0001638290false00016382902022-11-092022-11-09

 

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

 

FORM 8-K

 

CURRENT REPORT

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

Date of Report (Date of earliest event reported): November 09, 2022

 

 

MasterCraft Boat Holdings, Inc.

(Exact name of Registrant as Specified in Its Charter)

 

 

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

 

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

 

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

 

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

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

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

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

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

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

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

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

Emerging growth company ☐

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

 

 

---

Item 2.02 Results of Operations and Financial Condition.

On November 9, 2022, MasterCraft Boat Holdings, Inc. announced its financial results for its fiscal 2023 quarter ended October 2, 2022. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.

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

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

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

 

Exhibit No.		Description
99.1		Press Release dated November 9, 2022
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

---

SIGNATURES

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

			MASTERCRAFT BOAT HOLDINGS, INC.
Date:	November 9, 2022	By:	/s/ TIMOTHY M. OXLEY
			Timothy M. Oxley Chief Financial Officer, Treasurer and Secretary

 

---

 

 

Exhibit 99.1

FOR IMMEDIATE RELEASE

MasterCraft Boat Holdings, Inc. Reports Record Results for Fiscal 2023 First Quarter

VONORE, Tenn. – November 9, 2022 – MasterCraft Boat Holdings, Inc. (NASDAQ: MCFT) today announced financial results for its fiscal 2023 first quarter ended October 2, 2022.

 

Highlights:

 

Unless otherwise indicated, the highlights and commentary provided herein relate to our continuing operations, which excludes our NauticStar segment. Results for NauticStar are reported as discontinued operations.

 

 

Fred Brightbill, Chief Executive Officer and Chairman, commented, “We are proud of our outstanding start to fiscal 2023. Despite macroeconomic volatility and the dynamic business environment, we achieved the best first quarter in the Company’s history. Our ability to mitigate supply chain disruption is enabling more efficient production and throughput, and as a result, we made progress in replenishing dealer inventories, greatly enhancing product availability. Each of our segments contributed to our growth and profitability improvement during the quarter, and we realized structural improvements to the growth potential and margin profile of our business with the sale of NauticStar.”

 

Brightbill continued, “We delivered an eighth consecutive period-over-period record-setting quarter, net sales were higher by nearly 30 percent, Adjusted EBITDA grew by nearly 73 percent, Adjusted EBITDA margin increased 530 basis points, and Adjusted Net Income per share grew by more than 90 percent year-over-year. These results would not have been possible without the hard work and dedication of our team who continue to execute against our strategic priorities.”

 

---

 

First Quarter Results

Unless otherwise indicated, the financial results provided herein relate to our continuing operations, which excludes our NauticStar segment. Results for NauticStar are reported as discontinued operations.

For the first quarter of fiscal 2023, MasterCraft Boat Holdings, Inc. reported consolidated net sales of $169.5 million, up $38.9 million from the first quarter of fiscal 2022. The net sales increase reflects increased volume and mix, along with price increases, partially offset by increased dealer floor plan financing costs and other incentives as dealer inventories begin to return to normal following historically low levels due to the COVID-19 pandemic.

Gross profit increased $15.4 million and gross profit margin increased 370 basis points to 27.1 percent in the first quarter of fiscal 2023 from 23.4 percent in the first quarter of fiscal 2022. The increase was mainly due to higher prices, increased unit volumes, and improved production efficiencies, partially offset by inflationary pressures that drove costs higher and higher dealer incentives.

Operating expenses decreased $0.5 million for the first quarter of fiscal 2023, compared to the prior-year period primarily as a result of goodwill impairment charges associated with our Aviara segment in fiscal 2022.

Net income from continuing operations was $24.6 million for the first quarter of fiscal 2023, compared to $12.2 million in the prior-year period. Diluted net income from continuing operations per share was $1.37, compared to $0.65 for the first quarter of fiscal 2022.

Including discontinued operations, net income was $4.1 million for the first quarter of fiscal 2023, compared to net income of $10.4 million in the prior-year period. The $4.1 million includes a $20.6 million loss from discontinued operations.

Adjusted Net Income increased to $25.7 million for the first quarter, or $1.43 per diluted share, compared to $14.2 million, or $0.75 per diluted share, in the prior-year period.

Adjusted EBITDA was $35.9 million for the first quarter of fiscal 2023, compared to $20.8 million in the prior-year period. Adjusted EBITDA margin was 21.2 percent for the first quarter, up from 15.9 percent for the prior-year period.

 

See “Non-GAAP Measures” below for a reconciliation of Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted Net Income per share to the most directly comparable financial measures presented in accordance with GAAP.

 

Outlook

 

Concluded Brightbill, “Looking forward, we are raising our guidance for the full year based on our strong performance. We will continue to monitor the strength of retail demand and adjust our production plans as appropriate to maintain healthy dealer inventories. Our guidance range reflects the potential for a range of retail demand scenarios.”

