) | (11,550 | ) | 3,834 | (6,601 | ) | 8,552 | ||||||||||
Net income (loss) | $ | (36,713 | ) | $ | 12,763 | $ | (21,211 | ) | $ | 31,415 | ||||||
Net income (loss) per share: | ||||||||||||||||
Basic | $ | (1.96 | ) | $ | 0.68 | $ | (1.13 | ) | $ | 1.68 | ||||||
Diluted | $ | (1.96 | ) | $ | 0.68 | $ | (1.13 | ) | $ | 1.67 | ||||||
Weighted average shares used for computation of: | ||||||||||||||||
Basic earnings per share | 18,739,480 | 18,657,719 | 18,731,338 | 18,652,289 | ||||||||||||
Diluted earnings per share | 18,739,480 | 18,756,605 | 18,731,338 | 18,765,897 | ||||||||||||
MASTERCRAFT BOAT HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share and per share data)
March 29, | June 30, | |||||||
2020 | 2019 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 40,991 | $ | 5,826 | ||||
Accounts receivable, net of allowances of |
10,148 | 12,463 | ||||||
Income tax receivable | 5,703 | 951 | ||||||
Inventories, net | 37,159 | 30,660 | ||||||
Prepaid expenses and other current assets | 4,979 | 4,464 | ||||||
Total current assets | 98,980 | 54,364 | ||||||
Property, plant and equipment, net | 41,669 | 33,636 | ||||||
29,593 | 74,030 | |||||||
Other intangible assets, net | 64,836 | 79,799 | ||||||
Deferred income taxes | 13,792 | 6,240 | ||||||
Deferred debt issuance costs, net | 371 | 451 | ||||||
Operating lease assets | 779 | — | ||||||
Other long-term assets | 248 | 253 | ||||||
Total assets | $ | 250,268 | $ | 248,773 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Accounts payable | $ | 14,008 | $ | 17,974 | ||||
Income tax payable | — | 426 | ||||||
Accrued expenses and other current liabilities | 42,912 | 41,421 | ||||||
Current portion of long-term debt, net of unamortized debt issuance costs | 9,004 | 8,725 | ||||||
Total current liabilities | 65,924 | 68,546 | ||||||
Long-term debt, net of unamortized debt issuance costs | 129,429 | 105,016 | ||||||
Operating lease liabilities | 445 | — | ||||||
Unrecognized tax positions | 3,114 | 2,895 | ||||||
Total liabilities | 198,912 | 176,457 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
STOCKHOLDERS' EQUITY: | ||||||||
Common stock, |
189 | 188 | ||||||
Additional paid-in capital | 115,832 | 115,582 | ||||||
Accumulated deficit | (64,665 | ) | (43,454 | ) | ||||
Total stockholders' equity | 51,356 | 72,316 | ||||||
Total liabilities and stockholders' equity | $ | 250,268 | $ | 248,773 | ||||
Supplemental Operating Data
The following table presents certain supplemental operating data for the periods indicated:
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||
March 29, | March 31, | March 29, | March 31, | ||||||||||||||||||||||
2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||||||||||||||
(Dollars in thousands) | (Dollars in thousands) | ||||||||||||||||||||||||
Unit sales volume: | |||||||||||||||||||||||||
MasterCraft | 713 | 868 | (17.9 | ) | % | 2,170 | 2,609 | (16.8 | ) | % | |||||||||||||||
NauticStar | 313 | 485 | (35.5 | ) | % | 1,046 | 1,391 | (24.8 | ) | % | |||||||||||||||
Crest(a) | 461 | 728 | (36.7 | ) | % | 1,407 | 1,403 | 0.3 | % | ||||||||||||||||
Consolidated | 1,487 | 2,081 | (28.5 | ) | % | 4,623 | 5,403 | (14.4 | ) | % | |||||||||||||||
MasterCraft | $ | 70,531 | $ | 79,431 | (11.2 | ) | % | $ | 211,201 | $ | 232,062 | (9.0 | ) | % | |||||||||||
NauticStar | 14,156 | 21,652 | (34.6 | ) | % | 47,727 | 58,255 | (18.1 | ) | % | |||||||||||||||
Crest(a) | 17,875 | 27,307 | (34.5 | ) | % | 53,051 | 53,255 | (0.4 | ) | % | |||||||||||||||
Consolidated | $ | 102,562 | $ | 128,390 | (20.1 | ) | % | $ | 311,979 | $ | 343,572 | (9.2 | ) | % | |||||||||||
Net sales per unit: | |||||||||||||||||||||||||
MasterCraft | $ | 99 | $ | 92 | 7.6 | % | $ | 97 | $ | 89 | 9.0 | % | |||||||||||||
NauticStar | 45 | 45 | — | % | 46 | 42 | 9.5 | % | |||||||||||||||||
Crest(a) | 39 | 38 | 2.6 | % | 38 | 38 | — | % | |||||||||||||||||
Consolidated | 69 | 62 | 11.3 | % | 67 | 64 | 4.7 | % | |||||||||||||||||
Gross margin percentage | 20.7 | % | 24.4 | % | -370 bpts | 21.8 | % | 23.8 | % | -200 bpts |
