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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

 

FORM 10-Q

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: January 2, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                                    to                                                  

 

Commission File Number 001-37502

 

 

 

MASTERCRAFT BOAT HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

06-1571747

(State or Other Jurisdiction

 

(I.R.S. Employer

of Incorporation or Organization)

 

Identification No.)

 

100 Cherokee Cove Drive, Vonore, TN 37885

(Address of Principal Executive Office) (Zip Code)

 

(423) 884-2221

(Registrant’s telephone number, including area code)

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

 

NASDAQ

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.          Yes               No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).          Yes               No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

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.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).          Yes               No

As of January 28, 2022, there were 18,498,202 shares of the Registrant’s common stock, par value $0.01 per share, issued and outstanding.

 

 

 


 

 

 

TABLE OF CONTENTS

 

 

 

 

 

 

Page

 

 

 

PART I

FINANCIAL INFORMATION

 

Item 1.

Financial Statements

 

 

Unaudited Condensed Consolidated Statements of Operations

4

 

Unaudited Condensed Consolidated Balance Sheets

5

 

Unaudited Condensed Consolidated Statements of Stockholders’ Equity

6

 

Unaudited Condensed Consolidated Statements of Cash Flows

7

 

Notes to Unaudited Condensed Consolidated Financial Statements

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

18

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

28

Item 4.

Controls and Procedures

28

 

 

 

PART II

OTHER INFORMATION

 

Item 1.

Legal Proceedings

29

Item 1A.

Risk Factors

29

Item 2.

Unregistered Sales of Securities and Use of Proceeds

29

Item 3.

Defaults Upon Senior Securities

29

Item 4.

Mine Safety Disclosures

29

Item 5.

Other Information

29

Item 6.

Exhibits, Financial Statement Schedules

30

 

 

 

SIGNATURES

 

31

 

2


 

 

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains certain “forward-looking statements” within the meaning of the federal securities laws. These forward-looking statements can generally be identified by the use of statements that include words such as “could,” “may,” “might,” “will,” “expect,” “likely,” “believe,” “continue,” “anticipate,” “estimate,” “intend,” “plan,” “project” and other similar words or phrases. Forward-looking statements involve estimates and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements.

The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on assumptions that we have made considering our industry experience and our perceptions of historical trends, current conditions, expected future developments and other important factors we believe are appropriate under the circumstances. As you read and consider this Quarterly Report on Form 10-Q, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties (many of which are beyond our control) and assumptions. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many important factors could affect our actual operating and financial performance and cause our performance to differ materially from the performance anticipated in the forward-looking statements, including but not limited to the following: the potential effects of supply chain disruptions and production inefficiencies as a result of the coronavirus (“COVID-19”) pandemic on the Company, 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 the other important factors described under the caption “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2021, filed with the Securities and Exchange Commission (“SEC”) on September 2, 2021 (our “2021 Annual Report”). Should one or more of these risks or uncertainties materialize, or should any of these assumptions prove incorrect, our actual operating and financial performance may vary in material respects from the performance projected in these forward-looking statements.

Further, any forward-looking statement speaks only as of the date on which it is made, and except as required by law, we undertake no obligation to update any forward-looking statement contained in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New important factors that could cause our business not to develop as we expect may emerge from time to time, and it is not possible for us to predict all of them.

 

3


 

 

 

MASTERCRAFT BOAT HOLDINGS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

January 2,

 

 

January 3,

 

 

January 2,

 

 

January 3,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

NET SALES

 

$

159,465

 

 

$

118,677

 

 

$

303,475

 

 

$

222,422

 

COST OF SALES

 

 

124,267

 

 

 

89,404

 

 

 

238,155

 

 

 

166,919

 

GROSS PROFIT

 

 

35,198

 

 

 

29,273

 

 

 

65,320

 

 

 

55,503

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling and marketing

 

 

3,395

 

 

 

2,989

 

 

 

7,677

 

 

 

5,896

 

General and administrative

 

 

10,263

 

 

 

8,352

 

 

 

19,933

 

 

 

17,284

 

Amortization of other intangible assets

 

 

987

 

 

 

987

 

 

 

2,013

 

 

 

1,974

 

Goodwill impairment

 

 

 

 

 

 

 

 

1,100

 

 

 

 

Total operating expenses

 

 

14,645

 

 

 

12,328

 

 

 

30,723

 

 

 

25,154

 

OPERATING INCOME

 

 

20,553

 

 

 

16,945

 

 

 

34,597

 

 

 

30,349

 

OTHER EXPENSE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

357

 

 

 

870

 

 

 

739

 

 

 

1,889

 

INCOME BEFORE INCOME TAX EXPENSE

 

 

20,196

 

 

 

16,075

 

 

 

33,858

 

 

 

28,460

 

INCOME TAX EXPENSE

 

 

4,794

 

 

 

3,574

 

 

 

8,070

 

 

 

6,392

 

NET INCOME

 

$

15,402

 

 

$

12,501

 

 

$

25,788

 

 

$

22,068

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME PER SHARE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.82

 

 

$

0.66

 

 

$

1.37

 

 

$

1.17

 

Diluted

 

$

0.81

 

 

$

0.66

 

 

$

1.36

 

 

$

1.17

 

WEIGHTED AVERAGE SHARES USED FOR COMPUTATION OF:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

 

18,722,386

 

 

 

18,807,316

 

 

 

18,786,343

 

 

 

18,790,826

 

Diluted earnings per share

 

 

18,899,136

 

 

 

18,928,408

 

 

 

18,951,627

 

 

 

18,897,617

 

 

Notes to Unaudited Condensed Consolidated Financial Statements form an integral part of the condensed consolidated financial statements.

 

4


 

 

 

MASTERCRAFT BOAT HOLDINGS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share amounts)

 

 

 

January 2,

 

 

June 30,

 

 

 

2022

 

 

2021

 

ASSETS

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

13,647

 

 

$

39,252

 

Accounts receivable, net of allowance of $131 and $115, respectively

 

 

8,907

 

 

 

12,080

 

Income tax receivable

 

 

545

 

 

 

355

 

Inventories, net (Note 3)

 

 

78,382

 

 

 

53,481

 

Prepaid expenses and other current assets

 

 

3,870

 

 

 

5,059

 

Total current assets

 

 

105,351

 

 

 

110,227

 

Property, plant and equipment, net

 

 

62,737

 

 

 

60,495

 

Goodwill (Note 4)

 

 

28,493

 

 

 

29,593

 

Other intangible assets, net (Note 4)

 

 

57,886

 

 

 

59,899

 

Deferred income taxes

 

 

15,429

 

 

 

15,130

 

Deferred debt issuance costs, net

 

 

456

 

 

 

507

 

Other long-term assets

 

 

538

 

 

 

609

 

Total assets

 

$

270,890

 

 

$

276,460

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Accounts payable

 

 

18,292

 

 

 

23,861

 

Income tax payable

 

 

177

 

 

 

726

 

Accrued expenses and other current liabilities (Note 5)

 

 

49,677

 

 

 

46,836

 

Current portion of long-term debt, net of unamortized debt issuance costs (Note 7)

 

 

2,870

 

 

 

2,866

 

Total current liabilities

 

 

71,016

 

 

 

74,289

 

Long-term debt, net of unamortized debt issuance costs (Note 7)

 

 

70,841

 

 

 

90,277

 

Unrecognized tax positions

 

 

4,749

 

 

 

3,830

 

Other long-term liabilities

 

 

218

 

 

 

276

 

Total liabilities

 

 

146,824

 

 

 

168,672

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY:

 

 

 

 

 

 

 

 

Common stock, $.01 par value per share — authorized, 100,000,000 shares; issued and outstanding, 18,610,822 shares at January 2, 2022 and 18,956,719 shares at June 30, 2021

 

 

186

 

 

 

189

 

Additional paid-in capital

 

 

109,423

 

 

 

118,930

 

Retained earnings / (accumulated deficit)

 

 

14,457

 

 

 

(11,331

)

Total stockholders' equity

 

 

124,066

 

 

 

107,788

 

Total liabilities and stockholders' equity

 

$

270,890

 

 

$

276,460

 

 

Notes to Unaudited Condensed Consolidated Financial Statements form an integral part of the condensed consolidated financial statements.

 

5


 

 

 

MASTERCRAFT BOAT HOLDINGS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Retained Earnings/

 

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

(Accumulated

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit)

 

 

Total

 

Balance at June 30, 2021

 

 

18,956,719

 

 

$

189

 

 

$

118,930

 

 

$

(11,331

)

 

$

107,788

 

Share-based compensation activity

 

 

62,865

 

 

 

1

 

 

 

705

 

 

 

 

 

 

706

 

Repurchase and retirement of common stock

 

 

(58,379

)

 

 

(1

)

 

 

(1,486

)

 

 

 

 

 

(1,487

)

Net income

 

 

 

 

 

 

 

 

 

 

 

10,386

 

 

 

10,386

 

Balance at October 3, 2021

 

 

18,961,205

 

 

 

189

 

 

 

118,149

 

 

 

(945

)

 

 

117,393

 

Share-based compensation activity

 

 

5,913

 

 

 

 

 

 

1,159

 

 

 

 

 

 

1,159

 

Repurchase and retirement of common stock

 

 

(356,296

)

 

 

(3

)

 

 

(9,885

)

 

 

 

 

 

(9,888

)

Net income

 

 

 

 

 

 

 

 

 

 

 

15,402

 

 

 

15,402

 

Balance at January 2, 2022

 

 

18,610,822

 

 

$

186

 

 

$

109,423

 

 

$

14,457

 

 

$

124,066

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Accumulated

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Total

 

Balance at June 30, 2020

 

 

18,871,637

 

 

$

189

 

 

$

116,182

 

 

$

(67,501

)

 

$

48,870

 

Share-based compensation activity

 

 

80,701

 

 

 

 

 

 

486

 

 

 

 

 

 

486

 

Net income

 

 

 

 

 

 

 

 

 

 

 

9,567

 

 

 

9,567

 

Balance at October 4, 2020

 

 

18,952,338

 

 

 

189

 

 

 

116,668

 

 

 

(57,934

)

 

 

58,923

 

Share-based compensation activity

 

 

(3,043

)

 

 

 

 

 

577

 

 

 

 

 

 

577

 

Net income

 

 

 

 

 

 

 

 

 

 

 

12,501

 

 

 

12,501

 

Balance at January 3, 2021

 

 

18,949,295

 

 

$

189

 

 

$

117,245

 

 

$

(45,433

)

 

$

72,001

 

 

Notes to Unaudited Condensed Consolidated Financial Statements form an integral part of the condensed consolidated financial statements.

