MasterCraft Reports Fiscal 2015 Fourth-Quarter and Full-Year Results
Highlights:
-
Fiscal 2015 full-year sales rose 21 percent to
$214.4 million , with fourth-quarter net sales increasing 6 percent to$54.9 million -
Fully diluted pro forma adjusted net income per share totaled
$0.79 for fiscal 2015 and$0.20 for the fourth quarter -
MasterCraft unit volume grew 19 percent for fiscal 2015 to 2,547 units, and 2.5 percent for the three-month period to 626 units -
Adjusted EBITDA increased 71 percent for the fiscal year to
$31.5 million - Fiscal 2015 gross margin improved by 270 basis points versus the prior year
-
MasterCraft successfully launched the NXT22 during the fourth quarter and recently unveiled the X26
McNew continued, "We reported fourth quarter results at the high end of the guidance provided in our
Fourth-Quarter Results
Net sales for the three months ended
Said McNew, "Higher consumer confidence from improving macroeconomic conditions in
Gross profit for the fiscal 2015 fourth quarter rose
Fiscal 2015 fourth quarter selling and marketing expenses were flat versus the prior year, while general and administrative expense increased to
Net income for the quarter ended
Fiscal 2015 fourth quarter adjusted EBITDA was
Fiscal 2015 fourth quarter adjusted net income increased 8.5 percent to
Fiscal 2015 Results
For the fiscal 2015 full year,
Fiscal 2015 gross profit rose
Fiscal 2015 selling and marketing expense decreased 2.3 percent to
Operating expenses, as a percentage of net sales, increased to 12.7 percent for fiscal 2015 compared to 10.7 percent for fiscal 2014, primarily due to the general and administrative expense increases discussed above.
Net income for the 12 months ended
Fiscal 2015 adjusted EBITDA was
Fiscal 2015 adjusted net income increased 175.7 percent to
Key Milestones
McNew said, "Over the course of the last fiscal year, we've achieved a number of significant milestones—not the least of which was taking the company public. In July we closed our IPO, offering more than 6 million shares at
"In addition,
In
Recently,
Said McNew, "Handcrafted in our U.S.-based manufacturing facility in
"In addition to maintaining this cadence of three relevant, innovative new product launches every year,
Fiscal 2016 Outlook
"As a company, we had a great year and we're excited about what's on the horizon," McNew said. "Our growth strategy for fiscal 2016 involves four key initiatives:
- Continue to develop new and innovative products in core markets;
- Further penetrate the entry-level segment of the performance sport boat category;
- Further strengthen our dealer network; and
- Drive margin expansion through continuous operational improvement.
"We believe that through solid execution of these initiatives and the continued success of our highly differentiated product portfolio, we can drive strong organic growth and further expand profit margins in fiscal 2016," McNew concluded.
For the fiscal 2016 year ending
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 9127879. The audio replay will be available beginning at
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 be identified by such words and phrases as "believes," "anticipates," "expects," "intends," "estimates," "may," "will," "should," "continue" and similar expressions, comparable terminology or the negative thereof, and include statements in this press release concerning an exciting pipeline of launches; our ability to continue our operating momentum, capture additional market share and deliver continued growth; expectations regarding driving margin expansion, sales increases and organic growth; our fiscal 2016 outlook and key growth initiatives; and our anticipated financial performance for fiscal 2016.
