10-Q
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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: April 2, 2023

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

 

 

https://cdn.kscope.io/5728469224a513c86e449f9682aa2bd6-img155725646_0.jpg 

 

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 May 5, 2023, there were 17,495,267 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

25

Item 4.

Controls and Procedures

26

 

 

 

PART II

OTHER INFORMATION

 

Item 1.

Legal Proceedings

27

Item 1A.

Risk Factors

27

Item 2.

Unregistered Sales of Securities and Use of Proceeds

27

Item 3.

Defaults Upon Senior Securities

27

Item 4.

Mine Safety Disclosures

27

Item 5.

Other Information

27

Item 6.

Exhibits, Financial Statement Schedules

28

 

 

 

SIGNATURES

 

29

 

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: 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, financial institution disruptions 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, 2022, filed with the Securities and Exchange Commission (“SEC”) on September 9, 2022 (our “2022 Annual Report”) and our Quarterly Report on Form 10-Q for the fiscal quarter ended January 1, 2023, filed with the SEC on February 8, 2023 (our "Fiscal Second Quarter Quarterly 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

 

 

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 (Note 3)

 

 

(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

 

 

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)

 

 

 

April 2,

 

 

June 30,

 

 

 

2023

 

 

2022

 

ASSETS

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

Cash and cash equivalents

 

$

27,453

 

 

$

34,203

 

Held-to-maturity securities (Note 4)

 

 

73,914

 

 

 

 

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

 

 

18,688

 

 

 

22,472

 

Inventories, net (Note 5)

 

 

55,268

 

 

 

58,595

 

Prepaid expenses and other current assets

 

 

10,673

 

 

 

7,232

 

Current assets associated with discontinued operations (Note 3)

 

 

 

 

 

23,608

 

Total current assets

 

 

185,996

 

 

 

146,110

 

Property, plant and equipment, net (Note 6)

 

 

70,510

 

 

 

55,823

 

Goodwill (Note 7)

 

 

28,493

 

 

 

28,493

 

Other intangible assets, net (Note 7)

 

 

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 (Note 3)

 

 

 

 

 

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 (Note 8)

 

 

66,070

 

 

 

54,437

 

Current portion of long-term debt, net of unamortized debt issuance costs (Note 9)

 

 

4,004

 

 

 

2,873

 

Current liabilities associated with discontinued operations (Note 3)

 

 

 

 

 

7,887

 

Total current liabilities

 

 

102,991

 

 

 

93,172

 

Long-term debt, net of unamortized debt issuance costs (Note 9)

 

 

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

 

 

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

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Retained

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Total

 

Balance at June 30, 2022

 

 

18,061,437

 

 

$

181

 

 

$

96,584

 

 

$

46,883

 

 

$

143,648

 

Share-based compensation activity

 

 

128,040

 

 

 

1

 

 

 

649

 

 

 

 

 

 

650

 

Repurchase and retirement of common stock

 

 

(191,360

)

 

 

(2

)

 

 

(4,176

)

 

 

 

 

 

(4,178

)

Net income

 

 

 

 

 

 

 

 

 

 

 

4,068

 

 

 

4,068

 

Balance at October 2, 2022

 

 

17,998,117

 

 

 

180

 

 

 

93,057

 

 

 

50,951

 

 

 

144,188

 

Share-based compensation activity

 

 

2,466

 

 

 

 

 

 

745

 

 

 

 

 

 

745

 

Repurchase and retirement of common stock

 

 

(224,284

)

 

 

(2

)

 

 

(4,792

)

 

 

 

 

 

(4,794

)

Net income

 

 

 

 

 

 

 

 

 

 

 

19,683

 

 

 

19,683

 

Balance at January 1, 2023

 

 

17,776,299

 

 

 

178

 

 

 

89,010

 

 

 

70,634

 

 

 

159,822

 

Share-based compensation activity

 

 

5,733

 

 

 

 

 

 

883

 

 

 

 

 

 

883

 

Repurchase and retirement of common stock

 

 

(210,150

)

 

 

(2

)

 

 

(7,066

)

 

 

 

 

 

(7,068

)

Net income

 

 

 

 

 

 

 

 

 

 

 

22,510

 

 

 

22,510

 

Balance at April 2, 2023

 

 

17,571,882

 

 

$

176

 

 

$

82,827

 

 

$

93,144

 

 

$

176,147

 

 

 

 

 

 

 

 

 

 

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

 

Share-based compensation activity

 

 

(6,086

)

 

 

 

 

 

766

 

 

 

 

 

 

766

 

Repurchase and retirement of common stock

 

 

(395,948

)

 

 

(4

)

 

 

(10,075

)

 

 

 

 

 

(10,079

)

Net income

 

 

 

 

 

 

 

 

 

 

 

20,935

 

 

 

20,935

 

Balance at April 3, 2022

 

 

18,208,788

 

 

$

182

 

 

$

100,114

 

 

$

35,392

 

 

$

135,688

 

 

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)

 

 

 

Nine Months Ended

 

 

 

April 2,

 

 

April 3,

 

 

 

2023

 

 

2022

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net income

 

$

46,261

 

 

$

46,723

 

Loss from discontinued operations, net of tax

 

 

21,139

 

 

 

7,674

 

Net income from continuing operations

 

 

67,400

 

 

 

54,397

 

Adjustments to reconcile net income from continuing operations to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

7,833

 

 

 

7,329

 

Share-based compensation

 

 

2,892

 

 

 

2,927

 

Unrecognized tax benefits

 

 

111

 

 

 

1,340

 

Deferred income taxes

 

 

7,194

 

 

 

(3

)

Amortization of debt issuance costs

 

 

172

 

 

 

178

 

Goodwill impairment

 

 

 

 

 

1,100

 

Changes in certain operating assets and liabilities

 

 

21,610

 

 

 

(15,946

)

Other, net

 

 

153

 

 

 

541

 

Net cash provided by operating activities of continuing operations

 

 

107,365

 

 

 

51,863

 

Net cash used in operating activities of discontinued operations

 

 

(2,403

)

 

 

(16,561

)

Net cash provided by operating activities