8-K
0001638290false00016382902023-05-102023-05-10

 

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

 

FORM 8-K

 

CURRENT REPORT

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

Date of Report (Date of earliest event reported): May 10, 2023

 

 

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 May 10, 2023, MasterCraft Boat Holdings, Inc. announced its financial results for its fiscal 2023 quarter ended April 2, 2023. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.

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

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

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

 

Exhibit No.

 

Description

 

 

 

99.1

 

Press Release dated May 10, 2023

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:

May 10, 2023

By:

/s/ TIMOTHY M. OXLEY

 

 

 

Timothy M. Oxley
Chief Financial Officer, Treasurer and Secretary

 


EX-99

https://cdn.kscope.io/4a22ed1175b775eb50f0fec5d91cd4a8-img175202817_0.jpg 

 

Exhibit 99.1

FOR IMMEDIATE RELEASE

MasterCraft Boat Holdings, Inc. Reports Fiscal 2023 Third Quarter Results

VONORE, Tenn. – May 10, 2023 – MasterCraft Boat Holdings, Inc. (NASDAQ: MCFT) today announced financial results for its fiscal 2023 third quarter ended April 2, 2023.

 

Highlights:

 

Unless otherwise indicated, the highlights and commentary provided herein relate to our continuing operations, which exclude the NauticStar segment results reported as discontinued operations.

 

Net sales for the third quarter were $166.8 million, down 1.5% from the prior-year period
Net income from continuing operations was $22.8 million, or $1.28 per diluted share, down 6.3% and 2.3%, respectively, from the prior-year period
Diluted Adjusted Net Income per share, a non-GAAP measure, was $1.36, which equaled our record in the prior-year period
Adjusted EBITDA, a non-GAAP measure, was $33.0 million, down 5.8% from the prior-year period
Record operating cash flow due to strong earnings and diligent working capital management
Share repurchases of $7.0 million during the quarter

Fred Brightbill, Chief Executive Officer and Chairman, commented, “Our business has performed extremely well through the fiscal third quarter, delivering financial results which have exceeded expectations. Adjusted diluted net income per share tied our record from last year for the best fiscal third quarter in the Company’s history. Our exceptional operating results and diligent working capital management also continued into the third quarter, resulting in record operating cash flow.”

Brightbill continued, “During the quarter, we achieved our goal of refilling dealer inventories to optimal levels ahead of the summer selling season. Despite near-term macroeconomic headwinds, retail activity has performed closer to the upper end of our range of expectations through our fiscal third quarter. Our robust portfolio of innovative products and healthy dealer inventory levels position us to capitalize on the summer selling season. Additionally, our fortress balance sheet provides us with abundant financial flexibility to pursue our capital allocation priorities, first and foremost of which is investment in growth. We are laying the foundation for future growth by actively investing in targeted initiatives designed to take advantage of the strong underlying secular industry trends.”

 


 

Third Quarter Results

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

For the third quarter of fiscal 2023, MasterCraft Boat Holdings, Inc. reported consolidated net sales of $166.8 million, down $2.6 million from the third quarter of fiscal 2022. The net sales decrease reflects changes in model mix, decreased sales volumes, increased dealer incentives, and decreased options and content sales, partially offset by higher prices. Dealer incentives include higher floor plan financing costs and other incentives as a result of increased dealer inventories and interest rates.

Gross profit decreased $1.5 million and gross profit margin decreased 50 basis points in the third quarter of fiscal 2023 from the third quarter of fiscal 2022. The decreased margin was mainly due to higher costs from inflationary pressures, changes in model mix, higher dealer incentives, and increased warranty costs, partially offset by higher prices and improved production efficiencies.

Operating expenses increased $1.1 million for the third quarter of fiscal 2023, compared to the prior-year period primarily as a result of increased boat show related costs and investments in digital marketing.

Net income from continuing operations was $22.8 million for the third quarter of fiscal 2023, compared to $24.3 million in the prior-year period. Diluted net income from continuing operations per share was $1.28, compared to $1.31 for the third quarter of fiscal 2022.

Adjusted Net Income was $24.1 million for the third quarter of fiscal 2023, or $1.36 per diluted share, compared to $25.1 million, or $1.36 per diluted share, in the prior-year period. Adjusted net income per diluted share was flat as a result of reduced weighted average share count and short-term investment income.

Adjusted EBITDA was $33.0 million for the third quarter of fiscal 2023, compared to $35.0 million in the prior-year period. Adjusted EBITDA margin was 19.8 percent for the third quarter, down from 20.7 percent for the prior-year period.