6


 

 

MASTERCRAFT BOAT HOLDINGS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 (Dollars in thousands)

 

 

 

Six Months Ended

 

 

 

January 2,

 

 

January 3,

 

 

 

2022

 

 

2021

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net income

 

$

25,788

 

 

$

22,068

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

6,595

 

 

 

5,599

 

Share-based compensation

 

 

2,104

 

 

 

1,283

 

Unrecognized tax benefits

 

 

919

 

 

 

865

 

Amortization of debt issuance costs

 

 

119

 

 

 

316

 

Goodwill impairment

 

 

1,100

 

 

 

 

Changes in certain operating assets and liabilities

 

 

(24,484

)

 

 

(740

)

Other, net

 

 

83

 

 

 

764

 

Net cash provided by operating activities

 

 

12,224

 

 

 

30,155

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

(6,715

)

 

 

(18,903

)

Net cash used in investing activities

 

 

(6,715

)

 

 

(18,903

)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Principal payments on revolving credit facility

 

 

(30,000

)

 

 

(30,000

)

Borrowings on revolving credit facility

 

 

12,000

 

 

 

20,000

 

Principal payments on long-term debt

 

 

(1,500

)

 

 

(4,710

)

Repurchase and retirement of common stock

 

 

(11,375

)

 

 

 

Other, net

 

 

(239

)

 

 

(787

)

Net cash used in financing activities

 

 

(31,114

)

 

 

(15,497

)

NET CHANGE IN CASH AND CASH EQUIVALENTS

 

 

(25,605

)

 

 

(4,245

)

 

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS — BEGINNING OF PERIOD

 

 

39,252

 

 

 

16,319

 

CASH AND CASH EQUIVALENTS — END OF PERIOD

 

$

13,647

 

 

$

12,074

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

 

 

 

 

 

 

 

 

Cash payments for interest

 

$

600

 

 

$

1,348

 

Cash payments for income taxes

 

 

9,002

 

 

 

5,132

 

SIGNIFICANT NON-CASH INVESTING AND FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Capital expenditures in accounts payable and accrued expenses

 

 

393

 

 

 

594

 

 

Notes to Unaudited Condensed Consolidated Financial Statements form an integral part of the condensed consolidated financial statements.

 

7


 

MASTERCRAFT BOAT HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unless stated otherwise dollars in thousands, except per share data)

 

1.ORGANIZATION, BASIS OF PRESENTATION, AND SIGNIFICANT ACCOUNTING POLICIES

Organization — MasterCraft Boat Holdings, Inc. (“Holdings”) was formed on January 28, 2000, as a Delaware holding company and operates primarily through its wholly owned subsidiaries, MasterCraft Boat Company, LLC; MasterCraft Services, LLC; MasterCraft Parts, Ltd.; MasterCraft International Sales Administration, Inc.; Aviara Boats, LLC; Nautic Star, LLC; NS Transport, LLC; and Crest Marine, LLC. Holdings and its subsidiaries collectively are referred to herein as the “Company.”

Basis of PresentationThe Company’s fiscal year begins July 1 and ends June 30, with the interim quarterly reporting periods consisting of 13 weeks. Therefore, the fiscal quarter end will not always coincide with the date of the end of a calendar month.

The unaudited condensed consolidated financial statements have been prepared on the same basis as the Company’s audited consolidated financial statements for the year ended June 30, 2021 and, in the opinion of management, reflect all adjustments considered necessary to present fairly the Company’s financial position as of January 2, 2022, its results of operations for the three and six months ended January 2, 2022 and January 3, 2021, its cash flows for the six months ended January 2, 2022 and January 3, 2021, and its statements of stockholders’ equity for the three and six months ended January 2, 2022 and January 3, 2021. All adjustments are of a normal, recurring nature. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the applicable rules and regulations of the SEC for financial information have been condensed or omitted pursuant to such rules and regulations. The June 30, 2021 condensed consolidated balance sheet data was derived from the audited financial statements but does not include all disclosures required by U.S. GAAP for complete financial statements. However, management believes that the disclosures in these condensed consolidated financial statements are adequate to make the information presented not misleading. These condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in our 2021 Annual Report on Form 10-K.

Due to the seasonality of the Company’s business, the interim results are not necessarily indicative of the results that may be expected for the remainder of the fiscal year.

There were no significant changes in or changes to the application of the Company’s significant or critical accounting policies or estimation procedures for the three and six months ended January 2, 2022 as compared with those described in the Company’s audited consolidated financial statements for the fiscal year ended June 30, 2021.

Change in Reportable Segments — Beginning with the first quarter of fiscal 2022, our chief operating decision maker (“CODM”) began to manage our business, allocate resources, and evaluate performance based on the changes that have been made in the Company’s management structure in connection with the transition of Aviara production to our Merritt Island facility.  As a result, the Company has realigned its reportable segments to MasterCraft, Crest, NauticStar, and Aviara.  The Company has recast segment information for all prior periods presented.  Refer to Note 11 – Segment Information for further information on the Company’s reportable segments.

Reclassifications — Certain historical amounts have been reclassified in these notes to the condensed consolidated financial statements to conform to the current presentation.


8


 

 

 

Recently Adopted Accounting Standards

 

Income Taxes —In December 2019, the Financial Accounting Standards Board (the “FASB”) issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to general principles in Income Taxes (Topic 740). It also clarifies and amends existing guidance to improve consistent application. The guidance is effective for fiscal years beginning after December 15, 2020. The adoption of this standard did not have an impact on the Company’s consolidated financial statements.

 

Reference Rate Reform — In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions, subject to meeting certain criteria, that reference London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. An entity may apply ASU 2020-04 as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020 through December 31, 2022. The adoption of this standard did not have an impact on the Company’s consolidated financial statements.

 

2.

REVENUE RECOGNITION

Consistent with the Company’s change in reportable segments described in Note 11—Segment Information, the Company has changed its presentation of disaggregated revenue to align with the new segment structure.  The following tables present the Company’s revenue by major product category for each reportable segment.

 

 

 

 

Three Months Ended January 2, 2022

 

 

 

MasterCraft

 

 

Crest

 

 

NauticStar

 

 

Aviara

 

 

Total

 

Major Product Categories:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Boats and trailers

 

$

104,464

 

 

$

29,368

 

 

$

15,000

 

 

$

7,909

 

 

$

156,741

 

Parts

 

 

2,055

 

 

 

151

 

 

 

60

 

 

 

 

 

 

2,266

 

Other revenue

 

 

254

 

 

 

199

 

 

 

5

 

 

 

 

 

 

458

 

Total

 

$

106,773

 

 

$

29,718

 

 

$

15,065

 

 

$

7,909

 

 

$

159,465

 

 

 

 

 

Six Months Ended January 2, 2022

 

 

 

MasterCraft

 

 

Crest

 

 

NauticStar

 

 

Aviara

 

 

Total

 

Major Product Categories:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Boats and trailers

 

$

192,392

 

 

$

61,737

 

 

$

28,236

 

 

$

13,764

 

 

$

296,129

 

Parts

 

 

5,883

 

 

 

387

 

 

 

180

 

 

 

 

 

 

6,450

 

Other revenue

 

 

513

 

 

 

374

 

 

 

9

 

 

 

 

 

 

896

 

Total

 

$

198,788

 

 

$

62,498

 

 

$

28,425

 

 

$

13,764

 

 

$

303,475

 

 

 

 

 

Three Months Ended January 3, 2021

 

 

 

MasterCraft

 

 

Crest

 

 

NauticStar

 

 

Aviara

 

 

Total

 

Major Product Categories:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Boats and trailers

 

$

77,558

 

 

$

20,757

 

 

$

14,857

 

 

$

3,248

 

 

$

116,420

 

Parts

 

 

1,726

 

 

 

138

 

 

 

87

 

 

 

 

 

 

1,951

 

Other revenue

 

 

227

 

 

 

74

 

 

 

5

 

 

 

 

 

 

306

 

Total

 

$

79,511

 

 

$

20,969

 

 

$

14,949

 

 

$

3,248

 

 

$

118,677

 

 

9


 

 

 

 

 

Six Months Ended January 3, 2021

 

 

 

MasterCraft

 

 

Crest

 

 

NauticStar

 

 

Aviara

 

 

Total

 

Major Product Categories:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Boats and trailers

 

$

142,367

 

 

$

38,368

 

 

$

27,073

 

 

$

7,021

 

 

$

214,829

 

Parts

 

 

6,271

 

 

 

529

 

 

 

211

 

 

 

 

 

 

7,011

 

Other revenue

 

 

464

 

 

 

111

 

 

 

7

 

 

 

 

 

 

582

 

Total

 

$

149,102

 

 

$

39,008

 

 

$

27,291

 

 

$

7,021

 

 

$

222,422

 

 

Contract Liabilities

 

As of June 30, 2021, the Company had $1.8 million of contract liabilities associated with customer deposits. During the six months ended January 2, 2022, $1.6 million of this amount was recognized as revenue. As of January 2, 2022, total contract liabilities associated with customer deposits were $4.8 million, were reported in Accrued expenses and other current liabilities on the condensed consolidated balance sheet, and are expected to be recognized as revenue during the remainder of the year ending June 30, 2022.  

 

3.

INVENTORIES

Inventories consisted of the following:

 

 

 

January 2,

 

 

June 30,

 

 

 

2022

 

 

2021

 

Raw materials and supplies

 

$

56,795

 

 

$

37,089

 

Work in process

 

 

17,404

 

 

 

10,171

 

Finished goods

 

 

6,134

 

 

 

8,362

 

Obsolescence reserve

 

 

(1,951

)

 

 

(2,141

)

Total inventories

 

$

78,382

 

 

$

53,481

 

 

Raw materials and supplies have increased to support higher production volumes and to increase safety stock to manage supply chain risk.  Work in process has increased due to supply chain disruptions.

