MasterCraft Boat Holdings, Inc. Reports Fiscal 2023 Results
Unless otherwise indicated, the highlights and commentary provided herein relate to our continuing operations, which exclude the NauticStar segment results reported as discontinued operations.
Fourth Quarter Highlights:
- Net sales for the fourth quarter were
$166.6 million , down 15.5% from the prior-year period - Net income from continuing operations was
$23.1 million , or$1.32 per diluted share, down 31.2% and 28.6%, respectively, from the prior-year period - Diluted Adjusted Net Income per share, a non-GAAP measure, was
$1.37 , down 28.6% from the prior-year period - Adjusted EBITDA, a non-GAAP measure, was
$32.7 million , down 31.3% from the prior-year period - Share repurchases of
$7.0 million during the quarter
Full Year Highlights:
- The most profitable fiscal year in the Company's history
- Net sales increased to
$662.0 million , up 3.2% from the prior-year period - Net income from continuing operations was
$90.5 million , or$5.09 per diluted share, up 2.9% and 7.8%, respectively, from the prior-year period - Diluted Adjusted Net Income per share, a non-GAAP measure, was
$5.35 , up 6.8% from the prior-year period - Adjusted EBITDA, a non-GAAP measure, was
$131.5 million , up 0.7% from the prior-year period - Record operating cash flow due to strong earnings and diligent working capital management
- Share repurchases of
$22.9 million during the fiscal year
Brightbill continued, “As our fiscal fourth quarter progressed, retail sales slowed significantly and fell short of our expectations. Although we reduced production plans in response, dealer inventories ended fiscal 2023 at levels higher than we would now consider optimal. Despite cyclical headwinds facing the industry, our fortress balance sheet is a significant competitive advantage and provides us with abundant financial flexibility to pursue our capital allocation priorities, first and foremost of which is investment in growth. We have been laying the foundation for long-term growth by actively investing in targeted initiatives that will take advantage of the industry’s positive, underlying secular trends. These investments will continue into fiscal 2024 as we prioritize long-term growth and value creation through product line expansion, relentless innovation, and an unyielding focus on the consumer.”
Fourth Quarter Results
Unless otherwise indicated, the financial results provided herein relate to our continuing operations, which exclude the NauticStar segment results reported as discontinued operations.
For the fourth quarter of fiscal 2023,
Gross profit decreased
Operating expenses increased
Net income from continuing operations was
Adjusted Net Income 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.
Fiscal 2023 Results
Unless otherwise indicated, the financial results provided herein relate to our continuing operations, which exclude the NauticStar segment results reported as discontinued operations.
For fiscal 2023,
Gross profit increased
Operating expenses increased
Net income from continuing operations was
Adjusted Net Income 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, “Macroeconomic factors, including elevated interest rates as well as tightening credit standards and availability, are creating significant uncertainty which is limiting our retail demand visibility. In addition, the general expectation for an economic downturn during fiscal 2024 will likely be a headwind for the industry. This backdrop of economic uncertainty has caused us to approach our wholesale production plan for fiscal 2024 with a prudent level of conservatism, and we have developed plans for a range of potential retail demand scenarios. Because of the lower-than-expected retail sales results in our fiscal fourth quarter of 2023, and the uncertain outlook for retail sales, wholesale unit sales for fiscal 2024 will be lower than projected retail sales. Our production plans will allow us to rebalance dealer inventories with anticipated retail demand and keep our pipeline healthy.”
The Company’s outlook is as follows:
- For full year fiscal 2024, we expect consolidated net sales to be between
$390 million and$420 million , with Adjusted EBITDA of between$42 million and$52 million , and Adjusted Earnings per share of between$1.46 and$1.88 . We expect capital expenditures to be approximately$22 million for the full year. - For fiscal first quarter 2024, consolidated net sales are expected to be approximately
$98 million , with Adjusted EBITDA of approximately$11 million , and Adjusted Earnings per share of approximately$0.41 .
Importantly, this guidance reflects our view that industry retail unit sales could be down as much as mid-teens percent for fiscal year 2024. Although our guidance reflects a significant decline in earnings from fiscal 2023, we expect to generate positive free cash flow, which is a testament to our flexible, highly-variable cost structure and proactive cost control efforts.
Conference Call and Webcast Information
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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 our ability to capitalize on the summer selling season, our capital allocation priorities, including our intention to drive value and accelerate growth, and our full year financial outlook.