 

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

 

Outlook

 

Concluded Brightbill, “We are raising our guidance for the full year based on our strong performance and incremental retail demand visibility. Based on retail sales results through our fiscal third quarter and the general expectation that the onset of a potential downturn has been pushed into fiscal 2024, we now expect retail demand to perform closer to the high end of our range of expectations. We believe these conditions will allow us to achieve full-year wholesale unit sales at the upper end of our range of scenarios.”

 

 


 

The Company’s outlook is as follows:

 

For full year fiscal 2023, consolidated net sales is now expected to be approximately $656 million, with Adjusted EBITDA of approximately $125 million, and Adjusted Earnings per share of approximately $5.05. We continue to expect capital expenditures to be approximately $30 million for the full year.

 

Conference Call and Webcast Information

 

MasterCraft Boat Holdings, Inc. will host a live conference call and webcast to discuss fiscal third quarter 2023 results today, May 10, 2023, 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 our ability to capitalize on the summer selling season, our capital allocation priorities, including our intention to drive value and accelerate growth, and our full year financial outlook.

 

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: changes in interest rates, 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, geopolitical conflicts and financial institution disruptions.

 


 

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 and our Quarterly Report on Form 10-Q for the fiscal quarter ended January 1, 2023, filed with the SEC on February 8, 2023, could cause actual results to differ materially from those indicated by the forward-looking statements. The discussion of these risks is specifically incorporated by reference into this press release.

 

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

 

Use of Non-GAAP Financial Measures

 

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

 

 


 

Results of Operations for the Three and Nine Months Ended April 2, 2023

 

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

(Dollars in thousands, except per share data)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

April 2,

 

 

April 3,

 

 

April 2,

 

 

April 3,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

166,776

 

 

$

169,343

 

 

$

495,480

 

 

$

444,393

 

Cost of sales

 

 

124,178

 

 

 

125,269

 

 

 

368,682

 

 

 

333,376

 

Gross profit

 

 

42,598

 

 

 

44,074

 

 

 

126,798

 

 

 

111,017

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Selling and marketing

 

 

3,927

 

 

 

3,017

 

 

 

10,748

 

 

 

9,966

 

General and administrative

 

 

9,156

 

 

 

8,964

 

 

 

26,874

 

 

 

26,881

 

Amortization of other intangible assets

 

 

489

 

 

 

489

 

 

 

1,467

 

 

 

1,467

 

Goodwill impairment

 

 

 

 

 

 

 

 

 

 

 

1,100

 

Total operating expenses

 

 

13,572

 

 

 

12,470

 

 

 

39,089

 

 

 

39,414

 

Operating income

 

 

29,026

 

 

 

31,604

 

 

 

87,709

 

 

 

71,603

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(695

)

 

 

(341

)

 

 

(1,923

)

 

 

(1,080

)

Interest income

 

 

1,195

 

 

 

 

 

 

1,967

 

 

 

 

Income before income tax expense

 

 

29,526

 

 

 

31,263

 

 

 

87,753

 

 

 

70,523

 

Income tax expense

 

 

6,744

 

 

 

6,957

 

 

 

20,353

 

 

 

16,126

 

Net income from continuing operations

 

 

22,782

 

 

 

24,306

 

 

 

67,400

 

 

 

54,397

 

Loss from discontinued operations, net of tax

 

 

(272

)

 

 

(3,371

)

 

 

(21,139

)

 

 

(7,674

)

Net income

 

$

22,510

 

 

$

20,935

 

 

$

46,261

 

 

$

46,723

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

1.30

 

 

$

1.33

 

 

$

3.80

 

 

$

2.92

 

Discontinued operations

 

 

(0.02

)

 

 

(0.19

)

 

 

(1.19

)

 

 

(0.41

)

Net income

 

$

1.28

 

 

$

1.14

 

 

$

2.61

 

 

$

2.51

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

1.28

 

 

$

1.31

 

 

$

3.78

 

 

$

2.89

 

Discontinued operations

 

 

(0.01

)

 

 

(0.18

)

 

 

(1.19

)

 

 

(0.40

)

Net income

 

$

1.27

 

 

$

1.13

 

 

$

2.59

 

 

$

2.49

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares used for computation of:

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

 

17,559,920

 

 

 

18,295,949

 

 

 

17,725,208

 

 

 

18,622,878

 

Diluted earnings per share

 

 

17,748,910

 

 

 

18,487,346

 

 

 

17,851,655

 

 

 

18,796,867

 

 

 


 

MASTERCRAFT BOAT HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)

 

 

 

April 2,

 

 

June 30,

 

 

 

2023

 

 