 

 

10


 

 

 

4.GOODWILL AND OTHER INTANGIBLE ASSETS

Beginning with the first quarter of fiscal 2022, the Company realigned its reportable segments to MasterCraft, Crest, NauticStar, and Aviara.  Refer to Note 11 – Segment Information for further information on the Company’s reportable segments.  As a result of the change in segments, in accordance with ASC 350, Intangibles-Goodwill and Other, the Company reallocated the goodwill recorded in the MasterCraft reporting unit to the two separate MasterCraft and Aviara reporting units using a relative fair value approach.  

Prior to realigning our segments, we evaluated our goodwill for impairment and determined no impairment existed as the fair value of our MasterCraft reporting unit, which was the only reporting unit containing goodwill, was in excess of its carrying amount.  In conjunction with the reallocation of goodwill, we tested the goodwill at our MasterCraft and Aviara reporting units for impairment using an income-based approach, specifically a discounted cash flow model.  The cash flow model included significant judgements and assumptions related to revenue growth and discount rates. At the time of the impairment test, near-term operating losses generated by start-up inefficiencies had negatively impacted the fair value of Aviara, causing the carrying value of the reporting unit to be in excess of the fair value. Consequently, a $1.1 million impairment charge was recognized in the first quarter of fiscal 2022.

The carrying amounts of goodwill attributable to each of the Company’s reportable segments, were as follows:

 

 

 

MasterCraft

 

 

Crest

 

 

NauticStar

 

 

Aviara

 

 

Total

 

Balance at June 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

$

29,593

 

 

$

36,238

 

 

$

36,199

 

 

$

 

 

$

102,030

 

Accumulated impairment losses

 

 

 

 

 

(36,238

)

 

 

(36,199

)

 

 

 

 

 

(72,437

)

Goodwill, net at June 30, 2021

 

 

29,593

 

 

 

 

 

 

 

 

 

 

 

 

29,593

 

Goodwill reallocation

 

 

(1,100

)

 

 

 

 

 

 

 

 

1,100

 

 

 

 

Impairment

 

 

 

 

 

 

 

 

 

 

 

(1,100

)

 

 

(1,100

)

Goodwill, net at January 2, 2022

 

$

28,493

 

 

$

 

 

$

 

 

$

 

 

$

28,493

 

 

The following table presents the carrying amount of Other intangible assets, net:

 

 

 

January 2,

 

 

June 30,

 

 

 

2022

 

 

2021

 

 

 

Gross Amount

 

 

Accumulated Amortization / Impairment

 

 

Other intangible assets, net

 

 

Gross Amount

 

 

Accumulated Amortization / Impairment

 

 

Other intangible assets, net

 

Amortized intangible assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dealer networks

 

$

39,500

 

 

$

(15,700

)

 

$

23,800

 

 

$

39,500

 

 

$

(13,711

)

 

$

25,789

 

Software

 

 

245

 

 

 

(159

)

 

 

86

 

 

 

245

 

 

 

(135

)

 

 

110

 

 

 

 

39,745

 

 

 

(15,859

)

 

 

23,886

 

 

 

39,745

 

 

 

(13,846

)

 

 

25,899

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unamortized intangible assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade names

 

 

49,000

 

 

 

(15,000

)

 

 

34,000

 

 

 

49,000

 

 

 

(15,000

)

 

 

34,000

 

Total other intangible assets

 

$

88,745

 

 

$

(30,859

)

 

$

57,886

 

 

$

88,745

 

 

$

(28,846

)

 

$

59,899

 

 

Amortization expense related to Other intangible assets, net for both the three and six months ended January 2, 2022 and January 3, 2021 was $1.0 million and $2.0 million, respectively. Estimated amortization expense for the fiscal year ending June 30, 2022 is $4.0 million.

 

11


 

 

 

5.

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consisted of the following:

 

 

 

January 2,

 

 

June 30,

 

 

 

2022

 

 

2021

 

Warranty

 

$

24,100

 

 

$

22,329

 

Dealer incentives

 

 

9,986

 

 

 

10,634

 

Contract liabilities

 

 

4,839

 

 

 

1,848

 

Compensation and related accruals

 

 

4,493

 

 

 

6,046

 

Freight

 

 

669

 

 

 

778

 

Self-insurance

 

 

1,005

 

 

 

865

 

Inventory repurchase contingent obligation

 

 

1,027

 

 

 

471

 

Other

 

 

3,558

 

 

 

3,865

 

Total accrued expenses and other current liabilities

 

$

49,677

 

 

$

46,836

 

 

Accrued warranty liability activity was as follows for the six months ended:

 

 

 

January 2,

 

 

January 3,

 

 

 

2022

 

 

2021

 

Balance at the beginning of the period

 

$

22,329

 

 

$

20,004

 

Provisions

 

 

5,646

 

 

 

4,469

 

Payments made

 

 

(4,969

)

 

 

(4,272

)

Aggregate changes for preexisting warranties

 

 

1,094

 

 

 

718

 

Balance at the end of the period

 

$

24,100

 

 

$

20,919

 

 

6. COMMITMENTS AND CONTINGENCIES

 

Purchase Commitments

 

In October 2021, we signed a new supplier agreement to purchase marine outboard engines during fiscal 2022.  During the term of the agreement, we committed to purchasing a minimum annual gross dollar value of $27.0 million in engines.

 

Legal Proceedings

 

The Company is subject to various litigation, claims and proceedings, which have arisen in the ordinary course of business. The Company accrues for litigation, claims and proceedings when a liability is both probable and the amount can be reasonably estimated. As of January 2, 2022, the Company’s accruals for litigation matters are not material. While these matters are subject to inherent uncertainties, management believes that current litigation, claims and proceedings, individually and in the aggregate, and after considering expected insurance reimbursements, are not likely to have a material adverse impact on the Company’s financial position, results of operations or cash flows.

12


 

 

7.LONG-TERM DEBT

Long-term debt is as follows:

 

 

 

January 2,

 

 

June 30,

 

 

 

2022

 

 

2021

 

Revolving credit facility

 

$

15,728

 

 

$

33,728

 

Term loans

 

 

58,500

 

 

 

60,000

 

Debt issuance costs on term loans

 

 

(517

)

 

 

(585

)

Total debt

 

 

73,711

 

 

 

93,143

 

Less current portion of long-term debt

 

 

3,000

 

 

 

3,000

 

Less current portion of debt issuance costs on term loans

 

 

(130

)

 

 

(134

)

Long-term debt, net of current portion

 

$

70,841

 

 

$

90,277

 

 

On June 28, 2021, the Company entered into a credit agreement with a syndicate of certain financial institutions (the “Credit Agreement”). The Credit Agreement provides the Company with a $160.0 million senior secured credit facility, consisting of a $60.0 million term loan (the “Term Loan”) and a $100.0 million revolving credit facility (the “Revolving Credit Facility”). The Credit Agreement refinanced and replaced the previously existing credit agreement. The Credit Agreement is secured by a first priority security interest in substantially all of the Company’s assets.

The Credit Agreement contains a number of covenants that, among other things, restrict the Company’s ability to, subject to specified exceptions, incur additional debt; incur additional liens and contingent liabilities; sell or dispose of assets; merge with or acquire other companies; liquidate or dissolve; engage in businesses that are not in a related line of business; make loans, advances or guarantees; pay dividends or make other distributions; engage in transactions with affiliates; and make investments. The Company is also required to maintain a minimum fixed charge coverage ratio and a maximum net leverage ratio.

The Credit Agreement bears interest, at the Company’s option, at either the prime rate plus an applicable margin ranging from 0.25% to 1.00% or at an adjusted LIBOR rate plus an applicable margin ranging from 1.25% to 2.00%, in each case based on the Company’s net leverage ratio. The Company is also required to pay a commitment fee for any unused portion of the revolving credit facility ranging from 0.15% to 0.30% based on the Company’s net leverage ratio. Effective during the three and six months ended January 2, 2022, the applicable margin for loans accruing at the prime rate was 0.25% and the applicable margin for loans accruing interest at LIBOR was 1.25%.  As of January 2, 2022, the interest rate on the Company’s term loan and revolving credit facility was 1.38%.

The Credit Agreement will mature and all remaining amounts outstanding thereunder will be due and payable on June 28, 2026. As of January 2, 2022, the Company was in compliance with its financial covenants under the Credit Agreement.

Revolving Credit Facility

As of January 2, 2022, the Company had $15.7 million of borrowings outstanding on its Revolving Credit Facility and had remaining availability of $84.3 million.

 

8.

INCOME TAXES

The Company’s consolidated interim effective tax rate is based on a current estimate of the annual effective income tax rate adjusted to reflect the impact of discrete items. The differences between the Company’s effective tax rates and the statutory federal tax rate of 21.0% primarily relate to the inclusion of the state tax rate in the overall effective rate, the benefit of federal and state credits, and a permanent benefit associated with the foreign derived intangible income deduction, partially offset by a permanent add-back for Section 162(m) limitations. During the three months ended January 2, 2022 and January 3, 2021, the Company’s effective tax rate was 23.7% and 22.2%, respectively.  During the six months ended January 2, 2022 and January 3, 2021, the Company’s effective tax rate was 23.8% and 22.5%, respectively. The Company’s effective tax rate for the three and six months ended January 2, 2022 is higher compared to the effective

13


 

 

tax rate for the three and six months ended January 3, 2021, primarily due to an increase in the effective state tax rate, an increase in the tax impact of uncertain state tax positions and a reduction in the benefit of federal and state tax credits, partially offset by an increase in the Company’s net permanent benefits, largely driven by changes in foreign derived intangible income due to an increase in forecasted foreign taxable income, sales and gross margin.

 

9.

SHARE-BASED COMPENSATION

 

The following table presents the components of share-based compensation expense by award type.