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: changes in interest rates, the potential effects of supply chain disruptions and production inefficiencies, general economic conditions, demand for our products, inflation, 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 fixed cost base, the successful introduction of our new products, geopolitical conflicts and financial institution disruptions. These and other important factors discussed under the caption “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended
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 consolidated financial statements prepared in accordance with
| Results of Operations for the Twelve Months Ended |
||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
| (Dollars in thousands, except per share data) | ||||||||||||||||
| Three Months Ended | For the Years Ended | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Net sales | $ | 166,566 | $ | 197,216 | $ | 662,046 | $ | 641,609 | ||||||||
| Cost of sales | 123,651 | 140,043 | 492,333 | 473,419 | ||||||||||||
| Gross profit | 42,915 | 57,173 | 169,713 | 168,190 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling and marketing | 3,060 | 2,903 | 13,808 | 12,869 | ||||||||||||
| General and administrative | 10,160 | 9,189 | 37,034 | 36,070 | ||||||||||||
| Amortization of other intangible assets | 489 | 489 | 1,956 | 1,956 | ||||||||||||
| — | — | — | 1,100 | |||||||||||||
| Total operating expenses | 13,709 | 12,581 | 52,798 | 51,995 | ||||||||||||
| Operating income | 29,206 | 44,592 | 116,915 | 116,195 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense | (756 | ) | (392 | ) | (2,679 | ) | (1,471 | ) | ||||||||
| Interest income | 1,384 | — | 3,351 | — | ||||||||||||
| Income before income tax expense | 29,834 | 44,200 | 117,587 | 114,724 | ||||||||||||
| Income tax expense | 6,782 | 10,652 | 27,135 | 26,779 | ||||||||||||
| Net income from continuing operations | 23,052 | 33,548 | 90,452 | 87,945 | ||||||||||||
| Loss from discontinued operations, net of tax | (376 | ) | (22,057 | ) | (21,515 | ) | (29,731 | ) | ||||||||
| Net income | $ | 22,676 | $ | 11,491 | $ | 68,937 | $ | 58,214 | ||||||||
| Net income (loss) per share | ||||||||||||||||
| Basic | ||||||||||||||||
| Continuing operations | $ | 1.33 | $ | 1.87 | $ | 5.13 | $ | 4.77 | ||||||||
| Discontinued operations | (0.02 | ) | (1.23 | ) | (1.22 | ) | (1.62 | ) | ||||||||
| Net income | $ | 1.31 | $ | 0.64 | $ | 3.91 | $ | 3.15 | ||||||||
| Diluted | ||||||||||||||||
| Continuing operations | $ | 1.32 | $ | 1.85 | $ | 5.09 | $ | 4.72 | ||||||||
| Discontinued operations | (0.02 | ) | (1.22 | ) | (1.21 | ) | (1.60 | ) | ||||||||
| Net income | $ | 1.30 | $ | 0.63 | $ | 3.88 | $ | 3.12 | ||||||||
| Weighted average shares used for computation of: | ||||||||||||||||
| Basic earnings per share | 17,299,562 | 17,952,267 | 17,618,797 | 18,455,226 | ||||||||||||
| Diluted earnings per share | 17,505,504 | 18,155,449 | 17,765,117 | 18,636,512 | ||||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (Dollars in thousands, except per share data) | ||||||||
| 2023 | 2022 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 19,817 | $ | 34,203 | ||||
| Held-to-maturity securities | 91,560 | — | ||||||
| Accounts receivable, net of allowances of |
15,741 | 22,472 | ||||||
| Inventories, net | 58,298 | 58,595 | ||||||
| Prepaid expenses and other current assets | 10,083 | 7,232 | ||||||
| Current assets associated with discontinued operations | — | 23,608 | ||||||
| Total current assets | 195,499 | 146,110 | ||||||
| Property, plant and equipment, net | 77,921 | 55,823 | ||||||
| 28,493 | 28,493 | |||||||
| Other intangible assets, net | 35,462 | 37,418 | ||||||
| Deferred income taxes | 12,428 | 21,525 | ||||||
| Deferred debt issuance costs, net | 304 | 406 | ||||||
| Other long-term assets | 3,869 | 1,290 | ||||||
| Non-current assets associated with discontinued operations | — | 5,987 | ||||||
| Total assets | $ | 353,976 | $ | 297,052 | ||||
| LIABILITIES AND EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable | $ | 20,391 | $ | 23,375 | ||||
| Income tax payable | 5,272 | 4,600 | ||||||
| Accrued expenses and other current liabilities | 72,496 | 54,437 | ||||||