2022

 

ASSETS

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

Cash and cash equivalents

 

$

27,453

 

 

$

34,203

 

Held-to-maturity securities

 

 

73,914

 

 

 

 

Accounts receivable, net of allowances of $155 and $214, respectively

 

 

18,688

 

 

 

22,472

 

Inventories, net

 

 

55,268

 

 

 

58,595

 

Prepaid expenses and other current assets

 

 

10,673

 

 

 

7,232

 

Current assets associated with discontinued operations

 

 

 

 

 

23,608

 

Total current assets

 

 

185,996

 

 

 

146,110

 

Property, plant and equipment, net

 

 

70,510

 

 

 

55,823

 

Goodwill

 

 

28,493

 

 

 

28,493

 

Other intangible assets, net

 

 

35,951

 

 

 

37,418

 

Deferred income taxes

 

 

14,331

 

 

 

21,525

 

Deferred debt issuance costs, net

 

 

330

 

 

 

406

 

Other long-term assets

 

 

2,663

 

 

 

1,290

 

Non-current assets associated with discontinued operations

 

 

 

 

 

5,987

 

Total assets

 

$

338,274

 

 

$

297,052

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

Accounts payable

 

$

27,335

 

 

$

23,375

 

Income tax payable

 

 

5,582

 

 

 

4,600

 

Accrued expenses and other current liabilities

 

 

66,070

 

 

 

54,437

 

Current portion of long-term debt, net of unamortized debt issuance costs

 

 

4,004

 

 

 

2,873

 

Current liabilities associated with discontinued operations

 

 

 

 

 

7,887

 

Total current liabilities

 

 

102,991

 

 

 

93,172

 

Long-term debt, net of unamortized debt issuance costs

 

 

50,391

 

 

 

53,676

 

Unrecognized tax positions

 

 

6,469

 

 

 

6,358

 

Other long-term liabilities

 

 

2,276

 

 

 

198

 

Total liabilities

 

 

162,127

 

 

 

153,404

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

STOCKHOLDERS' EQUITY:

 

 

 

 

 

 

Common stock, $.01 par value per share — authorized, 100,000,000 shares; issued and outstanding, 17,571,882 shares at April 2, 2023 and 18,061,437 shares at June 30, 2022

 

 

176

 

 

 

181

 

Additional paid-in capital

 

 

82,827

 

 

 

96,584

 

Retained earnings

 

 

93,144

 

 

 

46,883

 

Total stockholders' equity

 

 

176,147

 

 

 

143,648

 

Total liabilities and stockholders' equity

 

$

338,274

 

 

$

297,052

 

 

 

 

 

 

 


 

Supplemental Operating Data

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

 

 

Three Months Ended

 

Nine Months Ended

 

 

April 2,

 

 

April 3,

 

 

 

 

 

 

April 2,

 

 

April 3,

 

 

 

 

 

 

 

2023

 

 

2022

 

 

Change

2023

 

 

2022

 

 

Change

 

 

(Dollars in thousands)

 

 

 

 

 

 

Unit sales volume:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   MasterCraft

 

 

900

 

 

 

900

 

 

 

 

%

 

 

2,457

 

 

 

2,569

 

 

 

(4.4

)

%

   Crest

 

 

722

 

 

 

855

 

 

 

(15.6

)

%

 

 

2,344

 

 

 

2,261

 

 

 

3.7

 

%

   Aviara

 

 

34

 

 

 

29

 

 

 

17.2

 

%

 

 

100

 

 

 

71

 

 

 

40.8

 

%

Consolidated

 

 

1,656

 

 

 

1,784

 

 

 

(7.2

)

%

 

 

4,901

 

 

 

4,901

 

 

 

 

%

Net Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MasterCraft

 

$

117,630

 

 

$

119,956

 

 

 

(1.9

)

%

 

$

339,315

 

 

$

318,744

 

 

 

6.5

 

%

   Crest

 

 

36,369

 

 

 

38,959

 

 

 

(6.6

)

%

 

 

116,595

 

 

 

101,457

 

 

 

14.9

 

%

   Aviara

 

 

12,777

 

 

 

10,428

 

 

 

22.5

 

%

 

 

39,570

 

 

 

24,192

 

 

 

63.6

 

%

Consolidated

 

$

166,776

 

 

$

169,343

 

 

 

(1.5

)

%

 

$

495,480

 

 

$

444,393

 

 

 

11.5

 

%

Net sales per unit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   MasterCraft

 

$

131

 

 

$

133

 

 

 

(1.5

)

%

 

$

138

 

 

$

124

 

 

 

11.3

 

