MasterCraft Boat Holdings, Inc. Stories Report Outcomes for

VONORE, Tenn., May 11, 2022 (GLOBE NEWSWIRE) — MasterCraft Boat Holdings, Inc. (NASDAQ: MCFT) today announced financial results for its fiscal 2022 third quarter ended April 3, 2022.

Highlights:

  • Delivered the most profitable quarter in the Company’s history; the sixth consecutive record-setting quarter.
  • Net sales for the third quarter increased to $186.7 million, up 26.3% from the prior-year period.
  • Net income was $20.9 million, up 19.2%.
  • Diluted Net Income per share was $1.13, up 21.5%.
  • Diluted Adjusted Net Income per share, a non-GAAP measure, was $1.21, up 19.8%.
  • Adjusted EBITDA, a non-GAAP measure, increased to $32.1 million, up 16.4%.
  • Share repurchases of $10.1 million during the quarter.

Fred Brightbill, Chief Executive Officer and Chairman, commented, “Once again, our business performed extremely well during the third quarter as we delivered the highest net sales, diluted adjusted earnings per share, and adjusted EBITDA for any quarter in the Company’s history. This momentous achievement would not have been possible without the hard work and determination of our team in the face of a continued challenging environment. With these results, we achieved a record-setting performance for the sixth consecutive quarter.”

Brightbill continued, “During the quarter we increased production, continued to execute our consumer-centric strategy by prioritizing product availability and quality, and once again, increased market share based on the preliminary rolling twelve-month data through March. In addition to fully funding our growth initiatives, we have now spent more than 40% of the $50 million authorized under our share repurchase program, as we believe our stock represents an incredible value at recent prices.”

Third Quarter Results

For the third quarter of 2022, MasterCraft Boat Holdings, Inc. reported consolidated net sales of $186.7 million, up $38.9 million from the third quarter of 2021. The increase was primarily due to higher prices and favorable model mix. Higher option sales and increased volumes also contributed to higher net sales.

Gross margin declined 270 basis points to 22.5 percent in the third quarter 2022 from 25.2 percent in third quarter 2021. Lower margins were the result of supply chain disruptions and inflationary pressures that drove material and overhead costs higher and were most pronounced at our NauticStar segment. In response to worsening inflationary pressures, mid-cycle price increases were phased in.   With price increases not yet fully realized, inflationary pressures continued to impact margins.

Operating expenses of $14.5 million for the third quarter 2022 were flat compared to the prior-year period. Selling, general, and administrative expenses as a percentage of sales have decreased compared to the prior-year period.

Net income was $20.9 million for the third quarter, compared to $17.6 million in the prior-year period. Diluted net income per share was $1.13, compared to $0.93 for the third quarter 2021. Adjusted Net Income increased to $22.4 million for the third quarter, or $1.21 per diluted share, compared to $19.1 million, or $1.01 per diluted share, in the prior-year period.

Adjusted EBITDA was $32.1 million for the third quarter 2022, compared to $27.5 million in the prior-year period. Adjusted EBITDA margins were higher year-over-year for each of our segments, except NauticStar, which was heavily impacted by supply chain disruption, inflationary pressures, and other operational challenges. The dilutive impact on margins from NauticStar more than offset the margin improvements at MasterCraft, Crest, and Aviara. As a result, our consolidated Adjusted EBITDA margin was 17.2 percent for the third quarter, down from 18.6 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 once again raising our net sales guidance for the full year on the strength of our operating performance, continuing strong retail demand, and wholesale visibility. While we believe our team can continue to expertly navigate the challenging environment, we are expecting the supply chain to remain constrained, and inflationary pressures and production inefficiencies to continue to weigh on margins.   We will prioritize delivering consumers their boats heading into the summer season.”