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

January 2,

 

 

January 3,

 

 

January 2,

 

 

January 3,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Restricted stock awards

 

$

518

 

 

$

388

 

 

$

985

 

 

$

805

 

Performance stock units

 

 

690

 

 

 

255

 

 

 

1,119

 

 

 

478

 

Share-based compensation expense

 

$

1,208

 

 

$

643

 

 

$

2,104

 

 

$

1,283

 

 

Restricted Stock Awards

During the six months ended January 2, 2022, the Company granted 74,961 restricted stock awards (“RSAs”) to the Company’s non-executive directors, officers and certain other key employees. Generally, the shares of restricted stock granted during the six months ended January 2, 2022, vest pro-rata over three years for officers and certain other key employees and over one year for non-executive directors. The Company determined the fair value of the shares awarded by using the close price of our common stock as of the date of grant. The weighted average grant date fair value of RSAs granted in the six months ended January 2, 2022, was $26.14 per share.

The following table summarizes the status of nonvested RSAs as of January 2, 2022, and changes during the six months then ended.

 

 

 

 

 

 

 

Average

 

 

 

Nonvested

 

 

Grant-Date

 

 

 

Restricted

 

 

Fair Value

 

 

 

Shares

 

 

(per share)

 

Nonvested at June 30, 2021

 

 

118,193

 

 

$

19.42

 

Granted

 

 

74,961

 

 

 

26.14

 

Vested

 

 

(58,086

)

 

 

19.16

 

Forfeited

 

 

(2,660

)

 

 

26.01

 

Nonvested at January 2, 2022

 

 

132,408

 

 

 

23.22

 

 

As of January 2, 2022, there was $2.3 million of total unrecognized compensation expense related to nonvested RSAs.  The Company expects this expense to be recognized over a weighted average period of 1.8 years.

Performance Stock Units

Performance stock units (“PSUs”) are a form of long-term incentive compensation awarded to executive officers and certain other key employees designed to directly align the interests of employees to the interests of the Company’s stockholders, and to create long-term stockholder value. The awards will be earned based on the Company’s achievement of certain performance criteria over a three-year performance period. The performance period for the awards commences on July 1 of the fiscal year in which they were granted and continue for a three-year period, ending on June 30 of the applicable year. The probability of achieving the performance criteria is assessed quarterly. Following the determination of the Company’s achievement with respect to the performance criteria, the number of shares awarded is subject to further adjustment based on the application of a total shareholder return (“TSR”) modifier. The grant date fair value is determined based on both the probability assessment of the Company achieving the performance criteria and an estimate of the expected TSR modifier. The TSR modifier estimate is determined using a Monte Carlo Simulation model, which considers the

14


 

 

likelihood of numerous possible outcomes of long-term market performance. Compensation expense related to nonvested PSUs is recognized ratably over the performance period.

The following table summarizes the status of nonvested PSUs as of January 2, 2022, and changes during the six months then ended.

 

 

 

 

 

 

 

Average

 

 

 

Nonvested

 

 

Grant-Date

 

 

 

Performance

 

 

Fair Value

 

 

 

Stock Units

 

 

(per share)

 

Nonvested at June 30, 2021

 

 

160,285

 

 

$

21.03

 

Granted

 

 

53,842

 

 

 

28.73

 

Forfeited

 

 

(2,177

)

 

 

28.71

 

Nonvested at January 2, 2022

 

 

211,950

 

 

 

22.91

 

 

As of January 2, 2022, there was $2.9 million of total unrecognized compensation expense related to nonvested PSUs.  The Company expects this expense to be recognized over a weighted average period of 1.9 years.                                

 

10.

EARNINGS PER SHARE AND COMMON STOCK

The following table sets forth the computation of the Company’s net income per share:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

January 2,

 

 

January 3,

 

 

January 2,

 

 

January 3,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net income

 

$

15,402

 

 

$

12,501

 

 

$

25,788

 

 

$

22,068

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares — basic

 

 

18,722,386

 

 

 

18,807,316

 

 

 

18,786,343

 

 

 

18,790,826

 

Dilutive effect of assumed exercises of stock options

 

 

12,994

 

 

 

13,950

 

 

 

13,618

 

 

 

14,025

 

Dilutive effect of assumed restricted share awards/units

 

 

163,756

 

 

 

107,142

 

 

 

151,666

 

 

 

92,766

 

Weighted average outstanding shares — diluted

 

 

18,899,136

 

 

 

18,928,408

 

 

 

18,951,627

 

 

 

18,897,617

 

Basic net income per share

 

$

0.82

 

 

$

0.66

 

 

$

1.37

 

 

$

1.17

 

Diluted net income per share

 

$

0.81

 

 

$

0.66

 

 

$

1.36

 

 

$

1.17

 

 

For the three and six months ended January 2, 2022 and January 3, 2021, an immaterial number of shares were excluded from the computation of diluted earnings per share as the effect would have been anti-dilutive.

 

Stock Repurchase Program

 

On June 24, 2021, the board of directors of the Company authorized a stock repurchase program that allows for the repurchase of up to $50.0 million of our common stock during the three-year period ending June 24, 2024. During the three months ended January 2, 2022, the Company repurchased 356,296 shares of common stock for $9.9 million in cash, including related fees and expenses.  During the six months ended January 2, 2022, the Company repurchased 414,675 shares of common stock for $11.4 million in cash, including related fees and expenses.  As of January 2, 2022, $38.6 million remained available under the program.

 

 

15


 

 

 

11.SEGMENT INFORMATION

Change in Reportable Segments

Beginning with the first quarter of fiscal 2022 and as discussed in Note 1, our CODM began to manage our business, allocate resources, and evaluate performance based on the reportable segments of MasterCraft, Crest, NauticStar, and Aviara.

Reportable Segments

Operating segments are identified as components of an enterprise about which discrete financial information is available for evaluation by the CODM in making decisions on how to allocate resources and assess performance. For the three and six months ended January 2, 2022, the Company’s CODM regularly assessed the operating performance of the Company’s boat brands under four operating and reportable segments:

 

The MasterCraft segment produces boats at its Vonore, Tennessee facility.  These are premium recreational performance sport boats primarily used for water skiing, wakeboarding, wake surfing, and general recreational boating.

 

The Crest segment produces pontoon boats at its Owosso, Michigan facility. Crest’s boats are primarily used for general recreational boating.  

 

The NauticStar segment produces boats at its Amory, Mississippi facility. NauticStar’s boats are primarily used for saltwater fishing and general recreational boating.

 

The Aviara segment produces luxury day boats at its Merritt Island, Florida facility.  Aviara boats are primarily used for general recreational boating.  Beginning in fiscal 2022, the CODM has begun to assess Aviara’s performance on a stand-alone basis using criteria consistent with our other operating and reportable segments.

Each segment distributes its products through its own independent dealer network. Each segment also has its own management structure which is responsible for the operations of the segment and is directly accountable to the CODM for the operating performance of the segment, which is regularly assessed by the CODM who allocates resources based on that performance, including using measures of performance based operating income.

The Company files a consolidated income tax return and does not allocate income taxes and other corporate-level expenses, including interest, to operating segments. All material corporate costs are included in the MasterCraft segment.

Selected financial information for the Company’s reportable segments was as follows:

 

 

 

For the Three Months Ended January 2, 2022

 

 

 

MasterCraft

 

 

Crest

 

 

NauticStar

 

 

Aviara

 

 

Consolidated

 

Net sales

 

$

106,773

 

 

$

29,718

 

 

$

15,065

 

 

$

7,909

 

 

$

159,465

 

Operating income (loss)

 

 

21,302

 

 

 

4,637

 

 

 

(3,066

)

 

 

(2,320

)

 

 

20,553

 

Depreciation and amortization

 

 

1,226

 

 

 

647

 

 

 

877

 

 

 

491

 

 

 

3,241

 

Purchases of property, plant and equipment

 

 

1,468

 

 

 

673

 

 

 

702

 

 

 

254

 

 

 

3,097

 

 

 

 

For the Six Months Ended January 2, 2022

 

 

 

MasterCraft

 

 

Crest

 

 

NauticStar

 

 

Aviara

 

 

Consolidated

 

Net sales

 

$

198,788

 

 

$

62,498

 

 

$

28,425

 

 

$

13,764

 

 

$

303,475

 

Operating income (loss)

 

 

37,482

 

 

 

8,436

 

 

 

(5,402

)

 

 

(5,919

)

 

 

34,597

 

Depreciation and amortization

 

 

2,514

 

 

 

1,341

 

 

 

1,772

 

 

 

968

 

 

 

6,595

 

Goodwill impairment

 

 

 

 

 

 

 

 

 

 

 

1,100

 

 

 

1,100

 

Purchases of property, plant and equipment

 

 

3,532

 

 

 

1,044

 

 

 

1,770

 

 

 

369

 

 

 

6,715

 

 

16


 

 

 

 

 

For the Three Months Ended January 3, 2021

 

 

 

MasterCraft

 

 

Crest

 

 

NauticStar

 

 

Aviara

 

 

Consolidated

 

Net sales

 

$

79,511

 

 

$

20,969

 

 

$

14,949

 

 

$

3,248

 

 

$

118,677

 

Operating income (loss)

 

 

16,660

 

 

 

2,650

 

 

 

(326

)

 

 

(2,039

)

 

 

16,945

 

Depreciation and amortization

 

 

1,116

 

 

 

624

 

 

 

802

 

 

 

319

 

 

 

2,861

 

Purchases of property, plant and equipment

 

 

1,063

 

 

 

23

 

 

 

516

 

 

 

15,349

 

 

 

16,951

 

 

 

 

For the Six Months Ended January 3, 2021

 

 

 

MasterCraft

 

 

Crest

 

 

NauticStar

 

 

Aviara

 

 

Consolidated

 

Net sales

 

$

149,102

 

 

$

39,008

 

 

$

27,291

 

 

$

7,021

 

 

$

222,422

 

Operating income (loss)

 

 

31,027

 

 

 

4,312

 

 

 

(1,945

)

 

 

(3,045

)

 

 

30,349

 

Depreciation and amortization

 

 

2,210

 

 

 

1,248

 

 

 

1,616

 

 

 

525

 

 

 

5,599

 

Purchases of property, plant and equipment

 

 

2,699

 

 

 

23

 

 

 

759

 

 

 

15,422

 

 

 

18,903

 

 

 

 

The following table presents total assets for the Company’s reportable segments.

