Press Release

MasterCraft Boat Holdings, Inc. Reports Results for Fiscal 2024 Second Quarter

February 7, 2024 at 7:30 AM EST

VONORE, Tenn., Feb. 07, 2024 (GLOBE NEWSWIRE) -- MasterCraft Boat Holdings, Inc. (NASDAQ: MCFT) today announced financial results for its fiscal 2024 second quarter ended December 31, 2023.

The highlights, commentary, and results provided herein relate to our continuing operations.

Highlights:

  • Net sales for the second quarter was $99.5 million, down 37.5% from the prior-year period
  • Net income from continuing operations was $5.9 million, or $0.35 per diluted share
  • Diluted Adjusted Net Income per share, a non-GAAP measure, was $0.37, down 69.2% from the prior-year period
  • Adjusted EBITDA, a non-GAAP measure, was $9.8 million, down 67.2% from the prior-year period
  • Share repurchases of $4.4 million during the quarter
  • Ended the quarter with cash and investments of $108.8 million

Fred Brightbill, Chief Executive Officer and Chairman, commented, “Our business performed well during the second quarter by exceeding previously issued guidance, despite continuing macroeconomic uncertainty and a highly competitive retail environment. Near-term, we remain focused on rebalancing dealer inventories with anticipated retail demand. As we anticipate moving beyond inventory rebalancing, we are prudently investing in targeted initiatives that will take advantage of the industry’s positive, underlying secular trends and accelerate our growth. Soon we will be launching a new pontoon brand built in our Crest facility. This new brand is an example of why we are confident in our ability to deliver long-term growth for our shareholders.”

Brightbill continued, “We continue to exercise a disciplined approach to capital allocation. Year-to-date, we have generated $19.2 million of cash flow from operations and our strong balance sheet provides us with the financial flexibility to pursue our strategic growth initiatives while also returning excess cash to shareholders. During the quarter, we spent approximately $4.4 million to repurchase more than 214,000 shares of our common stock. Since initiating our share repurchase program in June 2021, we have repurchased $58.6 million of our common stock and reduced our shares outstanding by more than twelve percent.”

Second Quarter Results

For the second quarter of fiscal 2024, MasterCraft Boat Holdings, Inc. reported consolidated net sales of $99.5 million, down $59.7 million from the second quarter of fiscal 2023. The decrease in net sales is due to lower unit volume and an increase in dealer incentives, partially offset by higher prices and favorable mix and options. Dealer incentives include higher floor plan financing costs as a result of increased dealer inventories and interest rates, and other incentives as the retail environment remains competitive.

Gross margin percentage declined 520 basis points during the second quarter of fiscal 2024, when compared to the same prior-year period. Lower margins were the result of lower cost absorption due to planned decreased sales volume, higher dealer incentives, and higher costs related to material, labor and overhead inflation, partially offset by higher prices.

Operating expenses were relatively consistent for the second quarter of fiscal 2024, compared to the prior-year period. In pursuit of growth initiatives, we continue to invest in product development and marketing.

Net income from continuing operations was $5.9 million for the second quarter of fiscal 2024, compared to $20.0 million in the prior-year period. Diluted net income from continuing operations per share was $0.35, compared to $1.12 for the second quarter of fiscal 2023.

Adjusted Net Income decreased to $6.3 million for the second quarter of fiscal 2024, or $0.37 per diluted share, compared to $21.3 million, or $1.20 per diluted share, in the prior-year period.

Adjusted EBITDA was $9.8 million for the second quarter of fiscal 2024, compared to $29.8 million in the prior-year period. Adjusted EBITDA margin was 9.8 percent for the second quarter, down from 18.7 percent for the prior-year period.

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, “Views regarding the economic outlook remain mixed and uncertain, which is limiting retail demand visibility. The retail environment has become increasingly competitive as industry participants react to lower demand and higher inventory levels. The resulting increase in promotional activity will likely pressure margins across the industry. We continue to monitor retail results, assess the overall business and economic environment, and accordingly adjust our production and shipment plan. We expect to have a clearer picture of retail demand as we progress through the third and fourth quarters.”

