MasterCraft Boat Holdings, Inc. Reports Fiscal 2024 Results
Subsequent to
The overview, commentary, and results provided herein relate to our continuing operations.
Fourth Quarter Overview:
- Net sales for the fourth quarter were
$67.2 million , down 59.7% from the prior-year period - Non-cash impairment charges of
$9.8 million related to our Aviara segment - Net loss from continuing operations was
($8.1) million , or ($0.49 ) per diluted share - Diluted Adjusted Net Income (Loss) per share, a non-GAAP measure, was (
$0.04 ), down from$1.37 in the prior-year period - Adjusted EBITDA, a non-GAAP measure, was
$0.8 million , down 97.4% from the prior-year period - Share repurchases of
$4.5 million during the quarter
Full Year Overview:
- Net sales were
$366.6 million , down 44.6% from the prior-year - Net income from continuing operations was
$8.7 million , or$0.51 per diluted share - Diluted Adjusted Net Income per share, a non-GAAP measure, was
$1.22 , down from$5.35 in the prior-year - Adjusted EBITDA, a non-GAAP measure, was
$32.9 million , down 74.9% from the prior-year - Share repurchases of
$16.3 million during the year - Ended the year with cash and investments of
$86.2 million , and total debt of$49.3 million
Nelson continued, “Combined with economic and retail uncertainty, elevated interest rates and lingering competitor dealer disruptions have contributed to above optimal inventory levels and increased carrying costs for dealers. Our production plans prioritize dealer health, and we remain committed to partnering with our dealers as they stay healthy by judiciously selling through inventory.”
Nelson added, “Our strong financial position provides us with the flexibility to pursue our strategic initiatives, including investment in innovation, product and brand development. We will continue to exercise a disciplined approach to capital allocation. As we navigate this dynamic environment, our strong portfolio of brands positions us well to explore long-term growth opportunities while maintaining the flexibility to return capital to shareholders.”
Fourth Quarter Results
For the fourth quarter of fiscal 2024,
Gross margin percentage declined 1,360 basis points during the fourth quarter of fiscal 2024, when compared to the prior-year period. Lower margins were the result of lower cost absorption due to planned decreased unit volume and unfavorable model mix and options, partially offset by higher prices.
Operating expenses increased
Net loss from continuing operations was
Adjusted Net loss was
Adjusted EBITDA was
See “Non-GAAP Measures” below for a reconciliation of Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income (Loss), and Adjusted Net Income (Loss) per share, which we refer to collectively as the “Non-GAAP Measures”, to the most directly comparable financial measures presented in accordance with GAAP.
Fiscal 2024 Results
For fiscal 2024,
Gross margin percentage declined 730 basis points during fiscal 2024, when compared to the same prior-year period. Lower margins were the result of lower cost absorption due to planned decreased unit volume and higher dealer incentives, partially offset by higher prices.
Operating expenses increased
Net income from continuing operations was
Adjusted Net Income decreased to
Adjusted EBITDA was
See “Non-GAAP Measures” below for a reconciliation of the Non-GAAP measures to the most directly comparable financial measures presented in accordance with GAAP.
Outlook
Concluded Nelson, “Looking forward, although current market uncertainties have short-term implications for wholesale shipments, our destocking efforts are positive for dealer health and in the best long-term interest of our business. In fiscal 2025, we will continue to prioritize a healthy distribution network, and our production plan optimizes dealer inventory levels to position us well to capitalize on the next market upswing.”
The Company’s outlook is as follows:
- For full year fiscal 2025, we expect consolidated net sales to be between
$265 million and$300 million , with Adjusted EBITDA between$15 million and$26 million , and Adjusted Earnings per share of between$0.36 and$0.87 . Capital expenditures are projected to be approximately$12 million for the full year. - For fiscal first quarter 2025, consolidated net sales are expected to be approximately
$61 million , with Adjusted EBITDA of approximately$2 million , and Adjusted Earnings per share of approximately$0.04 .