 

 

 

January 2, 2022

 

 

June 30, 2021

 

Assets:

 

 

 

 

 

 

 

 

MasterCraft

 

$

136,693

 

 

$

158,610

 

Crest

 

 

46,089

 

 

 

42,204

 

NauticStar

 

 

55,357

 

 

 

44,181

 

Aviara

 

 

32,751

 

 

 

31,465

 

Total assets

 

$

270,890

 

 

$

276,460

 

 

 

 

 

17


 

 

ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

The following discussion and analysis should be read together with the unaudited condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q. In addition, the statements in this discussion and analysis regarding our expectations concerning the performance of our business, anticipated financial results, liquidity and the other non-historical statements are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in “Cautionary Note Regarding Forward-Looking Statements” above and in “Risk Factors” set forth in our 2021 Annual Report on Form 10-K. Our actual results may differ materially from those contained in or implied by any forward-looking statements.

 

Certain statements in the following discussions are based on non-GAAP financial measures. A “non-GAAP financial measure” is a numerical measure of a registrant’s historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with U.S. GAAP in the statements of operations, balance sheets or statements of cash flows of the issuer; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. Non-GAAP financial measures do not include operating and statistical measures. The Company includes non-GAAP financial measures in Management’s Discussion and Analysis, as the Company’s management believes that these measures and the information they provide are useful to users of the financial statements, including investors, because they permit users of the financial statements to view the Company’s performance using the same tools that management utilizes and to better evaluate the Company’s ongoing business performance. In order to better align the Company’s reported results with the internal metrics used by the Company's management to evaluate business performance as well as to provide better comparisons to prior periods and peer data, non-GAAP measures exclude the impact of purchase accounting amortization related to business acquisitions.

 

Overview

The COVID-19 pandemic has facilitated strong marine retail demand as consumers have taken advantage of more flexible work schedules allowing for more leisure time and marine product usage.  This strong retail demand has created historically low dealer inventory levels which, in turn, has increased wholesale demand for our products.  Year over year, we have increased production rates to address wholesale demand. While supply chain disruptions, production inefficiencies, and inflationary pressures have impacted the results for the three and six months ended January 2, 2022 as discussed below, net sales increased 36.4 percent for the first half of fiscal 2022 compared to the same prior-year period.  

Supply Chain Disruptions. Demand for raw materials and components used in the production of our products has surged. As a result, some of the materials and components that we use are in short supply.  To reduce the impact of supply chain disruptions on production, we have increased our raw materials safety stock and pursued alternative sourcing of raw materials and components where possible.  Additionally, work in process has increased as a result of supply chain shortages delaying our ability to finish production units.

Production Inefficiencies.  Business processes have been altered to address completion of boats waiting on parts while maintaining normal production lines, resulting in increased labor costs. Absenteeism and implementing COVID-19 mitigating procedures also burdened our work force as we continue to focus on ramp-up of production.

Inflationary Pressures. Inflationary pressures have increased the costs of raw materials and components used to build our products, negatively impacting our margins during the first half of 2022.  New model year price increases took effect for fiscal 2022; however, these price increases did not fully offset the increased material costs caused by inflation.  In response to worsening inflationary pressures, we began phasing in additional mid-cycle price increases during the second quarter of fiscal 2022.

As we continue to navigate the unprecedented confluence of demand and disruption precipitated by the COVID-19 pandemic, our production rates and results going forward will depend, in large part, on our and our suppliers’ capacity and ability to alleviate ongoing and changing risks.

18


 

We will continue to actively monitor the impact of the COVID-19 pandemic and may take further actions to alter business operations as may be required by government authorities, or that are determined to be in the best interest of our employees, dealers, suppliers, and stakeholders. The full extent of the COVID-19 pandemic impact on our business, operations, and financial results will depend on evolving factors that we cannot predict. See “Risk Factors — Risks Relating to Our Business — Actual or potential public health emergencies, epidemics, or pandemics, such as the current coronavirus (“COVID-19”) pandemic, could have a material adverse effect on our business, results of operations, or financial condition” set forth in our 2021 Annual Report on Form 10-K.

19


 

Results of Operations

Consolidated Results

 

The table below presents our consolidated results of operations for the three and six months ended:

 

 

 

Three Months Ended

 

 

2022 vs. 2021

 

 

Six Months Ended

 

 

2022 vs. 2021

 

 

 

January 2,

 

 

January 3,

 

 

 

 

 

 

%

 

 

January 2,

 

 

January 3,

 

 

 

 

 

 

%

 

 

 

2022

 

 

2021

 

 

Change

 

 

Change

 

 

2022

 

 

2021

 

 

Change

 

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated statements of operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET SALES

 

$

159,465

 

 

$

118,677

 

 

$

40,788

 

 

 

34.4

%

 

$

303,475

 

 

$

222,422

 

 

$

81,053

 

 

 

36.4

%

COST OF SALES

 

 

124,267

 

 

 

89,404

 

 

 

34,863

 

 

 

39.0

%

 

 

238,155

 

 

 

166,919

 

 

 

71,236

 

 

 

42.7

%

GROSS PROFIT

 

 

35,198

 

 

 

29,273

 

 

 

5,925

 

 

 

20.2

%

 

 

65,320

 

 

 

55,503

 

 

 

9,817

 

 

 

17.7

%

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling and marketing

 

 

3,395

 

 

 

2,989

 

 

 

406

 

 

 

13.6

%

 

 

7,677

 

 

 

5,896

 

 

 

1,781

 

 

 

30.2

%

General and administrative

 

 

10,263

 

 

 

8,352

 

 

 

1,911

 

 

 

22.9

%

 

 

19,933

 

 

 

17,284

 

 

 

2,649

 

 

 

15.3

%

Amortization of other intangible assets

 

 

987

 

 

 

987

 

 

 

 

 

 

0.0

%

 

 

2,013

 

 

 

1,974

 

 

 

39

 

 

 

2.0

%

Goodwill impairment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,100

 

 

 

 

 

 

1,100

 

 

 

 

Total operating expenses

 

 

14,645

 

 

 

12,328

 

 

 

2,317

 

 

 

18.8

%

 

 

30,723

 

 

 

25,154

 

 

 

5,569

 

 

 

22.1

%

OPERATING INCOME

 

 

20,553

 

 

 

16,945

 

 

 

3,608

 

 

 

21.3

%

 

 

34,597

 

 

 

30,349

 

 

 

4,248

 

 

 

14.0

%

OTHER EXPENSE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

357

 

 

 

870

 

 

 

(513

)

 

 

(59.0

%)

 

 

739

 

 

 

1,889

 

 

 

(1,150

)

 

 

(60.9

%)

INCOME BEFORE INCOME TAX EXPENSE

 

 

20,196

 

 

 

16,075

 

 

 

4,121

 

 

 

25.6

%

 

 

33,858

 

 

 

28,460

 

 

 

5,398

 

 

 

19.0

%

INCOME TAX EXPENSE

 

 

4,794

 

 

 

3,574

 

 

 

1,220

 

 

 

34.1

%

 

 

8,070

 

 

 

6,392

 

 

 

1,678

 

 

 

26.3

%

NET INCOME

 

$

15,402

 

 

$

12,501

 

 

$

2,901

 

 

 

23.2

%

 

$

25,788

 

 

$

22,068

 

 

$

3,720

 

 

 

16.9

%

Additional financial and other data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unit sales volume:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MasterCraft

 

 

886

 

 

 

773

 

 

 

113

 

 

 

14.6

%

 

 

1,669

 

 

 

1,407

 

 

 

262

 

 

 

18.6

%

Crest

 

 

690

 

 

 

575

 

 

 

115

 

 

 

20.0

%

 

 

1,406

 

 

 

1,012

 

 

 

394

 

 

 

38.9

%

NauticStar

 

 

310

 

 

 

355

 

 

 

(45

)

 

 

(12.7

%)

 

 

601

 

 

 

646

 

 

 

(45

)

 

 

(7.0

%)

Aviara

 

 

23

 

 

 

11

 

 

 

12

 

 

 

109.1

%

 

 

42

 

 

 

24

 

 

 

18

 

 

 

75.0

%

Consolidated unit sales volume

 

 

1,909

 

 

 

1,714

 

 

 

195

 

 

 

11.4

%

 

 

3,718

 

 

 

3,089

 

 

 

629

 

 

 

20.4

%

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MasterCraft

 

$

106,773

 

 

$

79,511

 

 

$

27,262

 

 

 

34.3

%

 

$

198,788

 

 

$

149,102

 

 

$

49,686

 

 

 

33.3

%

Crest

 

 

29,718

 

 

 

20,969

 

 

 

8,749

 

 

 

41.7

%

 

 

62,498

 

 

 

39,008

 

 

 

23,490

 

 

 

60.2

%

NauticStar

 

 

15,065

 

 

 

14,949

 

 

 

116

 

 

 

0.8

%

 

 

28,425

 

 

 

27,291

 

 

 

1,134

 

 

 

4.2

%

Aviara

 

 

7,909

 

 

 

3,248

 

 

 

4,661

 

 

 

143.5

%

 

 

13,764

 

 

 

7,021

 

 

 

6,743

 

 

 

96.0

%

Consolidated net sales

 

$

159,465

 

 

$

118,677

 

 

$

40,788

 

 

 

34.4

%

 

$

303,475

 

 

$

222,422

 

 

$

81,053

 

 

 

36.4

%

Net sales per unit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MasterCraft

 

$

121

 

 

$

103

 

 

$

18

 

 

 

17.5

%

 

$

119

 

 

$

106

 

 

$

13

 

 

 

12.3

%

Crest

 

 

43

 

 

 

36

 

 

 

7

 

 

 

19.4

%

 

 

44

 

 

 

39

 

 

 

5

 

 

 

12.8

%

NauticStar

 

 

49

 

 

 

42

 

 

 

7

 

 

 

16.7

%

 

 

47

 

 

 

42

 

 

 

5

 

 

 

11.9

%

Aviara

 

 

344

 

 

 

295

 

 

 

49

 

 

 

16.6

%

 

 

328

 

 

 

293

 

 

 

35

 

 

 

11.9

%

Consolidated net sales per unit

 

 

84

 

 

 

69

 

 

 

15

 

 

 

21.7

%

 

 

82

 

 

 

72

 

 

 

10

 

 

 

13.9

%

Gross margin

 

 

22.1

%

 

 

24.7

%

 

(260) bps

 

 

 

 

 

 

 

21.5

%

 

 

25.0

%

 

(350) bps

 

 

 

 

 

 

 

20


 

 

Net sales increased 34.4 percent and 36.4 percent during the second quarter and first six months of fiscal 2022, respectively, when compared with the same prior year periods. Net sales in the MasterCraft, Crest, and Aviara segments benefited from increased sales volume as our dealers continue to have high retail demand and look to restock their inventories. Higher prices, favorable model mix, and higher option sales were also favorable compared to the prior period.