The Company’s outlook is as follows:

  • Looking forward, we are narrowing our guidance range for the full year. Consolidated net sales is now expected to be between $400 million and $412 million, with Adjusted EBITDA between $42 million and $47 million, and Adjusted Earnings per share between $1.53 and $1.78. We expect capital expenditures to be approximately $20 million for the full year.
  • For the third quarter of fiscal 2024, consolidated net sales is expected to be approximately $92 million, with Adjusted EBITDA of approximately $7 million, and Adjusted Earnings per share of approximately $0.23.

Conference Call and Webcast Information

MasterCraft Boat Holdings, Inc. will host a live conference call and webcast to discuss fiscal second quarter 2024 results today, February 7, 2024, at 8:30 a.m. EST. Participants may access the conference call live via webcast on the investor section of the Company’s website, Investors.MasterCraft.com, by clicking on the webcast icon. To participate via telephone, please register in advance at this link. Upon registration, all telephone participants will receive a confirmation email detailing how to join the conference call, including the dial-in number along with a unique passcode and registrant ID that can be used to access the call. A replay of the conference call and webcast will be archived on the Company's website.

About MasterCraft Boat Holdings, Inc.

Headquartered in Vonore, Tenn., MasterCraft Boat Holdings, Inc. (NASDAQ: MCFT) is a leading innovator, designer, manufacturer and marketer of recreational powerboats through its three brands, MasterCraft, Crest, and Aviara. Through these three brands, MasterCraft Boat Holdings has leading market share positions in two of the fastest growing segments of the powerboat industry – performance sport boats and pontoon boats – while entering the large, growing luxury day boat segment. For more information about MasterCraft Boat Holdings, and its three brands, visit: Investors.MasterCraft.com, www.MasterCraft.com, www.CrestPontoons.com, and www.AviaraBoats.com.

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; and our intention to drive value and accelerate growth.

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 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, and geopolitical conflicts, such as the conflict between Russia and Ukraine and the conflict in the Gaza Strip. These and other important factors discussed under the caption “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023, filed with the Securities and Exchange Commission (the “SEC”) on August 30, 2023, could cause actual results to differ materially from those indicated by the forward-looking statements. The discussion of these risks is specifically incorporated by reference into this press release.

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 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 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 Six Months Ended December 31, 2023
 
MASTERCRAFT BOAT HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
 
(Dollars in thousands, except per share data)
 
    Three Months Ended     Six Months Ended  
    December 31,     January 1,     December 31,     January 1,  
    2023     2023     2023     2023  
                   
Net sales   $ 99,481     $ 159,188     $ 203,698     $ 328,704  
Cost of sales     80,752       120,961       163,133       244,504  
Gross profit     18,729       38,227       40,565       84,200  
Operating expenses:                        
Selling and marketing     3,150       3,042       6,614       6,821  
General and administrative     8,111       8,235       17,468       17,718  
Amortization of other intangible assets     450       489       912       978  
Total operating expenses     11,711       11,766       24,994       25,517  
Operating income     7,018       26,461       15,571       58,683  
Other income (expense):                        
Interest expense     (854 )     (666 )     (1,732 )     (1,228 )
Interest income     1,415       621       2,766       772  
Income before income tax expense     7,579       26,416       16,605       58,227  
Income tax expense     1,652       6,433       3,602       13,609  
Net income from continuing operations     5,927       19,983       13,003       44,618  
Loss from discontinued operations, net of tax     (41 )     (300 )     (922 )     (20,867 )
Net income   $ 5,886     $ 19,683     $ 12,081     $ 23,751  
                         
Net income (loss) per share                        
Basic                        
Continuing operations   $ 0.35     $ 1.13     $ 0.76     $ 2.51  
Discontinued operations           (0.02 )     (0.05 )     (1.18 )
Net income   $ 0.35     $ 1.11     $ 0.71     $ 1.33  
                         