(a) Crest was acquired on
Non-GAAP Measures
EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin
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 or other items that we do not consider to be indicative of our core and/or ongoing operations. For the periods presented herein, these adjustments include goodwill and other intangible asset impairment, COVID-19 shutdown costs, Aviara (new brand) startup costs, transaction expenses associated with acquisitions and certain non-cash items including share-based compensation, and an acquisition-related inventory step-up adjustment. We define Adjusted EBITDA Margin as Adjusted EBITDA expressed as a percentage of Net sales.
Adjusted Net Income and Adjusted Net Income per share
We define Adjusted Net Income and Adjusted Net Income per share as net income adjusted to eliminate certain non-cash charges or other items that we do not consider to be indicative of our core and/or ongoing operations. For the periods presented herein, these adjustments include goodwill and other intangible asset impairment, COVID-19 shutdown costs, Aviara (new brand) startup costs, transaction expenses associated with acquisitions, and certain non-cash items including other intangible asset amortization, share-based compensation, and an acquisition-related inventory step-up adjustment.
EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, and Adjusted Net Income per share, which we refer to collectively as the Non-GAAP Measures, 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, Adjusted Net Income per share, and Adjusted EBITDA do not reflect the impact of earnings or charges resulting from matters we do not consider to be indicative of our core and/or 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 the Non-GAAP Measures may not be comparable to similarly titled measures of other companies, including companies in our industry.
We do not provide forward-looking guidance for certain financial measures on a
The following table presents a reconciliation of net income (loss) as determined in accordance with
Three Months Ended | Nine Months Ended | ||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||
(Dollars in thousands) | (Dollars in thousands) | ||||||||||||||||
Net income (loss) | $ | (36,713 | ) | $ | 12,763 | $ | (21,211 | ) | $ | 31,415 | |||||||
Income tax expense (benefit) | (11,550 | ) | 3,834 | (6,601 | ) | 8,552 | |||||||||||
Interest expense | 1,086 | 1,867 | 3,667 | 4,829 | |||||||||||||
Depreciation and amortization | 2,632 | 2,091 | 7,686 | 5,450 | |||||||||||||
EBITDA | (44,545 | ) | 20,555 | (16,459 | ) | 50,246 | |||||||||||
56,437 | — | 56,437 | — | ||||||||||||||
COVID-19 Shutdown Costs(b) | 1,506 | — | 1,506 | — | |||||||||||||
Aviara start-up costs(c) | 398 | 937 | 1,213 | 1,700 | |||||||||||||
Share-based compensation | 159 | 371 | 703 | 1,159 | |||||||||||||
Transaction expense(d) | — | 27 | — | 2,044 | |||||||||||||
Inventory step-up adjustment - acquisition related(e) | — | — | — | 382 | |||||||||||||
Adjusted EBITDA | $ | 13,955 | $ | 21,890 | $ | 43,400 | $ | 55,531 | |||||||||
Adjusted EBITDA margin | 13.6 | % | 17.0 | % | 13.9 | % | 16.2 | % |
(a) | Represents non-cash impairment charges of |
|
(b) | Represents costs associated with the COVID-19 pandemic. Costs include lump sum severance payments to laid off employees and costs to provide for temporary continuation of healthcare benefits for laid off employees. | |
(c) | Represents start-up costs associated with Aviara, a completely new boat brand in an industry category previously not served by the Company. We began selling the brand’s first two models, the AV32 and the AV36, during the first and second quarters of fiscal 2020, respectively. We expect to begin selling one additional model, the AV40, in first fiscal quarter of 2021. Start-up costs presented for fiscal 2020 are related to the AV36 and AV40 models. Start-up costs presented for fiscal 2019 are related to the launch of the Aviara brand and the three initial Aviara models which had not yet begun selling. We expect to adjust EBITDA for Aviara start-up costs through fiscal 2020. |