 

 

---

The Company’s outlook is as follows:

 

 

Conference Call and Webcast Information

 

MasterCraft Boat Holdings, Inc. will host a live conference call and webcast to discuss fiscal first quarter 2023 results today, November 9, 2022, at 8:30 a.m. EDT. Participants may access the conference call live via webcast on the investor section of the Company’s website, Investors.MasterCraft.com, by clicking on the webcast icon. To participate via telephone, please register in advance at this link. Upon registration, all telephone participants will receive a confirmation email detailing how to join the conference call, including the dial-in number along with a unique passcode and registrant ID that can be used to access the call. A replay of the conference call and webcast will be archived on the Company's website.

 

About MasterCraft Boat Holdings, Inc.

 

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

 

Forward-Looking Statements

 

This press release includes forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). Forward-looking statements can often be identified by such words and phrases as “believes,” “anticipates,” “expects,” “intends,” “estimates,” “may,” “will,” “should,” “continue” and similar expressions, comparable terminology or the negative thereof, and include statements in this press release concerning the resilience of our business model; and our intention to drive value and accelerate growth.

 

Forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, including, but not limited to: the potential effects of supply chain disruptions and production inefficiencies, general economic conditions, demand for our products, inflation, changes in consumer preferences, competition within our industry, our reliance on our network of independent dealers, our ability to manage our manufacturing levels and our fixed cost base, the successful introduction of our new products, and

 

---

geopolitical conflicts. These and other important factors discussed under the caption “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2022, filed with the Securities and Exchange Commission (the “SEC”) on September 9, 2022, could cause actual results to differ materially from those indicated by the forward-looking statements. The discussion of these risks is specifically incorporated by reference into this press release.

 

Any such forward-looking statements represent management's estimates as of the date of this press release. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release. We undertake no obligation (and we expressly disclaim any obligation) to update or supplement any forward-looking statements that may become untrue or cause our views to change, whether because of new information, future events, changes in assumptions or otherwise. Comparison of results for current and prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.

 

Use of Non-GAAP Financial Measures

 

To supplement the Company’s consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company uses certain non-GAAP financial measures in this release. Reconciliations of the non-GAAP financial measures used in this release to the most comparable GAAP measures for the respective periods can be found in tables immediately following the consolidated statements of operations. Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for the Company’s financial results prepared in accordance with GAAP.

 

 

---

Results of Operations for the Three Months Ended October 2, 2022

 

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

(Dollars in thousands, except per share data)

		Three Months Ended
		October 2,				October 3,
		2022				2021
Net sales		$	169,516			$	130,650
Cost of sales			123,543				100,068
Gross profit			45,973				30,582
Operating expenses:
Selling and marketing			3,779				3,893
General and administrative			9,483				8,720
Amortization of other intangible assets			489				489
Goodwill impairment			—				1,100
Total operating expenses			13,751				14,202
Operating income			32,222				16,380
Other income (expense):
Interest expense			(562	)			(382	)
Interest income			151				—
Income before income tax expense			31,811				15,998
Income tax expense			7,176				3,766
Net income from continuing operations			24,635				12,232
Loss from discontinued operations, net of tax			(20,567	)			(1,846	)
Net income		$	4,068			$	10,386
Net income (loss) per share
Basic
Continuing operations		$	1.38			$	0.65
Discontinued operations			(1.15	)			(0.10	)
Net income		$	0.23			$	0.55
Diluted
Continuing operations		$	1.37			$	0.65
Discontinued operations			(1.14	)			(0.10	)
Net income		$	0.23			$	0.55
Weighted average shares used for computation of:
Basic earnings per share			17,946,061				18,850,301
Diluted earnings per share			18,031,725				19,004,119

 

 

---

MASTERCRAFT BOAT HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)

 

		October 2,				June 30,
		2022				2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	40,829			$	34,203
Accounts receivable, net of allowances of $130 and $214, respectively			18,615				22,472
Income tax receivable			1,014				—
Inventories, net			68,790				58,595
Prepaid expenses and other current assets			5,946				7,232
Current assets associated with discontinued operations			—				23,608
Total current assets			135,194				146,110
Property, plant and equipment, net			59,676				55,823
Goodwill			28,493				28,493
Other intangible assets, net			36,929				37,418
Deferred income taxes			19,109				21,525
Deferred debt issuance costs, net			380				406
Other long-term assets			1,956				1,290
Non-current assets associated with discontinued operations			—				5,987
Total assets		$	281,737			$	297,052
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable		$	23,936			$	23,375
Income tax payable			488				4,600
Accrued expenses and other current liabilities			50,674				54,437
Current portion of long-term debt, net of unamortized debt issuance costs			3,250				2,873
Current liabilities associated with discontinued operations			—				7,887
Total current liabilities			78,348				93,172
Long-term debt, net of unamortized debt issuance costs			52,582				53,676
Unrecognized tax positions			5,540				6,358
Operating lease liabilities			1,079				198
Total liabilities			137,549				153,404
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value per share — authorized, 100,000,000 shares; issued and outstanding, 17,998,117 shares at October 2, 2022 and 18,061,437 shares at June 30, 2022			180				181
Additional paid-in capital			93,057				96,584
Retained earnings / (accumulated deficit)			50,951				46,883
Total stockholders' equity			144,188				143,648
Total liabilities and stockholders' equity		$	281,737			$	297,052