Gross margin percentage declined 260 basis points and 350 basis points during the second quarter and first six months of fiscal 2022, respectively, compared to the same prior year periods. Higher revenues yielded a lower margin due to supply chain disruptions and inflationary pressures that drove material and labor costs higher.  Though we began phasing in mid-cycle price increases to offset these headwinds, the impact will not be fully realized until the second half of fiscal 2022.  In addition, overhead from the new Aviara facility created unfavorable overhead absorption.

Operating expense increased 18.8 percent and 22.1 percent during the second quarter and first six months of fiscal 2022 when compared to the same prior year periods. Despite our increased costs, selling, general, and administrative expenses as a percentage of sales have decreased for the second quarter and first half of 2022 when compared to the same prior year periods.  Selling and marketing expense increased due to timing of prior-year expenses being impacted by the COVID-19 pandemic, resulting in lower costs for the second quarter and first half of fiscal 2021. General and administrative expenses increased as a result of increased variable compensation costs and continued investments in information technology.  Additionally, an impairment charge related to the allocated goodwill associated with the Aviara segment was recorded in the first quarter of fiscal 2022, as discussed in Note 4 to the Unaudited Condensed Consolidated Financial Statements.

Interest expense decreased due to lower effective interest rates and lower average outstanding debt balances during the current year periods compared to the prior year periods.

 

Segment Results

 

As discussed in Note 1 to our Unaudited Condensed Consoslidated Financial Statements and beginning with the first quarter of fiscal 2022, our CODM began to manage our business, allocate resources, and evaluate performance based on the reportable segments of MasterCraft, Crest, NauticStar, and Aviara.

 

MasterCraft Segment

 

The following table sets forth MasterCraft segment results for the three and six months ended:

 

 

 

Three Months Ended

 

 

2022 vs. 2021

 

 

Six Months Ended

 

 

2022 vs. 2021

 

 

 

January 2,

 

 

January 3,

 

 

 

 

 

 

%

 

 

January 2,

 

 

January 3,

 

 

 

 

 

 

%

 

 

 

2022

 

 

2021

 

 

Change

 

 

Change

 

 

2022

 

 

2021

 

 

Change

 

 

Change

 

Net sales

 

$

106,773

 

 

$

79,511

 

 

$

27,262

 

 

 

34.3

%

 

$

198,788

 

 

$

149,102

 

 

$

49,686

 

 

 

33.3

%

Operating income

 

 

21,302

 

 

 

16,660

 

 

 

4,642

 

 

 

27.9

%

 

 

37,482

 

 

 

31,027

 

 

 

6,455

 

 

 

20.8

%

Purchases of property, plant and equipment

 

 

1,468

 

 

 

1,063

 

 

 

405

 

 

 

38.1

%

 

 

3,532

 

 

 

2,699

 

 

 

833

 

 

 

30.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unit sales volume

 

 

886

 

 

 

773

 

 

 

113

 

 

 

14.6

%

 

 

1,669

 

 

 

1,407

 

 

 

262

 

 

 

18.6

%

Net sales per unit

 

$

121

 

 

$

103

 

 

$

18

 

 

 

17.5

%

 

$

119

 

 

$

106

 

 

$

13

 

 

 

12.3

%

 

Net sales increased 34.3 percent and 33.3 percent during the second quarter and first six months of fiscal 2022, respectively, when compared with the same prior year periods, primarily driven by an increase in sales volume and favorable model mix. Additionally, net sales benefited from higher prices and higher option sales.

 

Operating income increased $4.6 million and $6.5 million during the second quarter and first half of fiscal 2022, respectively, when compared to the same prior year periods. The increase was driven by higher net sales, and partially offset by inflationary pressures, the production inefficiencies from supply chain disruptions, and higher general and administrative costs.

21


 

 

Crest Segment

 

The following table sets forth Crest segment results for the three and six months ended:

 

 

 

Three Months Ended

 

 

2022 vs. 2021

 

 

Six Months Ended

 

 

2022 vs. 2021

 

 

 

January 2,

 

 

January 3,

 

 

 

 

 

 

%

 

 

January 2,

 

 

January 3,

 

 

 

 

 

 

%

 

 

 

2022

 

 

2021

 

 

Change

 

 

Change

 

 

2022

 

 

2021

 

 

Change

 

 

Change

 

Net sales

 

$

29,718

 

 

$

20,969

 

 

$

8,749

 

 

 

41.7

%

 

$

62,498

 

 

$

39,008

 

 

$

23,490

 

 

 

60.2

%

Operating income

 

 

4,637

 

 

 

2,650

 

 

 

1,987

 

 

 

75.0

%

 

 

8,436

 

 

 

4,312

 

 

 

4,124

 

 

 

95.6

%

Purchases of property, plant and equipment

 

 

673

 

 

 

23

 

 

 

650

 

 

 

2826.1

%

 

 

1,044

 

 

 

23

 

 

 

1,021

 

 

 

4439.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unit sales volume

 

 

690

 

 

 

575

 

 

 

115

 

 

 

20.0

%

 

 

1,406

 

 

 

1,012

 

 

 

394

 

 

 

38.9

%

Net sales per unit

 

$

43

 

 

$

36

 

 

$

7

 

 

 

19.4

%

 

$

44

 

 

$

39

 

 

$

5

 

 

 

12.8

%

 

Net sales increased $8.7 million and $23.5 million during the second quarter and first half of fiscal 2022, respectively, when compared to the same prior year periods, as a result of higher sales volumes and higher prices.

 

Operating income for second quarter and first half of fiscal 2022 increased 75.0 percent and 95.6 percent, respectively, when compared to the same prior year periods. The increase is primarily the result of higher net sales, partially offset by higher costs from inflationary pressures.

 

NauticStar Segment

 

The following table sets forth NauticStar segment results for the three and six months ended:

 

 

 

Three Months Ended

 

 

2022 vs. 2021

 

 

Six Months Ended

 

 

2022 vs. 2021

 

 

 

January 2,

 

 

January 3,

 

 

 

 

 

 

%

 

 

January 2,

 

 

January 3,

 

 

 

 

 

 

%

 

 

 

2022

 

 

2021

 

 

Change

 

 

Change

 

 

2022

 

 

2021

 

 

Change

 

 

Change

 

Net sales

 

$

15,065

 

 

$

14,949

 

 

$

116

 

 

 

0.8

%

 

$

28,425

 

 

$

27,291

 

 

$

1,134

 

 

 

4.2

%

Operating loss

 

 

(3,066

)

 

 

(326

)

 

 

(2,740

)

 

 

840.5

%

 

 

(5,402

)

 

 

(1,945

)

 

 

(3,457

)

 

 

177.7

%

Purchases of property, plant and equipment

 

 

702

 

 

 

516

 

 

 

186

 

 

 

36.0

%

 

 

1,770

 

 

 

759

 

 

 

1,011

 

 

 

133.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unit sales volume

 

 

310

 

 

 

355

 

 

 

(45

)

 

 

(12.7

%)

 

 

601

 

 

 

646

 

 

 

(45

)

 

 

(7.0

%)

Net sales per unit

 

$

49

 

 

$

42

 

 

$

7

 

 

 

16.7

%

 

$

47

 

 

$

42

 

 

$

5

 

 

 

11.9

%

 

Net sales were $15.1 million and $28.4 million for the second quarter and first six months of fiscal 2022, respectively.  Net sales benefited from higher prices and higher option sales, and was offset by decreased sales volume, when compared to the same prior year periods.  

 

Operating loss was $3.1 million and $5.4 million for the second quarter and first six months of fiscal 2022, respectively, when compared to the same prior year periods. Higher costs from inflationary pressures, supply chain disruptions, and labor challenges offset higher net sales.

 

 

 

 

 

 

 

 

22


 

 

 

 

Aviara Segment

 

The following table sets forth Aviara segment results for the three and six months ended:

 

 

 

Three Months Ended

 

 

2022 vs. 2021

 

 

Six Months Ended

 

 

2022 vs. 2021

 

 

 

January 2,

 

 

January 3,

 

 

 

 

 

 

%

 

 

January 2,

 

 

January 3,

 

 

 

 

 

 

%

 

 

 

2022

 

 

2021

 

 

Change

 

 

Change

 

 

2022

 

 

2021

 

 

Change

 

 

Change

 

Net sales

 

$

7,909

 

 

$

3,248

 

 

$

4,661

 

 

 

143.5

%

 

$

13,764

 

 

$

7,021

 

 

$

6,743

 

 

 

96.0

%

Operating loss

 

 

(2,320

)

 

 

(2,039

)

 

 

(281

)

 

 

13.8

%

 

 

(5,919

)

 

 

(3,045

)

 

 

(2,874

)

 

 

94.4

%

Goodwill impairment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,100

 

 

 

 

 

 

1,100

 

 

 

 

Purchases of property, plant and equipment

 

 

254

 

 

 

15,349

 

 

 

(15,095

)

 

 

(98.3

%)

 

 

369

 

 

 

15,422

 

 

 

(15,053

)

 

 

(97.6

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unit sales volume

 

 

23

 

 

 

11

 

 

 

12

 

 

 

109.1

%

 

 

42

 

 

 

24

 

 

 

18

 

 

 

75.0

%

Net sales per unit

 

$

344

 

 

$

295

 

 

$

49

 

 

 

16.6

%

 

$

328

 

 

$

293

 

 

$

35

 

 

 

11.9

%

 

Net sales increased $4.7 million and $6.7 million during the second quarter and first six months of fiscal 2022, respectively, when compared to the same prior year periods, due to an increase in unit sales volume attributed to increased capacity from the new Merritt Island facility and favorable model mix.