Conference Call and Webcast Information
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 accelerate growth, and our fiscal full year and first quarter 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: 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 ability to maintain a reliable network of dealers, our ability to manage our manufacturing levels and our fixed cost base, the successful introduction of our new products, including our new Balise brand, the success of our strategic divestments, including Aviara, geopolitical conflicts, such as the conflict between
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 Three Months and Fiscal Year Ended |
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CONSOLIDATED STATEMENTS OF OPERATIONS |
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| (Dollars in thousands, except per share data) |
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| Three Months Ended | Fiscal Year Ended | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Net sales | $ | 67,182 | $ | 166,566 | $ | 366,588 | $ | 662,046 | ||||||||
| Cost of sales | 58,998 | 123,651 | 299,491 | 492,333 | ||||||||||||
| Gross profit | 8,184 | 42,915 | 67,097 | 169,713 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling and marketing | 2,892 | 3,060 | 13,430 | 13,808 | ||||||||||||
| General and administrative | 6,950 | 10,160 | 34,396 | 37,034 | ||||||||||||
| Amortization of other intangible assets | 450 | 489 | 1,812 | 1,956 | ||||||||||||
| Impairments | 9,827 | — | 9,827 | — | ||||||||||||
| Total operating expenses | 20,119 | 13,709 | 59,465 | 52,798 | ||||||||||||
| Operating income (loss) | (11,935 | ) | 29,206 | 7,632 | 116,915 | |||||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense | (798 | ) | (756 | ) | (3,292 | ) | (2,679 | ) | ||||||||
| Interest income | 1,625 | 1,384 | 5,789 | 3,351 | ||||||||||||
| Income (loss) before income tax expense | (11,108 | ) | 29,834 | 10,129 | 117,587 | |||||||||||
| Income tax expense (benefit) | (3,001 | ) | 6,782 | 1,407 | 27,135 | |||||||||||
| Net income (loss) from continuing operations | (8,107 | ) | 23,052 | 8,722 | 90,452 | |||||||||||
| Benefit (loss) from discontinued operations, net of tax | 71 | (376 | ) | (922 | ) | (21,515 | ) | |||||||||
| Net income (loss) | $ | (8,036 | ) | $ | 22,676 | $ | 7,800 | $ | 68,937 | |||||||
| Net income (loss) per share | ||||||||||||||||
| Basic | ||||||||||||||||
| Continuing operations | $ | (0.49 | ) | $ | 1.33 | $ | 0.52 | $ | 5.13 | |||||||
| Discontinued operations | 0.01 | (0.02 | ) | (0.06 | ) | (1.22 | ) | |||||||||
| Net income (loss) | $ | (0.48 | ) | $ | 1.31 | $ | 0.46 | $ | 3.91 | |||||||
| Diluted | ||||||||||||||||
| Continuing operations | $ | (0.49 | ) | $ | 1.32 | $ | 0.51 | $ | 5.09 | |||||||
| Discontinued operations | 0.01 | (0.02 | ) | (0.05 | ) | (1.21 | ) | |||||||||
| Net income (loss) | $ | (0.48 | ) | $ | 1.30 | $ | 0.46 | $ | 3.88 | |||||||
| Weighted average shares used for computation of: | ||||||||||||||||
| Basic earnings per share | 16,710,544 | 17,299,562 | 16,930,348 | 17,618,797 | ||||||||||||
| Diluted earnings per share | 16,710,544 | 17,505,504 | 17,038,305 | 17,765,117 | ||||||||||||
CONSOLIDATED BALANCE SHEETS |
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| (Dollars in thousands, except per share data) |
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| 2024 | 2023 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 7,394 | $ | 19,817 | ||||
| Held-to-maturity securities | 78,846 | 91,560 | ||||||
| Accounts receivable, net of allowances of |
15,382 | 15,741 | ||||||
| Income tax receivable | 499 | — | ||||||
| Inventories, net | 44,267 | 58,298 | ||||||
| Prepaid expenses and other current assets | 8,686 | 10,083 | ||||||
| Total current assets | 155,074 | 195,499 | ||||||
| Property, plant and equipment, net | 73,813 | 77,921 | ||||||
| 28,493 | 28,493 | |||||||
| Other intangible assets, net | 33,650 | 35,462 | ||||||
| Deferred income taxes | 18,584 | 12,428 | ||||||