%

   Crest

 

 

50

 

 

 

46

 

 

 

8.7

 

%

 

 

50

 

 

 

45

 

 

 

11.1

 

%

   Aviara

 

 

376

 

 

 

360

 

 

 

4.4

 

%

 

 

396

 

 

 

341

 

 

 

16.1

 

%

   Consolidated

 

 

101

 

 

 

95

 

 

 

6.3

 

%

 

 

101

 

 

 

91

 

 

 

11.0

 

%

Gross margin

 

 

25.5

%

 

 

26.0

%

 

(50) bps

 

 

25.6

%

 

 

25.0

%

 

60 bps

 

 

Non-GAAP Measures

 

EBITDA, Adjusted EBITDA, EBITDA Margin, and Adjusted EBITDA Margin

 

We define EBITDA as net income from continuing operations, before interest, income taxes, depreciation and amortization. We define Adjusted EBITDA as EBITDA further adjusted to eliminate certain non-cash charges or other items that we do not consider to be indicative of our core and/or ongoing operations. For the periods presented herein, these adjustments include share-based compensation, business development consulting costs, and goodwill impairment. We define EBITDA margin and Adjusted EBITDA margin as EBITDA and Adjusted EBITDA, respectively, each expressed as a percentage of net sales.

 

Adjusted Net Income and Adjusted Net Income per share

 

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

 

EBITDA, Adjusted EBITDA, EBITDA margin, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted Net Income per share, which we refer to collectively as the Non-GAAP Measures, are not measures of net income or operating income as determined under accounting principles generally accepted in the United States, or U.S. GAAP. The Non-GAAP Measures are not measures of performance in accordance with U.S. GAAP and should not be considered as an alternative to net income, net income per share, or operating cash flows

 


 

determined in accordance with U.S. GAAP. Additionally, Adjusted EBITDA is not intended to be a measure of cash flow. We believe that the inclusion of the Non-GAAP Measures is appropriate to provide additional information to investors because securities analysts and investors use the Non-GAAP Measures to assess our operating performance across periods on a consistent basis and to evaluate the relative risk of an investment in our securities. We use Adjusted Net Income and Adjusted Net Income per share to facilitate a comparison of our operating performance on a consistent basis from period to period that, when viewed in combination with our results prepared in accordance with U.S. GAAP, provides a more complete understanding of factors and trends affecting our business than does U.S. GAAP measures alone. We believe Adjusted Net Income and Adjusted Net Income per share assists our board of directors, management, investors, and other users of the financial statements in comparing our net income on a consistent basis from period to period because it removes certain non-cash items and other items that we do not consider to be indicative of our core and/or ongoing operations and reflecting income tax expense on adjusted net income before income taxes at our estimated annual effective tax rate. The Non-GAAP Measures have limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Some of these limitations are:

 

Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and the Non-GAAP Measures do not reflect any cash requirements for such replacements;
The Non-GAAP Measures do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments;
The Non-GAAP Measures do not reflect changes in, or cash requirements for, our working capital needs;
The Non-GAAP Measures do not reflect our tax expense or any cash requirements to pay income taxes;
The Non-GAAP Measures do not reflect interest expense, or the cash requirements necessary to service interest payments on our indebtedness; and
The Non-GAAP Measures do not reflect the impact of earnings or charges resulting from matters we do not consider to be indicative of our core and/or ongoing operations, but may nonetheless have a material impact on our results of operations.

 

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

 

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

 

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

 

 


 

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

 

(Dollars in thousands, except per share data)

 

Three Months Ended

 

Nine Months Ended

 

 

April 2,

 

 

% of Net

 

April 3,

 

 

% of Net

 

April 2,

 

 

% of Net

 

April 3,

 

 

% of Net

 

 

2023

 

 

sales

 

2022

 

 

sales

 

2023

 

 

sales

 

2022

 

 

sales

Net income from continuing operations

 

$

22,782

 

 

13.7%

 

$

24,306

 

 

14.4%

 

$

67,400

 

 

13.6%

 

$

54,397

 

 

12.2%

Income tax expense

 

 

6,744

 

 

 

 

 

6,957

 

 

 

 

 

20,353

 

 

 

 

 

16,126

 

 

 

Interest expense

 

 

695

 

 

 

 

 

341

 

 

 

 

 

1,923

 

 

 

 

 

1,080

 

 

 

Interest income

 

 

(1,195

)

 

 

 

 

 

 

 

 

 

(1,967

)

 

 

 

 

 

 

 

Depreciation and amortization

 

 

2,622

 

 

 

 

 

2,507

 

 

 