 

During the second quarter and first six months of 2022, all Aviara boats were manufactured in our 140,000 square foot Merritt Island, Florida facility, which we purchased in October 2020 for $14.2 million. During the second quarter and first six months of 2021, the production of Aviara boats at our MasterCraft facility in Vonore, Tennessee, was winding down and transitioning to the Merritt Island facility. As a result of this transition, overhead costs attributable to Aviara increased significantly which creates a dilutive near-term impact on Aviara’s margins and profitability.

 

Operating loss increased $0.3 million and $2.9 million for the second quarter and first half of fiscal 2022, respectively, when compared to the same prior year periods, as a result of ramp up related inefficiencies in the Merritt Island facility, including higher overhead costs associated with the new facility.  Additionally, a goodwill impairment charge was recorded during the first quarter of fiscal 2022. See Note 4 in Notes to Unaudited Condensed Consolidated Financial Statements for more information on the impairment charge.

 

Non-GAAP Measures

EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin

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 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 Aviara transition costs and certain non-cash items including goodwill impairment and share-based compensation. We define Adjusted EBITDA margin as Adjusted EBITDA 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 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 Aviara transition costs and certain non-cash items including goodwill impairment, other intangible asset amortization, and share-based compensation. 

23


 

EBITDA, Adjusted EBITDA, 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 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 our tax expense or any cash requirements to pay income taxes;

 

Adjusted EBITDA does not reflect interest expense, or the cash requirements necessary to service interest payments on our indebtedness; and

 

Adjusted Net Income, Adjusted Net Income per share, and Adjusted EBITDA 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.

 


24


 

 

The following table presents a reconciliation of net income as determined in accordance with U.S. GAAP to EBITDA, and Adjusted EBITDA, and net income margin (expressed as a percentage of net sales) to Adjusted EBITDA Margin (expressed as a percentage of net sales) for the periods indicated:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

January 2,

 

 

% of Net

 

 

January 3,

 

 

% of Net

 

 

January 2,

 

 

% of Net

 

 

January 3,

 

 

% of Net

 

 

 

2022

 

 

sales

 

 

2021

 

 

sales

 

 

2022

 

 

sales

 

 

2021

 

 

sales

 

Net income

 

$

15,402

 

 

9.7%

 

 

$

12,501

 

 

10.5%

 

 

$

25,788

 

 

8.5%

 

 

$

22,068

 

 

9.9%

 

Income tax expense

 

 

4,794

 

 

 

 

 

 

 

3,574

 

 

 

 

 

 

 

8,070

 

 

 

 

 

 

 

6,392

 

 

 

 

 

Interest expense

 

 

357

 

 

 

 

 

 

 

870

 

 

 

 

 

 

 

739

 

 

 

 

 

 

 

1,889

 

 

 

 

 

Depreciation and amortization

 

 

3,241

 

 

 

 

 

 

 

2,861

 

 

 

 

 

 

 

6,595

 

 

 

 

 

 

 

5,599

 

 

 

 

 

EBITDA

 

 

23,794

 

 

14.9%

 

 

 

19,806

 

 

16.7%

 

 

 

41,192

 

 

13.6%

 

 

 

35,948

 

 

16.2%

 

Share-based compensation

 

 

1,208

 

 

 

 

 

 

 

643

 

 

 

 

 

 

 

2,104

 

 

 

 

 

 

 

1,283

 

 

 

 

 

Goodwill impairment(a)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,100

 

 

 

 

 

 

 

 

 

 

 

 

Aviara transition costs(b)

 

 

 

 

 

 

 

 

 

847

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,025

 

 

 

 

 

Adjusted EBITDA

 

$

25,002

 

 

15.7%

 

 

$

21,296

 

 

17.9%

 

 

$

44,396

 

 

14.6%

 

 

$

38,256

 

 

17.2%

 

(a)

Represents a non-cash charge recorded in the Aviara segment for impairment of goodwill.  See Note 4 for more information on the goodwill impairment charge.

(b)

Represents costs to transition production of the Aviara brand from Vonore, Tennessee to Merritt Island, Florida.  Costs include duplicative overhead costs and costs not indicative of ongoing operations (such as training and facility preparation).

 

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

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

January 2,

 

 

January 3,

 

 

January 2,

 

 

January 3,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

(Dollars in thousands, except per share data)

 

Net income

 

$

15,402

 

 

$

12,501

 

 

$

25,788

 

 

$

22,068

 

Income tax expense

 

 

4,794

 

 

 

3,574

 

 

 

8,070

 

 

 

6,392

 

Share-based compensation

 

 

1,208

 

 

 

643

 

 

 

2,104

 

 

 

1,283

 

Amortization of acquisition intangibles

 

 

960

 

 

 

960

 

 

 

1,959

 

 

 

1,921

 

Goodwill impairment(a)

 

 

 

 

 

 

 

 

1,100

 

 

 

 

Aviara transition costs(b)

 

 

 

 

 

847

 

 

 

 

 

 

1,025

 

Adjusted Net Income before income taxes

 

 

22,364

 

 

 

18,525

 

 

 

39,021

 

 

 

32,689

 

Adjusted income tax expense(c)

 

 

5,143

 

 

 

4,261

 

 

 

8,974

 

 

 

7,518

 

Adjusted Net Income

 

$

17,221

 

 

$

14,264

 

 

$

30,047

 

 

$

25,171

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.92

 

 

$

0.76

 

 

$

1.60

 

 

$

1.34

 

Diluted

 

$

0.91

 

 

$

0.75

 

 

$

1.59

 

 

$

1.33

 

Weighted average shares used for the computation of:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic Adjusted Net Income per share

 

 

18,722,386

 

 

 

18,807,316

 

 

 

18,786,343

 

 

 

18,790,826

 

Diluted Adjusted Net Income per share

 

 

18,899,136

 

 

 

18,928,408

 

 

 

18,951,627

 

 

 

18,897,617

 

(a)

Represents a non-cash charge recorded in the Aviara segment for impairment of goodwill.  See Note 4 for more information on the goodwill impairment charge.

(b)

Represents costs to transition production of the Aviara brand from Vonore, Tennessee to Merritt Island, Florida.  Costs include duplicative overhead costs and costs not indicative of ongoing operations (such as training and facility preparation).

(c)

Reflects income tax expense at an income tax rate of 23.0% for each period presented.

25


 

 

The following table presents the reconciliation of net income per diluted share to Adjusted Net Income per diluted share for the periods presented:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

January 2,

 

 

January 3,

 

 

January 2,

 

 

January 3,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net income per diluted share

 

$

0.81

 

 

$

0.66

 

 

$

1.36

 

 

$

1.17

 

Impact of adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

0.25

 

 

 

0.19

 

 

 

0.43

 

 

 

0.34

 

Share-based compensation

 

 

0.06

 

 

 

0.03

 

 

 

0.11

 

 

 

0.07

 

Amortization of acquisition intangibles

 

 

0.05

 

 

 

0.05

 

 

 

0.10

 

 

 

0.10

 

Goodwill impairment(a)

 

 

 

 

 

 

 

 

0.06

 

 

 

 

Aviara transition costs(b)

 

 

 

 

 

0.04

 

 

 

 

 

 

0.05

 

Adjusted Net Income per diluted share before income taxes

 

$

1.17

 

 

$

0.97

 

 

$

2.06

 

 

$

1.73

 

Impact of adjusted income tax expense on net income per diluted share before income taxes(c)

 

 

(0.26

)

 

 

(0.22

)

 

 

(0.47

)

 

 

(0.40

)

Adjusted Net Income per diluted share

 

$

0.91

 

 

$

0.75

 

 

$

1.59

 

 

$

1.33

 

(a)

Represents a non-cash charge recorded in the Aviara segment for impairment of goodwill.  See Note 4 for more information on the goodwill impairment charge.

(b)

Represents costs to transition production of the Aviara brand from Vonore, Tennessee to Merritt Island, Florida.  Costs include duplicative overhead costs and costs not indicative of ongoing operations (such as training and facility preparation).

(c)

Reflects income tax expense at an income tax rate of 23.0% for each period presented.

 

Liquidity and Capital Resources

Our primary liquidity and capital resource needs are to finance working capital, fund capital expenditures, service our debt, and fund our stock repurchase program. Our principal sources of liquidity are our cash balance, cash generated from operating activities, our revolving credit agreement and the refinancing and/or new issuance of long-term debt.

Cash and cash equivalents totaled $13.6 million as of January 2, 2022, a decrease of $25.6 million from $39.3 million as of June 30, 2021. Total debt as of January 2, 2022 and June 30, 2021 was $73.7 million and $93.1 million, respectively.

Our working capital was impacted by the $24.9 million increase in inventory during the first half of fiscal 2022 mainly due to an increase in raw materials to support higher production volumes and to increase safety stock to manage supply chain risk. Work in process has increased due to supply chain disruptions.

As of January 2, 2022, we had $15.7 million outstanding under the Revolving Credit Facility, leaving $84.3 million of available borrowing capacity.  Refer to Note 7 — Long Term Debt in the Notes to Unaudited Condensed Consolidated Financial Statements for further details.

On June 24, 2021, the board of directors of the Company authorized a stock repurchase program that allows for the repurchase of up to $50.0 million of our common stock during the three-year period ending June 24, 2024. During the six months ending January 2, 2022 the Company repurchased 414,675 shares of common stock for $11.4 million in cash, including related fees and expenses.

We are continuing to monitor the impact of supply chain disruptions, production inefficiencies, and inflationary pressures on our business. However, we believe our cash balance, cash from operations, and our ability to borrow will be sufficient to provide for our liquidity and capital resource needs, including authorized stock repurchases.