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: 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, and the successful introduction of our new products. These and other important factors discussed under the caption "Risk Factors" in our prospectus filed with the
Use of Non-GAAP Financial Measures
To supplement
Results of Operations for the Fourth Quarter and Fiscal Year 2015 MCBC HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS (Dollar amounts in thousands, except share and per share data) |
||||
Fourth Quarter Ended | Fiscal Years Ended | |||
June 30, | June 30, | June 30, | June 30, | |
2015 | 2014 | 2015 | 2014 | |
(Unaudited) | ||||
Net sales | $ 54,853 | $ 51,590 | $ 214,386 | $ 177,587 |
Cost of sales | 42,051 | 39,286 | 163,220 | 139,975 |
Gross profit | 12,802 | 12,304 | 51,166 | 37,612 |
Operating expenses: | ||||
Selling and marketing | 2,164 | 2,156 | 8,552 | 8,837 |
General and administrative | 3,790 | 2,649 | 18,472 | 9,960 |
Amortization of intangible assets | 56 | 55 | 222 | 221 |
Total operating expenses | 6,010 | 4,860 | 27,246 | 19,018 |
Operating income | 6,792 | 7,444 | 23,920 | 18,594 |
Other expense: | ||||
Interest expense | (1,021) | (1,221) | (5,171) | (7,555) |
Change in common stock warrant fair value | (1,373) | (821) | (6,621) | (2,526) |
Income before income tax expense (benefit) | 4,398 | 5,402 | 12,128 | 8,513 |
Income tax expense (benefit) | 1,861 | (11,359) | 6,594 | (11,414) |
Net income | $ 2,537 | $ 16,761 | $ 5,534 | $ 19,927 |
Earnings per common share | ||||
Basic | $ 0.23 | $ 1.50 | $ 0.50 | $ 1.79 |
Diluted | $ 0.21 | $ 1.50 | $ 0.47 | $ 1.78 |
Weighted average shares used for the computation of: | ||||
Basic earnings per share(1) | 11,139,000 | 11,139,000 | 11,139,000 | 11,139,000 |
Diluted earnings per share(1) | 11,954,984 | 11,202,058 | 11,862,699 | 11,182,264 |
(1) The weighted average shares used for computation of basic and diluted earnings per common share gives effect to the 11.139-for-1stock split consummated on July 22, 2015 in connection with the Company's initial public offering and excludes the 6,071,429 shares sold. |
MCBC HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollar amounts in thousands, except share and per share data) |
||
June 30, | ||
2015 | 2014 | |
ASSETS | ||
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 1,167 | $ 12,539 |
Accounts receivable — net of allowances of $92 and $137, respectively | 2,653 | 4,406 |
Inventories — net | 11,541 | 11,685 |
Prepaid expenses and other current assets | 7,235 | 1,568 |
Deferred income taxes | 6,733 | 3,839 |
Total current assets | 29,329 | 34,037 |
Property, plant and equipment — net | 13,233 | 12,891 |
Intangible assets — net | 16,971 | 17,193 |
Goodwill | 29,593 | 29,593 |
Deferred debt issuance costs — net | 425 | 548 |
Deferred income taxes | — | 1,800 |
Other | 125 | 80 |
Total assets | $ 89,676 | $ 96,142 |
LIABILITIES AND STOCKHOLDERS' DEFICIT | ||
CURRENT LIABILITIES: | ||
Accounts payable | $ 14,808 | $ 13,020 |
Income tax payable | 224 | 182 |
Accrued expenses and other current liabilities | 21,313 | 17,601 |
Common stock warrant liability | 9,147 | 2,526 |
Current portion of long term debt | 18,275 | 8,621 |
Total current liabilities | 63,767 | 41,950 |
OTHER LIABILITIES: | ||
Long-term debt, including related party amounts of — in 2015 and $40,364 in 2014 | 60,487 | 57,359 |
Unrecognized tax positions | 519 | 620 |
Deferred income taxes | 7,156 | — |
Total liabilities | 131,929 | 99,929 |
COMMITMENTS AND CONTINGENCIES | ||
STOCKHOLDERS' DEFICIT: | ||
Common stock, $0.01 par value per share — authorized, 54,581,100 shares; issued and outstanding, 11,139,000 shares at June 30, 2015 and 2014 | 10 | 10 |
Additional paid-in capital | 8,942 | 8,942 |
Accumulated deficit | (51,205) | (12,739) |
Total stockholders' equity (deficit) | (42,253) | (3,787) |