 

 

7,833

 

 

 

 

 

7,329

 

 

 

EBITDA

 

 

31,648

 

 

19.0%

 

 

34,111

 

 

20.1%

 

 

95,542

 

 

19.3%

 

 

78,932

 

 

17.8%

Share-based compensation

 

 

1,026

 

 

 

 

 

894

 

 

 

 

 

2,892

 

 

 

 

 

2,927

 

 

 

Business development consulting costs(a)

 

 

312

 

 

 

 

 

 

 

 

 

 

312

 

 

 

 

 

 

 

 

Goodwill impairment(b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,100

 

 

 

Adjusted EBITDA

 

$

32,986

 

 

19.8%

 

$

35,005

 

 

20.7%

 

$

98,746

 

 

19.9%

 

$

82,959

 

 

18.7%

 

(a)
Represents non-recurring third-party costs associated with business development activities, primarily relating to consulting costs for evaluation and execution of internal growth and other strategic initiatives.
(b)
Represents a non-cash charge recorded in the Aviara segment for impairment of goodwill.

 

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

 

 

Nine Months Ended

 

 

April 2,

 

 

April 3,

 

 

April 2,

 

 

April 3,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

(Dollars in thousands)

 

 

(Dollars in thousands)

 

Net income from continuing operations

$

22,782

 

 

$

24,306

 

 

$

67,400

 

 

$

54,397

 

Income tax expense

 

6,744

 

 

 

6,957

 

 

 

20,353

 

 

 

16,126

 

Amortization of acquisition intangibles

 

462

 

 

 

462

 

 

 

1,386

 

 

 

1,386

 

Share-based compensation

 

1,026

 

 

 

894

 

 

 

2,892

 

 

 

2,927

 

Business development consulting costs(a)

 

312

 

 

 

 

 

 

312

 

 

 

 

Goodwill impairment(b)

 

 

 

 

 

 

 

 

 

 

1,100

 

Adjusted Net Income before income taxes

 

31,326

 

 

 

32,619

 

 

 

92,343

 

 

 

75,936

 

Adjusted income tax expense(c)

 

7,205

 

 

 

7,502

 

 

 

21,239

 

 

 

17,465

 

Adjusted Net Income

$

24,121

 

 

$

25,117

 

 

$

71,104

 

 

$

58,471

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income per common share

 

 

 

 

 

 

 

 

 

 

 

    Basic

$

1.37

 

 

$

1.37

 

 

$

4.01

 

 

$

3.14

 

    Diluted

$

1.36

 

 

$

1.36

 

 

$

3.98

 

 

$

3.11

 

Weighted average shares used for the computation of (d):

 

 

 

 

 

 

 

 

 

 

 

   Basic Adjusted net income per share

 

17,559,920

 

 

 

18,295,949

 

 

 

17,725,208

 

 

 

18,622,878

 

   Diluted Adjusted net income per share

 

17,748,910

 

 

 

18,487,346

 

 

 

17,851,655

 

 

 

18,796,867

 

 

(a)
Represents non-recurring third-party costs associated with business development activities, primarily relating to consulting costs for evaluation and execution of internal growth and other strategic initiatives.
(b)
Represents a non-cash charge recorded in the Aviara segment for impairment of goodwill.
(c)
Reflects income tax expense at an income tax rate of 23.0% for each period presented.
(d)
Represents the Weighted Average Shares used for the computation of Basic and Diluted earnings per share as presented on the Consolidated Statements of Operations to calculate Adjusted Net Income per diluted share for all periods presented herein.

 

 

 

 


 

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

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

April 2,

 

 

April 3,

 

 

April 2,

 

 

April 3,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net income from continuing operations per diluted share

$

1.28

 

 

$

1.31

 

 

$

3.78

 

 

$

2.89

 

Impact of adjustments:

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

0.38

 

 

 

0.38

 

 

 

1.14

 

 

 

0.87

 

Amortization of acquisition intangibles

 

0.03

 

 

 

0.02

 

 

 

0.08

 

 

 

0.07

 

Share-based compensation

 

0.06

 

 

 

0.05

 

 

 

0.16

 

 

 

0.16

 

Business development consulting costs(a)

 

0.02

 

 

 

 

 

 

0.02

 

 

 

 

Goodwill impairment(b)

 

 

 

 

 

 

 

 

 

 

0.06

 

Adjusted Net Income per diluted share before income taxes

 

1.77

 

 

 

1.76

 

 

 

5.18

 

 

 

4.05

 

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

 

(0.41

)

 

 

(0.40

)

 

 

(1.20

)

 

 

(0.94

)