| Current portion of long-term debt, net of unamortized debt issuance costs | 4,381 | 2,873 | ||||||
| Current liabilities associated with discontinued operations | — | 7,887 | ||||||
| Total current liabilities | 102,540 | 93,172 | ||||||
| Long-term debt, net of unamortized debt issuance costs | 49,295 | 53,676 | ||||||
| Unrecognized tax positions | 7,350 | 6,358 | ||||||
| Operating lease liabilities | 2,702 | 198 | ||||||
| Total liabilities | 161,887 | 153,404 | ||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| EQUITY: | ||||||||
| Common stock, |
173 | 181 | ||||||
| Additional paid-in capital | 75,976 | 96,584 | ||||||
| Retained earnings | 115,820 | 46,883 | ||||||
| 191,969 | 143,648 | |||||||
| Noncontrolling interest | 120 | — | ||||||
| Total equity | 192,089 | 143,648 | ||||||
| Total liabilities and equity | $ | 353,976 | $ | 297,052 | ||||
Supplemental Operating Data
The following table presents certain supplemental operating data for the periods indicated:
| Three Months Ended | For the Years Ended | |||||||||||||||||||||||
| 2023 | 2022 | Change | 2023 | 2022 | Change | |||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||
| Unit sales volume: | ||||||||||||||||||||||||
| MasterCraft | 950 | 1,027 | (7.5 | )% | 3,407 | 3,596 | (5.3 | )% | ||||||||||||||||
| Crest | 492 | 895 | (45.0 | )% | 2,836 | 3,156 | (10.1 | )% | ||||||||||||||||
| Aviara | 34 | 29 | 17.2 | % | 134 | 100 | 34.0 | % | ||||||||||||||||
| Consolidated | 1,476 | 1,951 | (24.3 | )% | 6,377 | 6,852 | (6.9 | )% | ||||||||||||||||
| MasterCraft | $ | 129,341 | $ | 147,282 | (12.2 | )% | $ | 468,656 | $ | 466,027 | 0.6 | % | ||||||||||||
| Crest | 24,652 | 39,403 | (37.4 | )% | 141,247 | 140,859 | 0.3 | % | ||||||||||||||||
| Aviara | 12,573 | 10,531 | 19.4 | % | 52,143 | 34,723 | 50.2 | % | ||||||||||||||||
| Consolidated | $ | 166,566 | $ | 197,216 | (15.5 | )% | $ | 662,046 | $ | 641,609 | 3.2 | % | ||||||||||||
| Net sales per unit: | ||||||||||||||||||||||||
| MasterCraft | $ | 136 | $ | 143 | (4.9 | )% | $ | 138 | $ | 130 | 6.2 | % | ||||||||||||
| Crest | 50 | 44 | 13.6 | % | 50 | 45 | 11.1 | % | ||||||||||||||||
| Aviara | 370 | 363 | 1.9 | % | 389 | 347 | 12.1 | % | ||||||||||||||||
| Consolidated | 113 | 101 | 11.9 | % | 104 | 94 | 10.6 | % | ||||||||||||||||
| Gross margin | 25.8 | % | 29.0 | % | (320) bps | 25.6 | % | 26.2 | % | (60) bps | ||||||||||||||
Non-GAAP Measures
EBITDA, Adjusted EBITDA, EBITDA Margin, and Adjusted EBITDA Margin
We define EBITDA as net income from continuing operations, before interest, 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 share-based compensation, business development consulting costs, and goodwill impairment, as described in more detail below. We define EBITDA margin and Adjusted EBITDA margin as EBITDA and Adjusted EBITDA, respectively, each 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 from continuing operations, 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 and reflecting income tax expense on adjusted net income before income taxes at our estimated annual effective tax rate. For the periods presented herein, these adjustments include other intangible asset amortization, share-based compensation, business development consulting costs, and goodwill impairment.
EBITDA, Adjusted EBITDA, EBITDA margin, 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 the Non-GAAP Measures do not reflect any cash requirements for such replacements;
- The Non-GAAP Measures do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments;
- The Non-GAAP Measures do not reflect changes in, or cash requirements for, our working capital needs;
- The Non-GAAP Measures do not reflect our tax expense or any cash requirements to pay income taxes;
- The Non-GAAP Measures do not reflect interest expense, or the cash requirements necessary to service interest payments on our indebtedness; and
- The Non-GAAP Measures 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.
Beginning in the first quarter of fiscal 2023, due to the effects of discontinued operations, as discussed above, the Company's non-GAAP financial measures are presented on a continuing operations basis, for all periods presented.