|
(d) | Represents fees and expenses associated with our acquisition of Crest in fiscal 2019. | |
(e) | Represents post-acquisition adjustment to cost of goods sold for the fair value step up of inventory acquired, all of which was sold during fiscal 2019. |
The following table presents a reconciliation of net income (loss) as determined in accordance with
Three Months Ended | Nine Months Ended | ||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||
(Dollars in thousands, except for share and per share amounts) | (Dollars in thousands, except for share and per share amounts) | ||||||||||||||||
Net income (loss) | $ | (36,713 | ) | $ | 12,763 | $ | (21,211 | ) | $ | 31,415 | |||||||
Income tax expense (benefit) | (11,550 | ) | 3,834 | (6,601 | ) | 8,552 | |||||||||||
56,437 | — | 56,437 | — | ||||||||||||||
COVID-19 Shutdown costs(b) | 1,506 | — | 1,506 | — | |||||||||||||
Amortization of acquisition intangibles | 960 | 960 | 2,882 | 2,423 | |||||||||||||
Aviara start-up costs(c) | 398 | 937 | 1,213 | 1,700 | |||||||||||||
Share-based compensation | 159 | 371 | 703 | 1,159 | |||||||||||||
Transaction expense(d) | — | 27 | — | 2,044 | |||||||||||||
Inventory step-up adjustment - acquisition related(e) | — | - | — | 382 | |||||||||||||
Adjusted Net Income before income taxes | 11,197 | 18,892 | 34,929 | 47,675 | |||||||||||||
Adjusted income tax expense(f) | 2,575 | 4,251 | 8,034 | 10,727 | |||||||||||||
Adjusted Net Income | $ | 8,622 | $ | 14,641 | $ | 26,895 | $ | 36,948 | |||||||||
Adjusted net income per common share | |||||||||||||||||
Basic | $ | 0.46 | $ | 0.78 | $ | 1.44 | $ | 1.98 | |||||||||
Diluted | $ | 0.46 | $ | 0.78 | $ | 1.42 | $ | 1.96 | |||||||||
Weighted average shares used for the computation of: | |||||||||||||||||
Basic Adjusted net income per share | 18,739,480 | 18,657,719 | 18,731,338 | 18,652,289 | |||||||||||||
Diluted Adjusted net income per share(g) | 18,947,877 | 18,849,136 | 18,952,577 | 18,857,600 |
(a) | Represents non-cash impairment charges of |
|
(b) | Represents costs associated with the COVID-19 pandemic. Costs include lump sum severance payments to laid off employees and costs to provide for temporary continuation of healthcare benefits for laid off employees. | |
(c) | Represents start-up costs associated with Aviara, a completely new boat brand in an industry category previously not served by the Company. We began selling the brand’s first two models, the AV32 and the AV36, during the first and second quarters of fiscal 2020, respectively. We expect to begin selling one additional model, the AV40, in first fiscal quarter of 2021. Start-up costs presented for fiscal 2020 are related to the AV36 and AV40 models. Start-up costs presented for fiscal 2019 are related to the launch of the Aviara brand and the three initial Aviara models which had not yet begun selling. We expect to adjust net income (loss) for Aviara start-up costs through fiscal 2020. | |
(d) | Represents fees and expenses associated with our acquisition of Crest in fiscal 2019. | |
(e) | Represents post-acquisition adjustment to cost of goods sold for the fair value step up of inventory acquired, all of which was sold during fiscal 2019. | |
(f) | Reflects income tax expense at an estimated annual effective income tax rate of 23.0% for fiscal 2020 and 22.5% for the prior-year period. | |
(g) | See table below for reconciliation of weighted average shares used for computation of Basic earnings per share to weighted average shares used for Diluted Adjusted Net Income per share. |
The following table presents the reconciliation of weighted average shares used for computation of Basic earnings per share to weighted average shares used for Diluted Adjusted Net income per share:
Three Months Ended | Nine Months Ended | |||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||