The Company’s outlook is as follows:

  • For full year fiscal 2022, consolidated net sales growth is expected to be up in the 30 percent range. Because of supply chain disruption and inflationary pressures, combined with operational challenges at NauticStar, we expect our Adjusted EBITDA margins to be in the high-16 percent range. We expect Adjusted Earnings per share growth to be up in the 30 percent range year-over-year. Due to project delays driven by supply chain disruptions and labor challenges, we are lowering our capital expenditures estimate to $20 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 2022 results today, May 11, 2022, at 8:30 a.m. EDT. To access the call, dial (800) 219-6861 (domestic) or (574) 990-1024 (international) and provide the operator with the conference ID 2532258. Please dial in at least 10 minutes prior to the call. To access the live webcast, go to the investor section of the company’s website, www.MasterCraft.com, on the day of the conference call and click on the webcast icon.

For an audio replay of the conference call, dial (855) 859-2056 (domestic) or (404) 537-3406 (international) and enter audience passcode 2532258. The audio replay will be available beginning at 11:30 a.m. EDT on Wednesday, May 11, 2022, through 11:30 a.m. EDT on Wednesday, May 18, 2022.

About MasterCraft Boat Holdings, Inc.

Headquartered in Vonore, Tenn., MasterCraft Boat Holdings, Inc. (NASDAQ: MCFT) is a leading innovator, designer, manufacturer and marketer of recreational powerboats through its four brands, MasterCraft, Crest, NauticStar, and Aviara. Through these four brands, MasterCraft Boat Holdings has leading market share positions in three of the fastest growing segments of the powerboat industry – performance sport boats, outboard saltwater fishing and pontoon boats – while entering the large, growing luxury day boat segment. For more information about MasterCraft Boat Holdings, and its four brands, visit: Investors.MasterCraft.com, www.MasterCraft.com, www.CrestPontoons.com, www.NauticStarBoats.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 the COVID-19 pandemic on the Company, supply chain disruptions, inflationary pressures, general economic conditions, demand for our products, 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 large fixed cost base, changes to U.S. federal income tax law, the overall impact and interpretation of which remain uncertain, 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, 2021, filed with the Securities and Exchange Commission (the “SEC”) on September 2, 2021, 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 condensed 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 3, 2022

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

(Dollars in thousands, except per share data)

    Three Months Ended     Nine Months Ended  
    April 3,     April 4,     April 3,     April 4,  
    2022     2021     2022     2021  
                       
Net sales   $ 186,735     $ 147,854     $ 490,210     $ 370,276  
Cost of sales     144,702       110,627       382,857       277,546  
Gross profit     42,033       37,227       107,353       92,730  
Operating expenses:                                
Selling and marketing     3,611       3,693       11,288       9,589  
General and administrative     9,948       9,984       29,881       27,268  
Amortization of other intangible assets     987       987       3,000       2,961  
Goodwill impairment                 1,100        
Total operating expenses     14,546       14,664       45,269       39,818  
Operating income     27,487       22,563       62,084       52,912  
Other expense:                                
Interest expense     341       755       1,080       2,644  
Income before income tax expense     27,146       21,808       61,004       50,268  
Income tax expense     6,211       4,240       14,281       10,632  
Net income   $ 20,935     $ 17,568     $ 46,723     $ 39,636  
                                 
Earnings per share:                                
Basic   $ 1.14     $ 0.93     $ 2.51     $ 2.11  
Diluted   $ 1.13     $ 0.93     $ 2.49     $ 2.09  
Weighted average shares used for computation of:                                
Basic earnings per share     18,295,949       18,817,975       18,622,878       18,799,875  
Diluted earnings per share     18,487,346       18,989,629       18,796,867       18,928,288  

MASTERCRAFT BOAT HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)

