MasterCraft Boat Holdings, Inc. Reports Record Results for Fiscal 2022 First Quarter
MasterCraft Boat Holdings reported record financial results for Q1 fiscal 2022, with net sales reaching $144.0 million, a 38.8% increase year-over-year. Net income rose to $10.4 million or $0.55 per diluted share, alongside adjusted EBITDA of $19.4 million, marking a 14.3% rise. Despite challenges like supply chain disruptions, the company achieved its most profitable first quarter ever. Moving forward, MasterCraft expects 20% consolidated net sales growth for the fiscal year and raised its guidance for adjusted earnings per share by 25%.
- Record Q1 net sales of $144.0 million, up 38.8%
- Net income increased to $10.4 million, or $0.55 per share, a rise from the previous year
- Adjusted EBITDA rose to $19.4 million, reflecting a 14.3% growth
- Raised guidance: 20% expected net sales growth for fiscal 2022
- Adjusted earnings per share projected to rise by 25% year-over-year
- Gross margin decreased by 440 basis points to 20.9% due to supply chain disruptions and inflationary pressures
- Operating expenses rose to $16.1 million, up $3.3 million from the prior-year period
VONORE, Tenn., Nov. 10, 2021 (GLOBE NEWSWIRE) -- MasterCraft Boat Holdings, Inc. (NASDAQ: MCFT) today announced financial results for its fiscal 2022 first quarter ended October 3, 2021.
Highlights:
- Delivered the most profitable first quarter in the Company’s history, with record unit sales, net sales, net income, and adjusted EBITDA.
- Net sales for the first quarter increased to
$144.0 million , up38.8% . - Net income was
$10.4 million or$0.55 per diluted share. - Diluted Adjusted Net Income per share, a non-GAAP measure, was
$0.67 , up15.5% . - Adjusted EBITDA, a non-GAAP measure, increased to
$19.4 million , up14.3% . - Initiated purchasing under the
$50 million share repurchase program.
Fred Brightbill, Chief Executive Officer and Chairman, commented, “Our business performed extremely well during the first quarter in a very challenging and dynamic environment. These results reflect a continuation of exceptional execution against our strategic and operational priorities as we delivered a record-setting performance for the fourth consecutive quarter. Net sales, diluted adjusted earnings per share, and adjusted EBITDA were all the highest for any first quarter in the Company’s history.”
Brightbill continued, “Despite many challenges, we had a solid start to fiscal 2022. We achieved industry-leading organic growth, and we will look to build on that success during the remainder of the year. Guided by our consumer-centric strategy and facilitated by our best-in-class operating model, recent third-party industry data confirms we have outperformed many of our top competitors to take meaningful market share.”
First Quarter Results
For the first quarter of 2022, MasterCraft Boat Holdings, Inc. reported consolidated net sales of
Gross margin declined 440 basis points to 20.9 percent in first quarter 2022 from 25.3 percent in first quarter 2021. Higher revenues yielded a lower margin due to supply chain disruptions and inflationary pressures that drove materials and labor costs higher. In addition, we incurred incremental overhead costs associated with the Merritt Island, Florida facility acquired in second quarter of fiscal 2021.
Operating expenses were
Net income was
Adjusted EBITDA was
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 remain committed to making investments to further strengthen our competitive position, grow our brands, and deliver shareholder value guided by our long-term focus and strategic priorities. Looking forward, we are raising our guidance for the full year on the strength of our operating performance and wholesale visibility.”
The Company’s outlook is as follows:
- For full year fiscal 2022, consolidated net sales growth is expected to be up in the 20 percent range, with Adjusted EBITDA margins in the 18 percent range, and Adjusted Earnings per share growth up in the 25 percent range year-over-year. This guidance represents another record year based on the organic growth potential of our brands. Driven by growth-oriented projects, we now expect capital expenditures to be in the
$25 million range for the full year. - For the second quarter of fiscal 2022, consolidated net sales growth is expected to be up in the 30 percent range, with Adjusted EBITDA margins in the 14.5 percent range, and Adjusted Earnings per share growth up in the 5 percent range year-over-year.
Conference Call and Webcast Information
MasterCraft Boat Holdings, Inc. will host a live conference call and webcast to discuss fiscal first quarter 2022 results today, November 10, 2021, 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 6918414. 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 6918414. The audio replay will be available beginning at 11:30 a.m. EDT on Wednesday, November 10, 2021, through 11:30 a.m. EDT on Wednesday, November 17, 2021.
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; our intention to drive value and accelerate growth; and the potential impact of COVID-19 on our operating results and liquidity.