We do not provide forward-looking guidance for certain financial measures on a
The following table presents a reconciliation of net income from continuing operations as determined in accordance with
| (Dollars in thousands, except per share data) | Three Months Ended | For the Years Ended | ||||||||||||||||||||||||||
| % of Net | % of Net | % of Net | % of Net | |||||||||||||||||||||||||
| 2023 | sales | 2022 | sales | 2023 | sales | 2022 | sales | |||||||||||||||||||||
| Net income from continuing operations | $ | 23,052 | 13.8 | % | $ | 33,548 | 17.0 | % | $ | 90,452 | 13.7 | % | $ | 87,945 | 13.7 | % | ||||||||||||
| Income tax expense | 6,782 | 10,652 | 27,135 | 26,779 | ||||||||||||||||||||||||
| Interest expense | 756 | 392 | 2,679 | 1,471 | ||||||||||||||||||||||||
| Interest income | (1,384 | ) | — | (3,351 | ) | — | ||||||||||||||||||||||
| Depreciation and amortization | 2,736 | 2,402 | 10,569 | 9,731 | ||||||||||||||||||||||||
| EBITDA | 31,942 | 19.2 | % | 46,994 | 23.8 | % | 127,484 | 19.3 | % | 125,926 | 19.6 | % | ||||||||||||||||
| Share-based compensation | 765 | 582 | 3,656 | 3,510 | ||||||||||||||||||||||||
| Business development consulting costs(a) | — | — | 312 | — | ||||||||||||||||||||||||
| — | — | — | 1,100 | |||||||||||||||||||||||||
| Adjusted EBITDA | $ | 32,707 | 19.6 | % | $ | 47,576 | 24.1 | % | $ | 131,452 | 19.9 | % | $ | 130,536 | 20.3 | % | ||||||||||||
The following table sets forth a reconciliation of net income from continuing operations as determined in accordance with
| Three Months Ended | For the Years Ended | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| (Dollars in thousands) | (Dollars in thousands) | |||||||||||||||
| Net income from continuing operations | $ | 23,052 | $ | 33,548 | $ | 90,452 | $ | 87,945 | ||||||||
| Income tax expense | 6,782 | 10,652 | 27,135 | 26,779 | ||||||||||||
| Amortization of acquisition intangibles | 462 | 462 | 1,849 | 1,849 | ||||||||||||
| Share-based compensation | 765 | 582 | 3,656 | 3,510 | ||||||||||||
| Business development consulting costs(a) | — | — | 312 | — | ||||||||||||
| — | — | — | 1,100 | |||||||||||||
| Adjusted Net Income before income taxes | 31,061 | 45,244 | 123,404 | 121,183 | ||||||||||||
| Adjusted income tax expense(c) | 7,144 | 10,406 | 28,383 | 27,872 | ||||||||||||
| Adjusted Net Income | $ | 23,917 | $ | 34,838 | $ | 95,021 | $ | 93,311 | ||||||||
| Adjusted net income per common share | ||||||||||||||||
| Basic | $ | 1.38 | $ | 1.94 | $ | 5.39 | $ | 5.06 | ||||||||
| Diluted | $ | 1.37 | $ | 1.92 | $ | 5.35 | $ | 5.01 | ||||||||
| Weighted average shares used for the computation of (d): | ||||||||||||||||
| Basic Adjusted net income per share | 17,299,562 | 17,952,267 | 17,618,797 | 18,455,226 | ||||||||||||
| Diluted Adjusted net income per share | 17,505,504 | 18,155,449 | 17,765,117 | 18,636,512 | ||||||||||||
The following table presents the reconciliation of net income from continuing operations per diluted share to Adjusted Net Income per diluted share for the periods presented:
| Three Months Ended | For the Years Ended | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Net income from continuing operations per diluted share | $ | 1.32 | $ | 1.85 | $ | 5.09 | $ | 4.72 | ||||||||
| Impact of adjustments: | ||||||||||||||||
| Income tax expense | 0.39 | 0.59 | 1.53 | 1.44 | ||||||||||||
| Amortization of acquisition intangibles | 0.03 | 0.03 | 0.10 | 0.10 | ||||||||||||
| Share-based compensation | 0.04 | 0.03 | 0.21 | 0.19 | ||||||||||||
| Business development consulting costs(a) | — | — | 0.02 | — | ||||||||||||
| — | — | — | 0.06 | |||||||||||||
| Adjusted Net Income per diluted share before income taxes | 1.78 | 2.50 | 6.95 | 6.51 | ||||||||||||
| Impact of adjusted income tax expense on net income per diluted share before income taxes(c) | (0.41 | ) | (0.58 | ) | (1.60 | ) | (1.50 | ) | ||||||||
| Adjusted Net Income per diluted share | $ | 1.37 | $ | 1.92 | $ | 5.35 | $ | 5.01 | ||||||||
| (a) | Represents non-recurring third-party costs associated with business development activities, primarily relating to consulting costs for evaluation and execution of internal growth and other strategic initiatives. The evaluation and execution of the internal growth and other strategic initiatives is a bespoke initiative, and the costs associated therewith do not constitute normal reoccurring cash operating expenses necessary to operate the Company's business. | |
| (b) | Represents a non-cash charge recorded in the Aviara segment for impairment of goodwill. | |
| (c) | Reflects income tax expense at an income tax rate of 23.0% for each period presented. | |
| (d) | Represents the Weighted Average Shares used for the computation of Basic and Diluted earnings per share as presented on the Consolidated Statements of Operations to calculate Adjusted Net Income per diluted share for all periods presented herein. | |
Investor Contact:
Vice President of Strategy and Investor Relations
Email: investorrelations@mastercraft.com
Source: MasterCraft Boat Holdings, Inc.