 

 

 

 

 

 

---

Supplemental Operating Data

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

		Three Months Ended
		October 2,				October 3,
		2022				2021				Change
		(Dollars in thousands)
Unit sales volume:
MasterCraft			781				783				(0.3	)	%
Crest			846				716				18.2		%
Aviara			32				19				68.4		%
Consolidated			1,659				1,518				9.3		%
Net Sales:
MasterCraft		$	113,020			$	92,015				22.8		%
Crest			43,561				32,780				32.9		%
Aviara			12,935				5,855				120.9		%
Consolidated		$	169,516			$	130,650				29.7		%
Net sales per unit:
MasterCraft		$	145			$	118				22.9		%
Crest			51				46				10.9		%
Aviara			404				308				31.2		%
Consolidated			102				86				18.6		%
Gross margin			27.1	%			23.4	%		370 bps

 

 

Non-GAAP Measures

 

EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin

 

We define EBITDA as net income from continuing operations, before interest, income taxes, depreciation and amortization. We define Adjusted EBITDA as EBITDA further adjusted to eliminate certain non-cash charges or other items that we do not consider to be indicative of our core and/or ongoing operations. For the periods presented herein, these adjustments include share-based compensation and goodwill impairment. 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 from continuing operations, adjusted to eliminate certain non-cash charges or other items that we do not consider to be indicative of our core and/or ongoing operations and reflecting income tax expense on adjusted net income before income taxes at our estimated annual effective tax rate. For the periods presented herein, these adjustments include other intangible asset amortization, share-based compensation, and goodwill impairment.

 

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:

 

 

In addition, because not all companies use identical calculations, our presentation of the Non-GAAP Measures may not be comparable to similarly titled measures of other companies, including companies in our industry.

 

Beginning in the first quarter of fiscal 2023, due to the effects of discontinued operations, as discussed above, the Company's non-GAAP financial measures are presented on a continuing operations basis, for all periods presented.

 

We do not provide forward-looking guidance for certain financial measures on a U.S. GAAP basis because we are unable to predict certain items contained in the U.S. GAAP measures without unreasonable efforts. These items may include acquisition-related costs, litigation charges or settlements, impairment charges, and certain other unusual adjustments.

 

 

---

The following table presents a reconciliation of net income from continuing operations as determined in accordance with U.S. GAAP to EBITDA and Adjusted EBITDA, and net income from continuing operations margin (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
		October 2,				% of Net		October 3,				% of Net
		2022				sales		2021				sales
		(Dollars in thousands)
Net income from continuing operations		$	24,635			14.5%		$	12,232			9.4%
Income tax expense			7,176						3,766
Interest expense			562						382
Interest income			(151	)					—
Depreciation and amortization			2,601						2,459
EBITDA			34,823			20.5%			18,839			14.4%
Share-based compensation			1,120						862
Goodwill impairment(a)			—						1,100
Adjusted EBITDA		$	35,943			21.2%		$	20,801			15.9%

 

 

 

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

 

	Three Months Ended
	October 2,				October 3,
	2022				2021
	(Dollars in thousands, except per share data)
Net income from continuing operations	$	24,635			$	12,232
Income tax expense		7,176				3,766
Amortization of acquisition intangibles		462				462
Share-based compensation		1,120				862
Goodwill impairment(a)		—				1,100
Adjusted Net Income before income taxes		33,393				18,422
Adjusted income tax expense(b)		7,680				4,237
Adjusted Net Income	$	25,713			$	14,185
Adjusted net income per common share
Basic	$	1.43			$	0.75
Diluted	$	1.43			$	0.75
Weighted average shares used for the computation of (c):
Basic Adjusted net income per share		17,946,061				18,850,301
Diluted Adjusted net income per share		18,031,725				19,004,119

 

 

 

 

 

---

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

 

	Three Months Ended
	October 2,				October 3,
	2022				2021
Net income from continuing operations per diluted share	$	1.37			$	0.65
Impact of adjustments:
Income tax expense		0.40				0.20
Amortization of acquisition intangibles		0.03				0.02
Share-based compensation		0.06				0.05
Goodwill impairment(a)		—				0.06
Adjusted Net Income per diluted share before income taxes		1.86				0.98
Impact of adjusted income tax expense on net income per diluted share before income taxes(b)		(0.43	)			(0.23	)
Adjusted Net Income per diluted share	$	1.43			$	0.75

 

 

Investor Contact:

MasterCraft Boat Holdings, Inc.

George Steinbarger

Chief Revenue Officer

Email: investorrelations@mastercraft.com

 

 

# # #

 

---