    April 3,     June 30,  
    2022     2021  
ASSETS                
CURRENT ASSETS:                
Cash and cash equivalents   $ 13,766     $ 39,252  
Accounts receivable, net of allowances of $262 and $115, respectively     20,898       12,080  
Income tax receivable     450       355  
Inventories, net     82,353       53,481  
Prepaid expenses and other current assets     8,994       5,059  
Total current assets     126,461       110,227  
Property, plant and equipment, net     64,310       60,495  
Goodwill     28,493       29,593  
Other intangible assets, net     56,899       59,899  
Deferred income taxes     15,133       15,130  
Deferred debt issuance costs, net     431       507  
Other long-term assets     487       609  
Total assets   $ 292,214     $ 276,460  
LIABILITIES AND STOCKHOLDERS’ EQUITY                
CURRENT LIABILITIES:                
Accounts payable   $ 29,603     $ 23,861  
Income tax payable     1,487       726  
Accrued expenses and other current liabilities     55,069       46,836  
Current portion of long-term debt, net of unamortized debt issuance costs     2,872       2,866  
Total current liabilities     89,031       74,289  
Long-term debt, net of unamortized debt issuance costs     62,123       90,277  
Unrecognized tax positions     5,170       3,830  
Operating lease liabilities     202       276  
Total liabilities     156,526       168,672  
COMMITMENTS AND CONTINGENCIES                
STOCKHOLDERS’ EQUITY:                
Common stock, $.01 par value per share — authorized, 100,000,000 shares; issued and outstanding, 18,208,788 shares at April 3, 2022 and 18,956,719 shares at June 30, 2021     182       189  
Additional paid-in capital     100,114       118,930  
Retained earnings / (accumulated deficit)     35,392       (11,331 )
Total stockholders’ equity     135,688       107,788  
Total liabilities and stockholders’ equity   $ 292,214     $ 276,460  

Supplemental Operating Data

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

    Three Months Ended   Nine Months Ended
    April 3,     April 4,               April 3,     April 4,            
    2022     2021     Change   2022     2021     Change
    (Dollars in thousands)
     
     
Unit sales volume:                                                    
MasterCraft     900       933       (3.5 ) %     2,569       2,346       9.5   %
Crest     855       731       17.0   %     2,261       1,759       28.5   %
NauticStar     348       426       (18.3 ) %     949       1,067       (11.1 ) %
Aviara(a)     29       8       262.5   %     71       32       121.9   %
Consolidated     2,132       2,098       1.6   %     5,850       5,204       12.4   %
Net Sales:                                                    
MasterCraft   $ 119,956     $ 97,023       23.6   %   $ 318,744     $ 246,125       29.5   %
Crest     38,959       30,362       28.3   %     101,457       69,370       46.3   %
NauticStar     17,392       18,045       (3.6 ) %     45,817       45,336       1.1   %
Aviara(a)     10,428       2,424       330.2   %     24,192       9,445       156.1   %
Consolidated   $ 186,735     $ 147,854       26.3   %   $ 490,210     $ 370,276       32.4   %
Net sales per unit:                                                    
MasterCraft   $ 133     $ 104       27.9   %   $ 124     $ 105       18.1   %
Crest     46       42       9.5   %     45       39       15.4   %
NauticStar     50       42       19.0   %     48       42       14.3   %
Aviara(a)     360       303       18.8   %     341       295       15.6   %
Consolidated     88       70       25.7   %     84       71       18.3   %
Gross margin     22.5 %     25.2 %   (270) bps     21.9 %     25.0 %   (310) bps

(a) Beginning with the first quarter of fiscal 2022, our chief operating decision maker 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.

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 operational improvement initiative costs, 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 an adjustment for income tax expense on net income before income taxes at our estimated annual effective tax rate. For the periods presented herein, these adjustments include operational improvement initiative costs, Aviara transition costs and certain non-cash items including goodwill impairment, other intangible asset amortization, and share-based compensation. 

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 an adjustment for income tax expense on 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.