 

26


 

 

The following table summarizes our cash flows from operating, investing, and financing activities:

 

 

 

Six Months Ended

 

 

 

January 2,

 

 

January 3,

 

 

 

2022

 

 

2021

 

 

 

(Dollars in thousands)

 

Total cash provided by (used in):

 

 

 

 

 

 

 

 

Operating activities

 

$

12,224

 

 

$

30,155

 

Investing activities

 

 

(6,715

)

 

 

(18,903

)

Financing activities

 

 

(31,114

)

 

 

(15,497

)

Net change in cash

 

$

(25,605

)

 

$

(4,245

)

 

Six Months Ended January 2, 2022 Cash Flow

Net cash provided by operating activities for the first half of 2022 was $12.2 million mainly due to net income, partially offset by working capital usage.  Working capital usage primarily consisted of an increase in inventory and a decrease in accounts payable. Partially offsetting the working capital usage was a decrease in accounts receivable and an increase in accrued expenses and other current liabilities.  As discussed above, inventory increased $24.9 million for first half of 2022.  Accounts payable decreased as a result of the timing of purchases and payment of invoices. Accounts receivable decreased as a result of timing of customer payments. Accrued expenses and other current liabilities increased due to an increase in customer deposits, as described in Note 2 – Revenue Recognition, and warranty costs, partially offset by the payment in the first quarter of fiscal 2022 of variable compensation that was accrued at June 30, 2021.

Net cash used for investing activities was $6.7 million, which included capital expenditures.  Our capital spending was focused on expanding our capacity and maintenance capital.

Net cash used for financing activities was $31.1 million, which included net payments of $19.5 million on long-term debt and funding of the stock repurchase program totaling $11.4 million.

Six Months Ended January 3, 2021 Cash Flow

Net cash provided by operating activities in first quarter 2021 totaled $30.2 million primarily due to net income, an increase in accrued expenses and other current liabilities, and an increase in accounts payable, partially offset by an increase in inventory and accounts receivable.  Accrued expenses and other current liabilities increased due to timing of variable compensation costs and an increase in customer deposits.  Accounts payable and inventory increased as a result of increased production.  Accounts receivable increased as a result of increased sales.

Net cash used for investing activities was $18.9 million, which consisted of capital expenditures, including the purchase of the Merritt Island, Florida manufacturing facility.

Net cash used for financing activities was $15.5 million and related primarily to payments of long-term debt.

 

Contractual Obligations

 

In October 2021, we signed a new supplier agreement to purchase marine outboard engines during fiscal 2022.  During the term of the agreement, we committed to purchasing a minimum annual gross dollar value of $27.0 million in engines.  Except for the new purchase agreement and the net repayment of debt of $19.5 million during the six months ended January 2, 2022, there were no material changes to our contractual obligations disclosed in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” set forth in our Annual Report on Form 10-K for the fiscal year ended June 30, 2021.

 

 

 

27


 

 

Off Balance Sheet Arrangements

 

The Company did not have any off balance sheet financing arrangements as of January 2, 2022.

 

Critical Accounting Policies

 

As of January 2, 2022 there were no significant changes in or changes to the application of our critical accounting policies or estimation procedures from those presented in our Annual Report on Form 10-K for the fiscal year ended June 30, 2021, which was filed with the SEC on September 2, 2021.

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

Refer to our 2021 Annual Report for a complete discussion of the Company’s market risk. There have been no material changes in market risk from those disclosed therein.

ITEM 4.CONTROLS AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) (of the Exchange Act) that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

 

As of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures. Based upon this evaluation, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of January 2, 2022.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting during the quarter ended January 2, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

28


 

PART II – OTHER INFORMATION

ITEM 1.

For a discussion of the Company’s legal proceedings, see Part I – Item 1. – Note 6 Commitments and Contingencies to the Company’s unaudited condensed consolidated financial statements.

ITEM 1A.

RISK FACTORS.

During the six months ended January 2, 2022, there were no material changes to the risk factors disclosed in “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2021.

ITEM 2.

UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS.

 

Stock Repurchase Program

On June 24, 2021, the board of directors of the Company authorized a stock repurchase program that allows for the repurchase of up to $50.0 million of our common stock during the three-year period ending June 24, 2024.  During the first six months of fiscal 2022, we repurchased approximately $11.4 million of our common stock, including approximately $9.9 million during the three months ended January 2, 2022. The remaining authorization under the program was approximately $38.6 million.

During the three months ended January 2, 2022, the Company repurchased the following shares of common stock:

Period

 

Total Number of Shares Purchased

 

 

Average Price Paid Per Share(a)

 

 

Total Number of Shares Purchased as part of Publicly Announced Program

 

 

Approximate Dollar Value of Shares that May Yet be Purchased Under the Plan (dollars in thousands)

 

October 4, 2021 - October 31, 2021

 

 

15,001

 

 

$

25.88

 

 

 

15,001

 

 

$

48,125

 

November 1, 2021 - November 28, 2021

 

 

85,641

 

 

 

28.73

 

 

 

85,641

 

 

 

45,663

 

November 29, 2021 - January 2, 2022

 

 

255,654

 

 

 

27.51

 

 

 

255,654

 

 

 

38,625

 

Total

 

 

356,296

 

 

$

27.73

 

 

 

356,296

 

 

$

38,625

 

 

(a)

Represents weighted average price paid per share excluding commissions paid.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4.

MINE SAFETY DISCLOSURES.

None.

ITEM 5.

OTHER INFORMATION.

None.

29


 

ITEM 6.EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Incorporated by Reference

 

Exhibit
No.

 

Description

 

Form

 

File No.

 

Exhibit

 

Filing Date

 

Filed
Herewith

 

3.1  

 

Amended and Restated Certificate of Incorporation of MCBC Holdings, Inc.

 

10-K

 

001-37502

 

3.1

 

9/18/15

 

 

 

3.2  

 

Certificate of Amendment to Amended and Restated Certificate of Incorporation of MasterCraft Boat Holdings, Inc.

 

10-Q

 

001-37502

 

3.2

 

11/9/18

 

 

 

3.3  

 

Certificate of Amendment to Amended and Restated Certificate of Incorporation of MasterCraft Boat Holdings, Inc.

 

8-K

 

001-37502

 

3.1

 

10/25/19

 

 

 

3.4  

 

Fourth Amended and Restated By-laws of MasterCraft Boat Holdings, Inc.

 

8-K

 

001-37502

 

3.2

 

10/25/19

 

 

 

31.1

 

Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer

 

 

 

 

 

 

 

 

 

*

 

31.2

 

Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer

 

 

 

 

 

 

 

 

 

*

 

32.1

 

Section 1350 Certification of Chief Executive Officer

 

 

 

 

 

 

 

 

 

**

 

32.2

 

Section 1350 Certification of Chief Financial Officer

 

 

 

 

 

 

 

 

 

**

 

101.INS

 

Inline XBRL Instance Document

 

 

 

 

 

 

 

 

 

*

 

101.SCH

 

Inline XBRL Taxonomy Extension Schema Document

 

 

 

 

 

 

 

 

 

*

 

101.CAL

 

Inline XBRL Taxonomy Extension Calculation Linkbase Document

 

 

 

 

 

 

 

 

 

*

 

101.LAB

 

Inline XBRL Taxonomy Extension Label Linkbase Document

 

 

 

 

 

 

 

 

 

*

 

101.PRE

 

Inline XBRL Taxonomy Extension Presentation Linkbase Document

 

 

 

 

 

 

 

 

 

*

 

101.DEF

 

Inline XBRL Taxonomy Extension Definition Linkbase Document

 

 

 

 

 

 

 

 

 

*

 

104

 

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

 

 

 

 

 

 

 

 

 

*

 

 

*

Filed herewith.

**

Furnished herewith.

30


 

 

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 thereunto duly authorized.

 

 

 

MASTERCRAFT BOAT HOLDINGS, INC.

 

 

(Registrant)

 

 

 

 

Date:

February 3, 2022

By:

/s/  FREDERICK A. BRIGHTBILL

 

 

 

Frederick A. Brightbill

 

 

 

Chief Executive Officer (Principal Executive Officer) and Chairman of the Board

 

 

 

 

Date:

February 3, 2022

By:

/s/ TIMOTHY M. OXLEY

 

 

 

Timothy M. Oxley

 

 

 

Chief Financial Officer (Principal Financial and Accounting Officer),

 

 

 

Treasurer and Secretary

 

 

 

 

 

31

mcft-ex311_9.htm

Exhibit 31.1

CERTIFICATIONS

I, Frederick A. Brightbill, certify that:

 

1.I have reviewed this Quarterly Report on Form 10-Q for the fiscal quarter ended January 2, 2022 of MasterCraft Boat Holdings, Inc.;

 

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: February 3, 2022

 

/s/ FREDERICK A. BRIGHTBILL

 

 

Frederick A. Brightbill

 

 

Chief Executive Officer

(Principal Executive Officer) and Chairman of the Board

 

mcft-ex312_7.htm

Exhibit 31.2

CERTIFICATIONS

I, Timothy M. Oxley, certify that:

 

1.I have reviewed this Quarterly Report on Form 10-Q for the fiscal quarter ended January 2, 2022 of MasterCraft Boat Holdings, Inc.;

 

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: February 3, 2022

 

/s/ TIMOTHY M. OXLEY

 

 

Timothy M. Oxley

 

 

Chief Financial Officer, Treasurer and Secretary

(Principal Financial and Accounting Officer)

 

mcft-ex321_6.htm

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Frederick A. Brightbill, Chief Executive Officer of MasterCraft Boat Holdings, Inc. (the “Company”), hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

 

 

(1)

The Quarterly Report on Form 10-Q of the Company for the fiscal quarter ended January 2, 2022 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

 

 

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

February 3, 2022

 

 

 

/s/ FREDERICK A. BRIGHTBILL

 

 

 

 

Frederick A. Brightbill

 

 

 

 

Chief Executive Officer

(Principal Executive Officer) and Chairman of the Board

 

mcft-ex322_8.htm

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Timothy M. Oxley, Chief Financial Officer of MasterCraft Boat Holdings, Inc. (the “Company”), hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

 

 

(1)

The Quarterly Report on Form 10-Q of the Company for the fiscal quarter ended January 2, 2022 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

 

 

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

February 3, 2022

 

 

 

/s/ TIMOTHY M. OXLEY

 

 

 

 

Timothy M. Oxley

 

 

 

 

Chief Financial Officer, Treasurer and Secretary

(Principal Financial and Accounting Officer)