Diluted                        
Continuing operations   $ 0.35     $ 1.12     $ 0.76     $ 2.49  
Discontinued operations     (0.01 )     (0.01 )     (0.06 )     (1.16 )
Net income   $ 0.34     $ 1.11     $ 0.70     $ 1.33  
                         
Weighted average shares used for computation of:                        
Basic earnings per share     17,010,116       17,669,645       17,083,204       17,807,853  
Diluted earnings per share     17,091,633       17,774,329       17,158,124       17,903,027  


MASTERCRAFT BOAT HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 
(Dollars in thousands, except per share data)
 
    December 31,     June 30,  
    2023     2023  
ASSETS            
CURRENT ASSETS:            
Cash and cash equivalents   $ 36,246     $ 19,817  
Held-to-maturity securities     72,538       91,560  
Accounts receivable, net of allowances of $38 and $122, respectively     8,786       15,741  
Inventories, net     43,056       58,298  
Prepaid expenses and other current assets     9,684       10,083  
Total current assets     170,310       195,499  
Property, plant and equipment, net     77,746       77,921  
Goodwill     28,493       28,493  
Other intangible assets, net     34,550       35,462  
Deferred income taxes     12,769       12,428  
Deferred debt issuance costs, net     341       304  
Other long-term assets     7,577       3,869  
Total assets   $ 331,786     $ 353,976  
LIABILITIES AND EQUITY            
CURRENT LIABILITIES:            
Accounts payable   $ 10,205     $ 20,391  
Income tax payable     438       5,272  
Accrued expenses and other current liabilities     65,590       72,496  
Current portion of long-term debt, net of unamortized debt issuance costs     4,368       4,381  
Total current liabilities     80,601       102,540  
Long-term debt, net of unamortized debt issuance costs     47,075       49,295  
Unrecognized tax positions     7,936       7,350  
Operating lease liabilities     2,843       2,702  
Total liabilities     138,455       161,887  
COMMITMENTS AND CONTINGENCIES            
EQUITY:            
Common stock, $.01 par value per share — authorized, 100,000,000 shares; issued and outstanding, 17,033,805 shares at December 31, 2023 and 17,312,850 shares at June 30, 2023     170       173  
Additional paid-in capital     65,060       75,976  
Retained earnings     127,901       115,820  
MasterCraft Boat Holdings, Inc. equity     193,131       191,969  
Noncontrolling interest     200       120  
Total equity     193,331       192,089  
Total liabilities and equity   $ 331,786     $ 353,976  


Supplemental Operating Data
 
The following table presents certain supplemental operating data for the periods indicated:
 
    Three Months Ended   Six Months Ended
    December 31,     January 1,             December 31,     January 1,          
    2023     2023     Change   2023     2023     Change
    (Dollars in thousands)
Unit sales volume:                                        
MasterCraft     491       776     (36.7 ) %     985       1,557     (36.7 ) %
Crest     365       776     (53.0 ) %     727       1,622     (55.2 ) %
Aviara     28       34     (17.6 ) %     53       66     (19.7 ) %
Consolidated     884       1,586     (44.3 ) %     1,765       3,245     (45.6 ) %
Net sales:                                        
MasterCraft   $ 72,699     $ 108,665     (33.1 ) %   $ 148,535     $ 221,685     (33.0 ) %
Crest     17,051       36,665     (53.5 ) %     35,520       80,226     (55.7 ) %
Aviara     9,731       13,858     (29.8 ) %     19,643       26,793     (26.7 ) %
Consolidated   $ 99,481     $ 159,188     (37.5 ) %   $ 203,698     $ 328,704     (38.0 ) %
Net sales per unit:                                        
MasterCraft   $ 148     $ 140     5.7   %   $ 151     $ 142     6.3   %
Crest     47       47       %     49       49       %
Aviara     348       408     (14.7 ) %     371       406     (8.6 ) %
Consolidated     113       100     13.0   %     115       101     13.9   %
Gross margin     18.8 %     24.0 %   (520) bps         19.9 %     25.6 %   (570) 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, the adjustment includes share-based compensation. 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 and share-based compensation.