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, and the successful introduction of our new products. 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 Months Ended October 3, 2021
MASTERCRAFT BOAT HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
| Three Months Ended | ||||||||
| October 3, | October 4, | |||||||
| 2021 | 2020 | |||||||
| Net sales | $ | 144,010 | $ | 103,745 | ||||
| Cost of sales | 113,888 | 77,515 | ||||||
| Gross profit | 30,122 | 26,230 | ||||||
| Operating expenses: | ||||||||
| Selling and marketing | 4,282 | 2,907 | ||||||
| General and administrative | 9,670 | 8,932 | ||||||
| Amortization of other intangible assets | 1,026 | 987 | ||||||
| Goodwill impairment | 1,100 | — | ||||||
| Total operating expenses | 16,078 | 12,826 | ||||||
| Operating income | 14,044 | 13,404 | ||||||
| Other expense: | ||||||||
| Interest expense | 382 | 1,019 | ||||||
| Income before income tax expense | 13,662 | 12,385 | ||||||
| Income tax expense | 3,276 | 2,818 | ||||||
| Net income | $ | 10,386 | $ | 9,567 | ||||
| Earnings per share: | ||||||||
| Basic | $ | 0.55 | $ | 0.51 | ||||
| Diluted | $ | 0.55 | $ | 0.51 | ||||
| Weighted average shares used for computation of: | ||||||||
| Basic earnings per share | 18,850,301 | 18,774,336 | ||||||
| Diluted earnings per share | 19,004,119 | 18,866,826 | ||||||
MASTERCRAFT BOAT HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
| October 3, | June 30, | |||||||
| 2021 | 2021 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 11,651 | $ | 39,252 | ||||
| Accounts receivable, net of allowances of | 19,105 | 12,080 | ||||||
| Income tax receivable | 935 | 355 | ||||||
| Inventories, net | 75,536 | 53,481 | ||||||
| Prepaid expenses and other current assets | 5,524 | 5,059 | ||||||
| Total current assets | 112,751 | 110,227 | ||||||
| Property, plant and equipment, net | 62,335 | 60,495 | ||||||
| Goodwill | 28,493 | 29,593 | ||||||
| Other intangible assets, net | 58,873 | 59,899 | ||||||
| Deferred income taxes | 15,379 | 15,130 | ||||||
| Deferred debt issuance costs, net | 482 | 507 | ||||||
| Other long-term assets | 551 | 609 | ||||||
| Total assets | $ | 278,864 | $ | 276,460 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable | $ | 28,642 | $ | 23,861 | ||||
| Income tax payable | — | 726 | ||||||
| Accrued expenses and other current liabilities | 43,869 | 46,836 | ||||||
| Current portion of long-term debt, net of unamortized debt issuance costs | 2,868 | 2,866 | ||||||
| Total current liabilities | 75,379 | 74,289 | ||||||
| Long-term debt, net of unamortized debt issuance costs | 81,559 | 90,277 | ||||||
| Unrecognized tax positions | 4,294 | 3,830 | ||||||
| Operating lease liabilities | 239 | 276 | ||||||
| Total liabilities | 161,471 | 168,672 | ||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| STOCKHOLDERS' EQUITY: | ||||||||
| Common stock, $.01 par value per share — authorized, 100,000,000 shares; issued and outstanding, 18,961,205 shares at October 3, 2021 and 18,956,719 shares at June 30, 2021 | 189 | 189 | ||||||
| Additional paid-in capital | 118,149 | 118,930 | ||||||
| Accumulated deficit | (945 | ) | (11,331 | ) | ||||
| Total stockholders' equity | 117,393 | 107,788 | ||||||
| Total liabilities and stockholders' equity | $ | 278,864 | $ | 276,460 | ||||
Supplemental Operating Data
The following table presents certain supplemental operating data for the periods indicated:
| Three Months Ended | ||||||||||||
| October 3, | October 4, | |||||||||||
| 2021 | 2020 | Change | ||||||||||
| (Dollars in thousands) | ||||||||||||
| Unit sales volume: | ||||||||||||
| MasterCraft | 783 | 640 | 22.3 | % | ||||||||
| Crest | 716 | 453 | 58.1 | % | ||||||||
| NauticStar | 291 | 286 | 1.7 | % | ||||||||
| Aviara(a) | 19 | 13 | 46.2 | % | ||||||||
| Consolidated | 1,809 | 1,392 | 30.0 | % | ||||||||
| Net Sales: | ||||||||||||
| MasterCraft | 92,015 | 69,591 | 32.2 | % | ||||||||
| Crest | 32,780 | 18,039 | 81.7 | % | ||||||||
| NauticStar | 13,360 | 12,342 | 8.2 | % | ||||||||
| Aviara(a) | 5,855 | 3,773 | 55.2 | % | ||||||||
