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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 08, 2024

 

 

MasterCraft Boat Holdings, Inc.

(Exact name of Registrant as Specified in Its Charter)

 

 

Delaware			001-37502	06-1571747
(State or Other Jurisdiction of Incorporation)			(Commission File Number)	(IRS Employer Identification No.)
100 Cherokee Cove Drive
Vonore, Tennessee				37885
(Address of Principal Executive Offices)				(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: 423 884-2221

 

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock		MCFT		The Nasdaq Stock Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

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Item 2.02 Results of Operations and Financial Condition.

On May 8, 2024, MasterCraft Boat Holdings, Inc. announced its financial results for its fiscal 2024 quarter ended March 31, 2024. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.

The information in this Form 8-K (including Exhibit 99.1) shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly provided by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

The following exhibits are being furnished as part of this report:

 

Exhibit No.		Description
99.1		Press Release dated May 8, 2024
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

			MASTERCRAFT BOAT HOLDINGS, INC.
Date:	May 8, 2024	By:	/s/ TIMOTHY M. OXLEY
			Timothy M. Oxley Chief Financial Officer, Treasurer and Secretary

 

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Exhibit 99.1

FOR IMMEDIATE RELEASE

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

VONORE, Tenn. – May 8, 2024 – MasterCraft Boat Holdings, Inc. (NASDAQ: MCFT) today announced financial results for its fiscal 2024 third quarter ended March 31, 2024.

 

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

 

Overview:

 

Brad Nelson, Chief Executive Officer, commented, “We delivered results ahead of our expectations in what remains a dynamic and challenging environment for the marine industry. My first six weeks with our team has been energizing, and it is clear to me that our capabilities and opportunities are even greater than I anticipated. Since I joined the Company, I have been on the road meeting with and getting to know our team, our customers, dealers and business partners. The headline takeaways, are highly encouraging - the foundation of the business is strong, MasterCraft is home to iconic and leading brands, customers and dealers love our products, and the long-term outlook for the industry is bright. We are laser focused on and well-positioned to navigate the near-term challenges in our industry as we evolve our long-term growth strategy.”

Nelson continued, “We recently announced the launch of an all-new luxury pontoon brand, Balise. Balise will further diversify our product offerings, expand our addressable market, and grow our portfolio of strong brands. The Balise product will be built by our experienced team at Crest’s manufacturing facility in Owosso, Michigan, which is a capital-efficient use of existing capacity. Balise production has already commenced, and product will be available to consumers for model year 2025. The launch of Balise Pontoon Boats is the latest example of our unwavering commitment to growth and innovation.”

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Third Quarter Results

For the third quarter of fiscal 2024, MasterCraft Boat Holdings, Inc. reported consolidated net sales of $95.7 million, down $71.1 million from the third quarter of fiscal 2023. The decrease in net sales was due to lower unit volume and an increase in dealer incentives, partially offset by higher prices and favorable model mix and options. Dealer incentives include measures taken by the Company to assist dealers as the retail environment remains competitive.

Gross margin percentage declined 630 basis points during the third 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 unit volume and higher dealer incentives, partially offset by higher prices and favorable model mix and options.

Operating expenses increased $0.8 million for the third quarter of fiscal 2024, compared to the prior-year period. The increase in operating expenses was a result of CEO transition and related share-based compensation costs, which were $1.9 million.

Net income from continuing operations was $3.8 million for the third quarter of fiscal 2024, compared to $22.8 million in the prior-year period. Diluted net income from continuing operations per share was $0.23, compared to $1.28 for the third quarter of fiscal 2023.

Adjusted Net Income decreased to $6.3 million for the third quarter of fiscal 2024, or $0.37 per diluted share, compared to $24.1 million, or $1.36 per diluted share, in the prior-year period.

Adjusted EBITDA was $9.7 million for the third quarter of fiscal 2024, compared to $33.0 million in the prior-year period. Adjusted EBITDA margin was 10.1 percent for the third quarter, down from 19.8 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 Nelson, “As we enter the prime retail selling season, macroeconomic uncertainty continues to limit demand visibility. This has been exacerbated by the news that a competitor’s largest dealer is in financial distress, which has heightened competitive pressure with the potential for higher-than-normal competitor discounting. Dealer inventories remain higher-than-optimal and inventory carrying costs are elevated. Consequently, dealers are taking a cautious approach to ordering ahead of the annual model year changeover. We continue to focus on balancing dealer inventories with retail demand to prioritize dealer health, therefore, we plan to reduce planned production for the remainder of our fiscal year. We have taken a proactive approach to production planning, inventory management, and dealer incentives to best position our dealers to capitalize on retail demand during the upcoming selling season, and end the fiscal year with improved inventory levels.”