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 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     Nine Months Ended
    April 3,     % of Net     April 4,     % of Net     April 3,     % of Net     April 4,     % of Net
    2022     sales     2021     sales     2022     sales     2021     sales
    (Dollars in thousands)     (Dollars in thousands)
Net income   $ 20,935     11.2 %     $ 17,568     11.9 %     $ 46,723     9.5 %     $ 39,636     10.7 %
Income tax expense     6,211               4,240               14,281               10,632        
Interest expense     341               755               1,080               2,644        
Depreciation and amortization     3,559               2,948               10,153               8,547        
EBITDA     31,046     16.6 %       25,511     17.3 %       72,237     14.7 %       61,459     16.6 %
Share-based compensation     772               902               2,876               2,185        
Operational improvement initiative(a)     232                             232                      
Goodwill impairment(b)                                 1,100                      
Aviara transition costs(c)                   1,125                             2,149        
Adjusted EBITDA   $ 32,050     17.2 %     $ 27,538     18.6 %     $ 76,445     15.6 %     $ 65,793     17.8 %

(a) Represents third-party consulting fees associated with the operational improvement initiative at our NauticStar segment.

(b) Represents a non-cash charge recorded in the Aviara segment for impairment of goodwill.

(c) 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 sets forth a reconciliation of net income as determined in accordance with U.S. GAAP to Adjusted Net Income for the periods indicated:

  Three Months Ended     Nine Months Ended  
  April 3,     April 4,     April 3,     April 4,  
  2022     2021     2022     2021  
  (Dollars in thousands, except per share data)     (Dollars in thousands)  
Net income $ 20,935     $ 17,568     $ 46,723     $ 39,636  
Income tax expense   6,211       4,240       14,281       10,632  
Amortization of acquisition intangibles   960       960       2,920       2,882  
Share-based compensation   772       902       2,876       2,185  
Operational improvement initiative(a)   232             232        
Goodwill impairment(b)               1,100        
Aviara transition costs(c)         1,125             2,149  
Adjusted Net Income before income taxes   29,110       24,795       68,132       57,484  
Adjusted income tax expense(d)   6,695       5,703       15,670       13,221  
Adjusted Net Income $ 22,415     $ 19,092     $ 52,462     $ 44,263  
                               
Adjusted net income per common share                              
Basic $ 1.23     $ 1.01     $ 2.82     $ 2.35  
Diluted $ 1.21     $ 1.01     $ 2.79     $ 2.34  
Weighted average shares used for the computation of (e):                              
Basic Adjusted net income per share   18,295,949       18,817,975       18,622,878       18,799,875  
Diluted Adjusted net income per share   18,487,346       18,989,629       18,796,867       18,928,288  

(a) Represents third-party consulting fees associated with the operational improvement initiative at our NauticStar segment.

(b) Represents a non-cash charge recorded in the Aviara segment for impairment of goodwill.

(c) 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).

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

(e) 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 per diluted share to Adjusted Net Income per diluted share for the periods presented:

  Three Months Ended     Nine Months Ended  
  April 3,     April 4,     April 3,     April 4,  
  2022     2021     2022     2021  
Net income per diluted share $ 1.13     $ 0.93     $ 2.49     $ 2.09  
Impact of adjustments:                              
Income tax expense   0.34       0.22       0.76       0.57  
Amortization of acquisition intangibles   0.05       0.05       0.16       0.15  
Share-based compensation   0.04       0.05       0.15       0.12  
Operational improvement initiative(a)   0.01             0.01        
Goodwill impairment(b)               0.06        
Aviara transition costs(c)         0.06             0.11  
Adjusted Net Income per diluted share before income taxes   1.57       1.31       3.63       3.04  
Impact of adjusted income tax expense on net income per diluted share before income taxes(d)   (0.36 )     (0.30 )     (0.84 )     (0.70 )
Adjusted Net Income per diluted share $ 1.21     $ 1.01     $ 2.79     $ 2.34  

(a) Represents third-party consulting fees associated with the operational improvement initiative at our NauticStar segment.

(b) Represents a non-cash charge recorded in the Aviara segment for impairment of goodwill.

(c) 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).

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

Investor Contact:
MasterCraft Boat Holdings, Inc.
George Steinbarger
Chief Revenue Officer
Email: [email protected]