| Deferred debt issuance costs, net | 272 | 304 | ||||||
| Other long-term assets | 8,098 | 3,869 | ||||||
| Total assets | $ | 317,984 | $ | 353,976 | ||||
| LIABILITIES AND EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable | $ | 12,178 | $ | 20,391 | ||||
| Income tax payable | — | 5,272 | ||||||
| Accrued expenses and other current liabilities | 61,384 | 72,496 | ||||||
| Current portion of long-term debt, net of unamortized debt issuance costs | 4,374 | 4,381 | ||||||
| Total current liabilities | 77,936 | 102,540 | ||||||
| Long-term debt, net of unamortized debt issuance costs | 44,887 | 49,295 | ||||||
| Unrecognized tax positions | 8,549 | 7,350 | ||||||
| Operating lease liabilities | 2,733 | 2,702 | ||||||
| Total liabilities | 134,105 | 161,887 | ||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| EQUITY: | ||||||||
| Common stock, |
167 | 173 | ||||||
| Additional paid-in capital | 59,892 | 75,976 | ||||||
| Retained earnings | 123,620 | 115,820 | ||||||
| 183,679 | 191,969 | |||||||
| Noncontrolling interest | 200 | 120 | ||||||
| Total equity | 183,879 | 192,089 | ||||||
| Total liabilities and equity | $ | 317,984 | $ | 353,976 | ||||
Supplemental Operating Data
The following table presents certain supplemental operating data for the periods indicated:
| Three Months Ended | For the Years Ended | |||||||||||||||||||||||||
| 2024 | 2023 | Change | 2024 | 2023 | Change | |||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||
| Unit sales volume: | ||||||||||||||||||||||||||
| MasterCraft | 302 | 950 | (68.2 | ) | % | 1,755 | 3,407 | (48.5 | ) | % | ||||||||||||||||
| Pontoon(a) | 216 | 492 | (56.1 | ) | % | 1,241 | 2,836 | (56.2 | ) | % | ||||||||||||||||
| Aviara | 42 | 34 | 23.5 | % | 134 | 134 | — | % | ||||||||||||||||||
| Consolidated | 560 | 1,476 | (62.1 | ) | % | 3,130 | 6,377 | (50.9 | ) | % | ||||||||||||||||
| Net sales: | ||||||||||||||||||||||||||
| MasterCraft | $ | 44,417 | $ | 129,341 | (65.7 | ) | % | $ | 262,736 | $ | 468,656 | (43.9 | ) | % | ||||||||||||
| Pontoon(a) | 9,901 | 24,652 | (59.8 | ) | % | 59,615 | 141,247 | (57.8 | ) | % | ||||||||||||||||
| Aviara | 12,864 | 12,573 | 2.3 | % | 44,237 | 52,143 | (15.2 | ) | % | |||||||||||||||||
| Consolidated | $ | 67,182 | $ | 166,566 | (59.7 | ) | % | $ | 366,588 | $ | 662,046 | (44.6 | ) | % | ||||||||||||
| Net sales per unit: | ||||||||||||||||||||||||||
| MasterCraft | $ | 147 | $ | 136 | 8.1 | % | $ | 150 | $ | 138 | 8.7 | % | ||||||||||||||
| Pontoon(a) | 46 | 50 | (8.0 | ) | % | 48 | 50 | (4.0 | ) | % | ||||||||||||||||
| Aviara | 306 | 370 | (17.3 | ) | % | 330 | 389 | (15.2 | ) | % | ||||||||||||||||
| Consolidated | 120 | 113 | 6.2 | % | 117 | 104 | 12.5 | % | ||||||||||||||||||
| Gross margin | 12.2 | % | 25.8 | % | (1,360) bps | 18.3 | % | 25.6 | % | (730) bps | ||||||||||||||||
| (a) | During the fiscal fourth quarter of 2024, the Company changed the name of its “Crest” operating segment to “Pontoon.” The segment name change had no impact on the composition of the Company’s segments or on previously reported financial position, results of operations, cash flows or segment operating results. |
Non-GAAP Measures
EBITDA, Adjusted EBITDA, EBITDA margin, and Adjusted EBITDA margin
We define EBITDA as net income (loss) 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 non-cash impairment charges, share-based compensation, CEO transition costs, and business development consulting costs. 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 (Loss) and Adjusted Net Income (Loss) per share
We define Adjusted Net Income (Loss) and Adjusted Net Income (Loss) 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 (benefit) on adjusted net income (loss) before income taxes at our estimated annual effective tax rate. For the periods presented herein, these adjustments include non-cash impairment charges, other intangible asset amortization, share-based compensation, CEO transition costs, and business development consulting costs.