Total liabilities and stockholders' deficit | $ 89,676 | $ 96,142 |
Supplemental Operating Data
The following table sets forth certain supplemental operating data for the periods indicated (unaudited):
Fourth Quarter Ended | Fiscal Years Ended | |||
June 30, | June 30, | June 30, | June 30, | |
2015 | 2014 | 2015 | 2014 | |
(Dollars in thousands) | ||||
Unit volume: | ||||
MasterCraft | 626 | 611 | 2,547 | 2,135 |
Hydra-Sports | 9 | 13 | 45 | 50 |
MasterCraft sales(1) | $ 50,749 | $ 47,877 | $ 199,907 | $ 163,631 |
MasterCraft sales per unit | $ 81 | $ 78 | $ 78 | $ 77 |
Gross margin | 23.3 % | 23.8 % | 23.9 % | 21.2 % |
(1) We define MasterCraft sales as net sales less net sales associated with Hydra-Sports. |
Non-GAAP Measures
We define EBITDA as earnings before interest expense, income taxes, depreciation and amortization. We define adjusted EBITDA as EBITDA further adjusted to eliminate certain non-cash charges and unusual items that we do not consider to be indicative of our ongoing operations, including change in common stock warrant fair value, fees and expenses related to the recapitalization transactions and the Company's initial public offering, our stock-based compensation and the results of operations of our Hydra-Sports business, which was divested 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 the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our significant amount of indebtedness; and
- Adjusted net income and adjusted EBITDA do not reflect the impact of earnings or charges resulting from matters we do not consider to be indicative of our ongoing operations, but may nonetheless have a material impact on our results of operations, including the continuing operations related to our Hydra-Sports manufacturing contract.
In addition, because not all companies use identical calculations, our presentation of adjusted EBITDA and adjusted net income may not be comparable to similarly titled measures of other companies, including companies in our industry.
The following table sets forth a reconciliation of adjusted EBITDA to net income as determined in accordance with U.S. GAAP for the periods indicated (unaudited):
Three Months Ended | Fiscal Year Ended | |||
June 30, | June 30, | June 30, | June 30, | |
2015 | 2014 | 2015 | 2014 | |
(Dollars in thousands) | ||||
Net income | $ 2,537 | $ 16,761 | $ 5,534 | $ 19,927 |
Income tax expense (benefit)(a) | 1,861 | (11,359) | 6,594 | (11,414) |
Interest expense, including related party amounts | 1,021 | 1,221 | 5,171 | 7,555 |
Depreciation and amortization | 975 | 700 | 3,278 | 2,472 |
EBITDA | 6,394 | 7,323 | 20,577 | 18,540 |
Change in common stock warrant fair value(b) | 1,373 | 821 | 6,621 | 2,526 |
Transaction expense(c) | 560 | — | 7,068 | — |
Non-recurring settlement charge(d) | 539 | — | 539 | — |
Hydra-Sports(e) | (835) | (664) | (3,265) | (2,665) |
Stock-based compensation | — | 2 | — | 2 |
Adjusted EBITDA | $ 8,031 | $ 7,482 | $ 31,540 | $ 18,403 |
Adjusted EBITDA margin(f) | 15.8% | 15.6% | 15.8% | 11.2% |
(a) Fiscal 2014 income tax benefit primarily represents the reversal of a valuation allowance for deferred tax assets. | ||||
(b) Represents non-cash expense related to increases in the fair market value of the Company's common stock warrant. | ||||
(c) Represents fees and expenses related to the recapitalization transactions completed in March 2015 and the Company's initial public offering, including $5.7 million related to transaction bonuses paid in connection with the recapitalization. | ||||
(d) Represents a non-recurring settlement charge. | ||||