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 the United States, or U.S. GAAP. The Non-GAAP Measures are not measures of performance in accordance with U.S. GAAP and should not be considered as an alternative to net income, net income per share, or operating cash flows determined in accordance with U.S. 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 U.S. GAAP, provides a more complete understanding of factors and trends affecting our business than does U.S. GAAP measures alone. We believe Adjusted Net Income and Adjusted Net Income 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 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 U.S. 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.

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 U.S. GAAP basis because we are unable to predict certain items contained in the U.S. 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 from continuing operations as determined in accordance with U.S. 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   Six Months Ended
    December 31,     % of Net   January 1,     % of Net   December 31,     % of Net   January 1,     % of Net
    2023     sales   2023     sales   2023     sales   2023     sales
Net income from continuing operations   $ 5,927     6.0 %   $ 19,983     12.6 %   $ 13,003     6.4 %   $ 44,618     13.6 %
Income tax expense     1,652           6,433           3,602           13,609      
Interest expense     854           666           1,732           1,228      
Interest income     (1,415 )         (621 )         (2,766 )         (772 )    
Depreciation and amortization     2,758           2,610           5,484           5,211      
EBITDA     9,776     9.8 %     29,071     18.3 %     21,055     10.3 %     63,894     19.4 %
Share-based compensation     9           745           948           1,865      
Adjusted EBITDA   $ 9,785     9.8 %   $ 29,816     18.7 %   $ 22,003     10.8 %   $ 65,759     20.0 %

The following table sets forth a reconciliation of net income from continuing operations as determined in accordance with U.S. GAAP to Adjusted Net Income for the periods indicated:

(Dollars in thousands, except per share data) Three Months Ended     Six Months Ended  
  December 31,     January 1,     December 31,     January 1,  
  2023     2023     2023     2023  
Net income from continuing operations $ 5,927     $ 19,983     $ 13,003     $ 44,618  
Income tax expense   1,652       6,433       3,602       13,609  
Amortization of acquisition intangibles   450       462       912       924  
Share-based compensation   9       745       948       1,865  
Adjusted Net Income before income taxes   8,038       27,623       18,465       61,016  
Adjusted income tax expense(a)   1,768       6,353       4,062       14,034  
Adjusted Net Income $ 6,270     $ 21,270     $ 14,403     $ 46,982  
                       
Adjusted net income per common share                      
Basic $ 0.37     $ 1.20     $ 0.84     $ 2.64  
Diluted $ 0.37     $ 1.20     $ 0.84     $ 2.62  
Weighted average shares used for the computation of(b):                      
Basic Adjusted net income per share   17,010,116       17,669,645       17,083,204       17,807,853  
Diluted Adjusted net income per share   17,091,633       17,774,329       17,158,124       17,903,027  

(a)    For fiscal 2024 and 2023, income tax expense reflects an income tax rate of 22.0% and 23.0%, respectively, for each period presented.

(b)    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.

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 indicated:

(Dollars in thousands, except per share data) Three Months Ended     Six Months Ended  
  December 31,     January 1,     December 31,     January 1,  
  2023     2023     2023     2023  
Net income from continuing operations per diluted share $ 0.35     $ 1.12     $ 0.76     $ 2.49  
Impact of adjustments:                      
Income tax expense   0.09       0.36       0.21       0.76  
Amortization of acquisition intangibles   0.03       0.03       0.05       0.05  
Share-based compensation         0.04       0.06       0.10  
Adjusted Net Income per diluted share before income taxes   0.47       1.55       1.08       3.40  
Impact of adjusted income tax expense on net income per diluted share before income taxes(a)   (0.10 )     (0.35 )     (0.24 )     (0.78 )
Adjusted Net Income per diluted share $ 0.37     $ 1.20     $ 0.84     $ 2.62  

(a)    For fiscal 2024 and 2023, income tax expense reflects an income tax rate of 22.0% and 23.0%, respectively, for each period presented.

Investor Contact:
MasterCraft Boat Holdings, Inc.
Bobby Potter
Vice President of Strategy and Investor Relations
Email: investorrelations@mastercraft.com 


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Source: MasterCraft Boat Holdings, Inc.