| Consolidated | $ | 144,010 | $ | 103,745 | 38.8 | % | ||||||
| Net sales per unit: | ||||||||||||
| MasterCraft | 118 | 109 | 8.3 | % | ||||||||
| Crest | 46 | 40 | 15.0 | % | ||||||||
| NauticStar | 46 | 43 | 7.0 | % | ||||||||
| Aviara(a) | 308 | 290 | 6.2 | % | ||||||||
| Consolidated | 80 | 75 | 6.7 | % | ||||||||
| Gross margin | 20.9 | % | 25.3 | % | (440) 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 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 adjusted for the impact to income tax expense related to non-GAAP adjustments. For the periods presented herein, these adjustments include 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 adjusts for the impact to income tax expense related to non-GAAP adjustments. 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 | ||||||||||||||||||
| October 3, | % of Net | October 4, | % of Net | |||||||||||||||
| 2021 | sale | 2020 | sale | |||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||
| Net income | $ | 10,386 | 7.2 | % | $ | 9,567 | 9.2 | % | ||||||||||
| Income tax expense | 3,276 | 2,818 | ||||||||||||||||
| Interest expense | 382 | 1,019 | ||||||||||||||||
| Depreciation and amortization | 3,354 | 2,739 | ||||||||||||||||
| EBITDA | 17,398 | 12.1 | % | 16,143 | 15.6 | % | ||||||||||||
| Goodwill impairment(a) | 1,100 | — | ||||||||||||||||
| Share-based compensation | 896 | 640 | ||||||||||||||||
| Aviara transition costs(b) | — | 178 | ||||||||||||||||
| Adjusted EBITDA | $ | 19,394 | 13.5 | % | $ | 16,961 | 16.3 | % | ||||||||||
(a) Represents a non-cash charge recorded in the Aviara segment for impairment of goodwill.
(b) 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 | |||||||
| October 3, | October 4, | ||||||
| 2021 | 2020 | ||||||
| (Dollars in thousands, except per share data) | |||||||
| Net income | $ | 10,386 | $ | 9,567 | |||
| Income tax expense | 3,276 | 2,818 | |||||
| Goodwill impairment(a) | 1,100 | - | |||||
| Amortization of acquisition intangibles | 999 | 960 | |||||
| Share-based compensation | 896 | 640 | |||||
| Aviara transition costs(b) | - | 178 | |||||
| Adjusted Net Income before income taxes | 16,657 | 14,163 | |||||
| Adjusted income tax expense(c) | 3,831 | 3,257 | |||||
| Adjusted Net Income | $ | 12,826 | $ | 10,906 | |||
| Adjusted net income per common share | |||||||
| Basic | $ | 0.68 | $ | 0.58 | |||
| Diluted | $ | 0.67 | $ | 0.58 | |||
| Weighted average shares used for the computation of (d): | |||||||
| Basic Adjusted net income per share | 18,850,301 | 18,774,336 | |||||
| Diluted Adjusted net income per share | 19,004,119 | 18,866,826 | |||||
(a) Represents a non-cash charge recorded in the Aviara segment for impairment of goodwill.
(b) 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).
(c) Reflects income tax expense at an income tax rate of
(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 per diluted share to Adjusted Net Income per diluted share for the periods presented:
| Three Months Ended | |||||||
| October 3, | October 4, | ||||||
| 2021 | 2020 | ||||||
| Net income per diluted share | $ | 0.55 | $ | 0.51 | |||
| Impact of adjustments: | |||||||
| Income tax expense | 0.17 | 0.15 | |||||
| Goodwill impairment(a) | 0.06 | — | |||||
| Amortization of acquisition intangibles | 0.05 | 0.05 | |||||
| Share-based compensation | 0.05 | 0.03 | |||||
| Aviara transition costs(b) | — | 0.01 | |||||
| Adjusted Net Income per diluted share before income taxes | 0.88 | 0.75 | |||||
| Impact of adjusted income tax expense on net income per diluted share before income taxes(c) | (0.21 | ) | (0.17 | ) | |||
| Adjusted Net Income per diluted share | $ | 0.67 | $ | 0.58 | |||
(a) Represents a non-cash charge recorded in the Aviara segment for impairment of goodwill.
(b) 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).
(c) Reflects income tax expense at an income tax rate of
Investor Contact:
MasterCraft Boat Holdings, Inc.
George Steinbarger
Chief Revenue Officer
Email: investorrelations@mastercraft.com
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