(e) Represents the operating income attributable to the operations of our Hydra-Sports business and the related manufacturing agreement, adjusted to exclude depreciation and amortization related to Hydra-Sports. We divested the Hydra-Sports business in June 2012, but continued to manufacture Hydra-Sports boats for the purchaser of the business pursuant to an agreement that expired on June 30, 2015 (and which was not renewed). This adjustment was calculated by identifying the applicable cost of sales and operating expenses directly attributable to the Hydra-Sports business for such period, excluding any corporate overhead or other shared costs. | ||||
(f) We define adjusted EBITDA margin as adjusted EBITDA expressed as a percentage of MasterCraft sales. |
The following table sets forth a reconciliation of adjusted net income to net income as determined in accordance with U.S. GAAP for the periods indicated (unaudited):
Three Months Ended | Fiscal Year Ended | |||
June 30, | June 30, | June 30, | June 30, | |
2015 | 2014 | 2015 | 2014 | |
(Dollars in thousands, except for shares and per share amounts) | ||||
Net income | $ 2,537 | $ 16,761 | $ 5,534 | $ 19,927 |
Income tax expense (benefit)(a) | 1,861 | (11,359) | 6,594 | (11,414) |
Change in common stock warrant fair value(b) | 1,373 | 821 | 6,621 | 2,526 |
Transaction expense(c) | 560 | — | 7,068 | — |
Non-recurring settlement charge(d) | 539 | — | 539 | — |
Hydra-Sports(e) | (835) | (664) | (3,265) | (2,665) |
Stock-based compensation | — | 2 | — | 2 |
Adjusted net income before income taxes | 6,035 | 5,561 | 23,091 | 8,376 |
Adjusted income tax expense(f) | 2,173 | 2,002 | 8,313 | 3,015 |
Adjusted net income | $ 3,862 | $ 3,559 | $ 14,778 | $ 5,361 |
Pro-forma adjusted net income per common share | ||||
Basic | $ 0.22 | $ 0.21 | $ 0.86 | $ 0.31 |
Diluted | $ 0.20 | $ 0.20 | $ 0.79 | $ 0.30 |
Pro-forma weighted average shares used for the computation of: | ||||
Basic adjusted net income per share(g) | 17,210,429 | 17,210,429 | 17,210,429 | 17,210,429 |
Diluted adjusted net income per share(h) | 18,915,143 | 18,162,217 | 18,822,858 | 18,142,423 |
(a) Fiscal 2014 income tax benefit primarily represents the reversal of a valuation allowance for deferred tax assets. | ||||
(b) Represents non-cash expense related to increases in the fair market value of the Company's common stock warrant. | ||||
(c) Represents fees and expenses related to the recapitalization transactions completed in March 2015 and the Company's initial public offering, including $5.7 million related to transaction bonuses paid in connection with the recapitalization. | ||||
(d) Represents a non-recurring settlement charge. | ||||
(e) Represents the operating income attributable to the operations of our Hydra-Sports business and the related manufacturing agreement, adjusted to exclude depreciation and amortization related to Hydra-Sports. We divested the Hydra-Sports business in June 2012, but continued to manufacture Hydra-Sports boats for the purchaser of the business pursuant to an agreement that expired on June 30, 2015 (and which was not renewed). This adjustment was calculated by identifying the applicable cost of sales and operating expenses directly attributable to the Hydra-Sports business for such period, excluding any corporate overhead or other shared costs. | ||||
(f) Reflects income tax expense at an estimated normalized annual effective income tax rate of 36.0 percent for the periods presented. | ||||
(g) The weighted average shares used for computation of pro-forma basic earnings per common share gives effect to the 6,071,429 shares sold in the Company's initial public offering, which closed on July 22, 2015. | ||||
(h) The weighted average shares used for computation of pro-forma diluted earnings per common share gives effect to the 6,071,429 shares sold in the Company's initial public offering, the 11.139-for-1 stock split consummated on July 22, 2015 and the 888,730 shares of restricted stock granted under the 2015 Incentive Award Plan which vest in January 2016. |
CONTACT:Tim Oxley Chief Financial Officer (423) 884-2221 Tim.Oxley@mastercraft.comMatt Sullivan (612) 455-1709 Matt.Sullivan@padillacrt.com