MasterCraft Maintains Full-Year Outlook as Selling Season Comes to Close

MasterCraft Boat Holdings, Inc., parent of the MasterCraft, Crest, and Aviara boat brands, reported consolidated net sales of $104.2 million for its fiscal first quarter ended October 1, down $65.3 million from the first quarter of fiscal 2023. The net sales decrease reportedly reflects lower unit volume as the company focuses on “rebalancing dealer inventories consistent with anticipated softness in retail demand, and an increase in dealer incentives, partially offset by higher prices.” Dealer incentives include higher floor plan financing costs as a result of increased dealer inventories and interest rates, and other incentives as the retail environment remains competitive.

“Our business performed well during the first quarter as we delivered better-than-expected results despite continuing macroeconomic and demand uncertainty,” said Fred Brightbill, CEO and chairman, MasterCraft Boat Holdings, Inc. “With the summer selling season now complete we are focused on rebalancing dealer inventories with anticipated retail demand as we seek to ensure the health of our dealer network. We are maintaining a disciplined approach to capital allocation as we prioritize balance sheet resilience and the return of cash to shareholders through our share repurchase program.”

Income Statement
Gross margin decreased 610 basis points to 21.0 percent of sales in the fiscal first quarter, compared to 27.1 percent in the first quarter of fiscal 2023. The decrease in margin was said to be mainly due to lower cost absorption due to planned decreased sales volume, higher dealer incentives, and higher costs related to material, labor and overhead inflation, partially offset by higher prices.

Operating expenses decreased $0.5 million for the first quarter, compared to the prior-year period.

Net income from continuing operations was $7.1 million, or 41 cents per diluted share, for the first quarter of fiscal 2024, compared to $24.6 million, or $1.37 per diluted share, in the prior year period.

Adjusted Net Income decreased to $8.1 million, or 47 cents per diluted share, for the first quarter compared to $25.7 million, or $1.43 per diluted share, in the prior-year period.

Adjusted EBITDA was $12.2 million for the first quarter, compared to $35.9 million in the prior-year period. Adjusted EBITDA margin was 11.7 percent for the first quarter, down from 21.2 percent for the prior-year period.

Net income was $6.2 million for the first quarter of fiscal 2024, compared to net income of $4.1 million in the prior-year period.

Brightbill continued, “Given the uncertain environment, our strong balance sheet is a significant advantage which provides us with abundant financial flexibility. Despite the cyclical headwinds facing the industry, we are well-positioned to pursue our capital allocation priorities, including investment in long-term growth. We continue to prudently invest in targeted initiatives that will take advantage of the industry’s positive, underlying secular trends. These investments will support long-term growth and value creation through product line expansion, relentless innovation, and an unyielding focus on the consumer.”

MasterCraft Boat Holdings, Inc. ended the quarter with cash and investments of $90.0 million.

“Macroeconomic factors, including interest rates which could remain elevated for some time, are adversely impacting the demand for recreational boats and other luxury consumer goods,” concluded Brightbill. ‘The potential for a broader economic downturn during fiscal 2024 could worsen this headwind for the industry. In addition, political and geopolitical risks are creating uncertainties that weigh on consumer confidence. Given the dynamic macroeconomic and geopolitical backdrop, which is limiting retail demand visibility, we have planned for a range of potential retail demand scenarios.”

Full-Year Outlook
For full-year fiscal 2024, MCFT continues to expect consolidated net sales to be between $390 million and $420 million, with Adjusted EBITDA between $42 million and $52 million, and Adjusted Net Income per diluted share of between $1.46 and $1.88 per share. It continues to expect capital expenditures to be approximately $22 million for the full year.

For the second quarter of fiscal 2024, consolidated net sales is expected to be approximately $96 million, with Adjusted EBITDA of approximately $7 million, and Adjusted Net Income per diluted share of approximately 22 cents a share.

Photo courtesy Mastercraft