The Non-GAAP Measures are not measures of net income or operating income as determined under GAAP. The Non-GAAP Measures are not measures of performance in accordance with GAAP and should not be considered as an alternative to net income (loss), net income (loss) per share, or operating cash flows determined in accordance with GAAP. Additionally, Adjusted EBITDA is not intended to be a measure of cash flow. We believe that the inclusion of the Non-GAAP Measures is appropriate to provide additional information to investors because securities analysts and investors use the Non-GAAP Measures to assess our operating performance across periods on a consistent basis and to evaluate the relative risk of an investment in our securities. We use Adjusted Net Income and Adjusted Net Income per share to facilitate a comparison of our operating performance on a consistent basis from period to period that, when viewed in combination with our results prepared in accordance with GAAP, provides a more complete understanding of factors and trends affecting our business than does GAAP measures alone. We believe Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per share assists our board of directors, management, investors, and other users of the financial statements in comparing our net income on a consistent basis from period to period because it removes certain non-cash items and other items that we do not consider to be indicative of our core and/or ongoing operations and reflecting income tax expense (benefit) on adjusted net income before income taxes at our estimated annual effective tax rate. The Non-GAAP Measures have limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:
- 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;
- Certain Non-GAAP Measures do not reflect our tax expense or any cash requirements to pay income taxes;
- Certain 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.
We do not provide forward-looking guidance for certain financial measures on a GAAP basis because we are unable to predict certain items contained in the GAAP measures without unreasonable efforts. These items may include acquisition-related costs, litigation charges or settlements, impairment charges, and certain other unusual adjustments.
The following table presents a reconciliation of net income (loss) from continuing operations as determined in accordance with GAAP to EBITDA and Adjusted EBITDA, and net income from continuing operations margin to EBITDA margin and Adjusted EBITDA margin (each expressed as a percentage of net sales) for the periods indicated:
| (Dollars in thousands) | Three Months Ended | For the Years Ended | ||||||||||||||||||||||||||
| % of Net | % of Net | % of Net | % of Net | |||||||||||||||||||||||||
| 2024 | sales | 2023 | sales | 2024 | sales | 2023 | sales | |||||||||||||||||||||
| Net income (loss) from continuing operations | $ | (8,107 | ) | (12.1 | )% | $ | 23,052 | 13.8 | % | $ | 8,722 | 2.4 | % | $ | 90,452 | 13.7 | % | |||||||||||
| Income tax expense (benefit) | (3,001 | ) | 6,782 | 1,407 | 27,135 | |||||||||||||||||||||||
| Interest expense | 798 | 756 | 3,292 | 2,679 | ||||||||||||||||||||||||
| Interest income | (1,625 | ) | (1,384 | ) | (5,789 | ) | (3,351 | ) | ||||||||||||||||||||
| Depreciation and amortization | 2,856 | 2,736 | 11,182 | 10,569 | ||||||||||||||||||||||||
| EBITDA | (9,079 | ) | (13.5 | )% | 31,942 | 19.2 | % | 18,814 | 5.1 | % | 127,484 | 19.3 | % | |||||||||||||||
| Impairments(a) | 9,827 | — | 9,827 | — | ||||||||||||||||||||||||
| Share-based compensation(b) | 67 | 765 | 2,598 | 3,656 | ||||||||||||||||||||||||
| CEO transition costs(c) | 31 | — | 1,708 | — | ||||||||||||||||||||||||
| Business development consulting costs(d) | — | — | — | 312 | ||||||||||||||||||||||||
| Adjusted EBITDA | $ | 846 | 1.3 | % | $ | 32,707 | 19.6 | % | $ | 32,947 | 9.0 | % | $ | 131,452 | 19.9 | % | ||||||||||||
The following table sets forth a reconciliation of net income (loss) from continuing operations as determined in accordance with GAAP to Adjusted Net Income (loss) for the periods indicated:
| (Dollars in thousands, except per share data) | Three Months Ended | For the Years Ended | |||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Net income (loss) from continuing operations | $ | (8,107 | ) | $ | 23,052 | $ | 8,722 | $ | 90,452 | ||||||
| Income tax expense (benefit) | (3,001 | ) | 6,782 | 1,407 | 27,135 | ||||||||||
| Impairments(a) | 9,827 | — | 9,827 | — | |||||||||||
| Amortization of acquisition intangibles | 450 | 462 | 1,812 | 1,849 | |||||||||||
| Share-based compensation(b) | 67 | 765 | 2,598 | 3,656 | |||||||||||
| CEO transition costs(c) | 31 | — | 1,708 | — | |||||||||||
| Business development consulting costs(d) | — | — | — | 312 | |||||||||||
| Adjusted Net Income before income taxes | (733 | ) | 31,061 | 26,074 | 123,404 | ||||||||||
| Adjusted income tax expense (benefit)(e) | (147 | ) | 7,144 | 5,214 | 28,383 | ||||||||||
| Adjusted Net Income (Loss) | $ | (586 | ) | $ | 23,917 | $ | 20,860 | $ | 95,021 | ||||||
| Adjusted net income (loss) per common share | |||||||||||||||
| Basic | $ | (0.04 | ) | $ | 1.38 | $ | 1.23 | $ | 5.39 | ||||||
| Diluted | $ | (0.04 | ) | $ | 1.37 | $ | 1.22 | $ | 5.35 | ||||||
| Weighted average shares used for the computation of (f): | |||||||||||||||
| Basic Adjusted net income (loss) per share | 16,710,544 | 17,299,562 | 16,930,348 | 17,618,797 | |||||||||||
| Diluted Adjusted net income (loss) per share | 16,710,544 | 17,505,504 | 17,038,305 | 17,765,117 | |||||||||||
The following table presents the reconciliation of net income (loss) from continuing operations per diluted share to Adjusted Net Income (loss) per diluted share for the periods indicated:
| (Dollars in thousands, except per share data) | Three Months Ended | For the Years Ended | |||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Net income (loss) from continuing operations per diluted share | $ | (0.49 | ) | $ | 1.32 | $ | 0.51 | $ | 5.09 | ||||||
| Impact of adjustments: | |||||||||||||||
| Income tax expense (benefit) | (0.18 | ) | 0.39 | 0.08 | 1.53 | ||||||||||
| Impairments(a) | 0.59 | — | 0.57 | — | |||||||||||
| Amortization of acquisition intangibles | 0.03 | 0.03 | 0.11 | 0.10 | |||||||||||
| Share-based compensation(b) | — | 0.04 | 0.15 | 0.21 | |||||||||||
| CEO transition costs(c) | — | — | 0.10 | — | |||||||||||
| Business development consulting costs(d) | — | — | — | 0.02 | |||||||||||
| Adjusted Net Income per diluted share before income taxes | (0.05 | ) | 1.78 | 1.52 | 6.95 | ||||||||||
| Impact of adjusted income tax expense on net income per diluted share before income taxes(e) | 0.01 | (0.41 | ) | (0.30 | ) | (1.60 | ) | ||||||||
| Adjusted Net Income (loss) per diluted share | $ | (0.04 | ) | $ | 1.37 | $ | 1.22 | $ | 5.35 | ||||||
| (a) | Represents non-cash charges recorded in the Aviara segment of |
| (b) | Included in share-based compensation are the impacts of accelerating expense recognition for equity awards related to the CEO transition. |
| (c) | Represents amounts paid to the Company’s former CEO upon his departure under the terms of his transition agreements and legal fees incurred with the transition, but excluding amounts related to accelerating expense recognition for equity awards related to the CEO transition noted in (b). Also included are recruiting and relocation costs related to the new CEO. |
| (d) | 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 recurring cash operating expenses necessary to operate the Company’s business. |
| (e) | For fiscal 2024 and 2023, income tax expense (benefit) reflects an income tax rate of 20.0% and 23.0%, respectively, for each period presented. |
| (f) | Represents the Weighted Average Shares used for the computation of Basic and Diluted (loss) earnings per share as presented on the Consolidated Statements of Operations to calculate Adjusted Net Income (loss) per diluted share for all periods presented herein. |
Investor Contact:
Manager of
Email: investorrelations@mastercraft.com
Source: MasterCraft Boat Holdings, Inc.