Weighted average shares used for computation of Basic earnings per share | 18,739,480 | 18,657,719 | 18,731,338 | 18,652,289 | ||||||||||||||||
Dilutive effect of outstanding stock options(a) | - | 42,525 | 10,711 | 48,289 | ||||||||||||||||
Dilutive effect of outstanding restricted share awards/units(b) | 208,397 | 148,892 | 210,528 | 157,022 | ||||||||||||||||
Weighted average shares used for the computation of Diluted Adjusted Net Income per share |
18,947,877 | 18,849,136 | 18,952,577 | 18,857,600 |
(a) | Represents the dilutive effect of stock options calculated using the treasury stock method, but instead of using the average market price, the market price on the last business day of the period is used. | |
(b) | Represents the dilutive effect of restricted stock awards (“RSAs”) and performance stock units (“PSUs”) assuming the total outstanding awards/unit at each period end are fully dilutive. |
The following table presents the reconciliation of net income (loss) per diluted share to Adjusted net income per diluted weighted average share for the periods presented:
Three Months Ended | Nine Months Ended | ||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||
Net income (loss) per diluted share | $ | (1.96 | ) | $ | 0.68 | $ | (1.13 | ) | $ | 1.67 | |||||||
Impact of adjustments: | |||||||||||||||||
Income tax expense | (0.62 | ) | 0.20 | (0.35 | ) | 0.46 | |||||||||||
3.01 | — | 3.01 | — | ||||||||||||||
COVID-19 Shutdown Costs(b) | 0.08 | — | 0.08 | — | |||||||||||||
Amortization of acquisition intangibles | 0.05 | 0.05 | 0.15 | 0.13 | |||||||||||||
Aviara startup costs(c) | 0.02 | 0.05 | 0.06 | 0.09 | |||||||||||||
Share-based compensation | 0.01 | 0.02 | 0.04 | 0.06 | |||||||||||||
Transaction expense(d) | — | — | — | 0.11 | |||||||||||||
Inventory step-up adjustment - acquisition related(e) | — | — | — | 0.02 | |||||||||||||
Adjusted Net income per diluted share before income taxes | 0.59 | 1.00 | 1.86 | 2.54 | |||||||||||||
Impact of adjusted income tax expense on net income per diluted share before income taxes(f) | (0.14 | ) | (0.22 | ) | (0.43 | ) | (0.58 | ) | |||||||||
Impact of increased share count(g) | 0.01 | — | (0.01 | ) | — | ||||||||||||
Adjusted Net Income per diluted weighted average share | $ | 0.46 | $ | 0.78 | $ | 1.42 | $ | 1.96 |
(a) | Represents non-cash impairment charges of |
|
(b) | Represents costs associated with the COVID-19 pandemic. Costs include lump sum severance payments to laid off employees and costs to provide for temporary continuation of healthcare benefits for laid off employees. | |
(c) | Represents start-up costs associated with Aviara, a completely new boat brand in an industry category previously not served by the Company. We began selling the brand’s first two models, the AV32 and the AV36, during the first and second quarters of fiscal 2020, respectively. We expect to begin selling one additional model, the AV40, in first fiscal quarter of 2021. Start-up costs presented for fiscal 2020 are related to the AV36 and AV40 models. Start-up costs presented for fiscal 2019 are related to the launch of the Aviara brand and the three initial Aviara models which had not yet begun selling. We expect to adjust net income (loss) for Aviara start-up costs through fiscal 2020. | |
(d) | Represents fees and expenses associated with our acquisition of Crest in fiscal 2019. | |
(e) | Represents post-acquisition adjustment to cost of goods sold for the fair value step up of inventory acquired, all of which was sold during fiscal 2019. | |
(f) | Reflects income tax expense at an estimated annual effective income tax rate of 23.0% for fiscal 2020 and 22.5% for the prior-year period. | |
(g) | Reflects the impact of increased share counts giving effect to the exchange of all RSAs, the vesting of all PSUs and for the dilutive effect of stock options included in outstanding shares and rounding. |
Investor Contacts:
Chief Revenue Officer
(423) 884-7141
George.Steinbarger@mastercraft.com
Padilla
(612) 455-1709
Matt.Sullivan@padillaco.com
Source: MasterCraft Boat Holdings, Inc.