MasterCraft Boat Holdings, Inc. Reports Record Results for Fiscal 2022 Third Quarter

Rhea-AI Summary

MasterCraft Boat Holdings, Inc. (NASDAQ: MCFT) reported a record-setting third quarter for fiscal 2022, ending April 3, with net sales of $186.7 million, a 26.3% increase year-over-year. Net income surged to $20.9 million ($1.13 per diluted share), marking a 19.2% rise. Adjusted EBITDA reached $32.1 million, up 16.4%, despite supply chain issues impacting margins. The company raised its full-year sales guidance, forecasting 30% growth while anticipating continued inflationary challenges affecting margins and operational efficiency.

Positive

• Record net sales of $186.7 million, a 26.3% increase YoY.
• Net income of $20.9 million, up 19.2% from the prior year.
• Diluted EPS of $1.13 represents a 21.5% increase.
• Adjusted EBITDA of $32.1 million, up 16.4%.

Negative

• Gross margin decreased by 270 basis points to 22.5% due to supply chain disruptions and inflation.
• Adjusted EBITDA margin declined from 18.6% to 17.2% YoY.
• Anticipated supply chain constraints and inflationary pressures expected to impact future margins.

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: investorrelations@mastercraft.com 

 

FAQ

What were MasterCraft's net sales for the third quarter of fiscal 2022?

MasterCraft reported net sales of $186.7 million for the third quarter of fiscal 2022.

How did MasterCraft's net income change in Q3 2022 compared to Q3 2021?

Net income increased to $20.9 million in Q3 2022, up 19.2% from $17.6 million in Q3 2021.

What is MasterCraft's outlook for the full year of fiscal 2022?

MasterCraft expects consolidated net sales growth in the 30% range for fiscal 2022.

What challenges is MasterCraft facing that could impact margins?

MasterCraft is facing supply chain disruptions and inflationary pressures that may affect margins.