 

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The Company’s outlook is as follows:

 

 

Conference Call and Webcast Information

 

MasterCraft Boat Holdings, Inc. will host a live conference call and webcast to discuss fiscal third quarter 2024 results today, May 8, 2024, at 8:30 a.m. EDT. 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 four brands, MasterCraft, Crest, Aviara and Balise. Through these four 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 four brands, visit: Investors.MasterCraft.com, www.MasterCraft.com, www.CrestPontoons.com, www.AviaraBoats.com, and www.BalisePontoonBoats.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 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, geopolitical conflicts, such as the conflict between Russia and Ukraine and the conflict in the Gaza Strip and general unrest in the Middle East, and financial institution disruptions. These and other

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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, and our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2024, 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.

 

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Results of Operations for the Three and Nine Months Ended March 31, 2024

 

MASTERCRAFT BOAT HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share data)

		Three Months Ended								Nine Months Ended
		March 31,				April 2,				March 31,				April 2,
		2024				2023				2024				2023
Net sales		$	95,708			$	166,776			$	299,406			$	495,480
Cost of sales			77,360				124,178				240,493				368,682
Gross profit			18,348				42,598				58,913				126,798
Operating expenses:
Selling and marketing			3,924				3,927				10,538				10,748
General and administrative			9,978				9,156				27,446				26,874
Amortization of other intangible assets			450				489				1,362				1,467
Total operating expenses			14,352				13,572				39,346				39,089
Operating income			3,996				29,026				19,567				87,709
Other income (expense):
Interest expense			(762	)			(695	)			(2,494	)			(1,923	)
Interest income			1,398				1,195				4,164				1,967
Income before income tax expense			4,632				29,526				21,237				87,753
Income tax expense			806				6,744				4,408				20,353
Net income from continuing operations			3,826				22,782				16,829				67,400
Loss from discontinued operations, net of tax			(71	)			(272	)			(993	)			(21,139	)
Net income		$	3,755			$	22,510			$	15,836			$	46,261
Net income (loss) per share
Basic
Continuing operations		$	0.23			$	1.30			$	0.99			$	3.80
Discontinued operations			(0.01	)			(0.02	)			(0.06	)			(1.19	)
Net income		$	0.22			$	1.28			$	0.93			$	2.61
Diluted
Continuing operations		$	0.23			$	1.28			$	0.98			$	3.78
Discontinued operations			(0.01	)			(0.01	)			(0.05	)			(1.19	)
Net income		$	0.22			$	1.27			$	0.93			$	2.59
Weighted average shares used for computation of:
Basic earnings per share			16,844,440				17,559,920				17,003,616				17,725,208
Diluted earnings per share			16,965,624				17,748,910				17,093,958				17,851,655

 

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MASTERCRAFT BOAT HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)

 

		March 31,				June 30,
		2024				2023
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	22,509			$	19,817
Held-to-maturity securities			83,183				91,560
Accounts receivable, net of allowances of $96 and $122, respectively			13,473				15,741
Inventories, net			41,432				58,298
Prepaid expenses and other current assets			14,414				10,083
Total current assets			175,011				195,499
Property, plant and equipment, net			79,593				77,921
Goodwill			28,493				28,493
Other intangible assets, net			34,100				35,462
Deferred income taxes			14,377				12,428
Deferred debt issuance costs, net			306				304
Other long-term assets			9,002				3,869
Total assets		$	340,882			$	353,976
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable		$	15,216			$	20,391
Income tax payable			1,022				5,272
Accrued expenses and other current liabilities			66,164				72,496
Current portion of long-term debt, net of unamortized debt issuance costs			4,371				4,381
Total current liabilities			86,773				102,540
Long-term debt, net of unamortized debt issuance costs			45,982				49,295
Unrecognized tax positions			8,174				7,350
Operating lease liabilities			2,855				2,702
Total liabilities			143,784				161,887
COMMITMENTS AND CONTINGENCIES
EQUITY:
Common stock, $.01 par value per share — authorized, 100,000,000 shares; issued and outstanding, 17,018,448 shares at March 31, 2024 and 17,312,850 shares at June 30, 2023			170				173
Additional paid-in capital			65,072				75,976
Retained earnings			131,656				115,820
MasterCraft Boat Holdings, Inc. equity			196,898				191,969
Noncontrolling interest			200				120
Total equity			197,098				192,089
Total liabilities and equity		$	340,882			$	353,976

 

 

 

 

 

 

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Supplemental Operating Data

The following table presents certain supplemental operating data for the periods indicated:

		Three Months Ended													Nine Months Ended
		March 31,				April 2,									March 31,				April 2,
		2024				2023				Change					2024				2023				Change
		(Dollars in thousands)
Unit sales volume:
MasterCraft			468				900				(48.0	)	%			1,453				2,457				(40.9	)	%
Crest			298				722				(58.7	)	%			1,025				2,344				(56.3	)	%
Aviara			39				34				14.7		%			92				100				(8.0	)	%
Consolidated			805				1,656				(51.4	)	%			2,570				4,901				(47.6	)	%
Net sales:
MasterCraft		$	69,783			$	117,630				(40.7	)	%		$	218,319			$	339,315				(35.7	)	%
Crest			14,194				36,369				(61.0	)	%			49,713				116,595				(57.4	)	%
Aviara			11,731				12,777				(8.2	)	%			31,374				39,570				(20.7	)	%
Consolidated		$	95,708			$	166,776				(42.6	)	%		$	299,406			$	495,480				(39.6	)	%
Net sales per unit:
MasterCraft		$	149			$	131				13.7		%		$	150			$	138				8.7		%
Crest			48				50				(4.0	)	%			49				50				(2.0	)	%
Aviara			301				376				(19.9	)	%			341				396				(13.9	)	%
Consolidated			119				101				17.8		%			117				101				15.8		%
Gross margin			19.2	%			25.5	%		(630) bps						19.7	%			25.6	%		(590) 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 CEO transition 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 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 CEO transition costs.

 

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

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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:

 

 

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 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.

 

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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												Nine Months Ended
		March 31,				% of Net		April 2,				% of Net		March 31,				% of Net		April 2,				% of Net
		2024				sales		2023				sales		2024				sales		2023				sales
Net income from continuing operations		$	3,826			4.0%		$	22,782			13.7%		$	16,829			5.6%		$	67,400			13.6%
Income tax expense			806						6,744						4,408						20,353
Interest expense			762						695						2,494						1,923
Interest income			(1,398	)					(1,195	)					(4,164	)					(1,967	)
Depreciation and amortization			2,842						2,622						8,327						7,833
EBITDA			6,838			7.1%			31,648			19.0%			27,894			9.3%			95,542			19.3%
Share-based compensation(a)			1,583						1,026						2,531						2,892
Business development consulting costs(b)			—						312						—						312
CEO transition costs(c)			1,241						—						1,677						—
Adjusted EBITDA		$	9,662			10.1%		$	32,986			19.8%		$	32,102			10.7%		$	98,746			19.9%

 

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								Nine Months Ended
	March 31,				April 2,				March 31,				April 2,
	2024				2023				2024				2023
Net income from continuing operations	$	3,826			$	22,782			$	16,829			$	67,400
Income tax expense		806				6,744				4,408				20,353
Amortization of acquisition intangibles		450				462				1,362				1,386
Share-based compensation(a)		1,583				1,026				2,531				2,892
Business development consulting costs(b)		—				312				—				312
CEO transition costs(c)		1,241				—				1,677				—
Adjusted Net Income before income taxes		7,906				31,326				26,807				92,343
Adjusted income tax expense (d)		1,581				7,205				5,361				21,239
Adjusted Net Income	$	6,325			$	24,121			$	21,446			$	71,104
Adjusted net income per common share
Basic	$	0.38			$	1.37			$	1.26			$	4.01
Diluted	$	0.37			$	1.36			$	1.25			$	3.98
Weighted average shares used for the computation of (e):
Basic Adjusted net income per share		16,844,440				17,559,920				17,003,616				17,725,208
Diluted Adjusted net income per share		16,965,624				17,748,910				17,093,958				17,851,655

 

 

 

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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								Nine Months Ended
	March 31,				April 2,				March 31,				April 2,
	2024				2023				2024				2023
Net income from continuing operations per diluted share	$	0.23			$	1.28			$	0.98			$	3.78
Impact of adjustments:
Income tax expense		0.05				0.38				0.26				1.14
Amortization of acquisition intangibles		0.03				0.03				0.08				0.08
Share-based compensation(a)		0.10				0.06				0.15				0.16
Business development consulting costs(b)		—				0.02				—				0.02
CEO transition costs(c)		0.07				—				0.10				—
Adjusted Net Income per diluted share before income taxes		0.48				1.77				1.57				5.18
Impact of adjusted income tax expense on net income per diluted share before income taxes(d)		(0.11	)			(0.41	)			(0.32	)			(1.20	)
Adjusted Net Income per diluted share	$	0.37			$	1.36			$	1.25			$	3.98

 

 

Investor Contact:

MasterCraft Boat Holdings, Inc.

John Zelenak

Email: investorrelations@mastercraft.com

 

 

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