MasterCraft Boat Holdings, Inc. reported adjusted earnings in the fiscal third quarter ended April 2 matched record earnings in the year-ago quarter despite a 1.5 percent sales decline. The boat maker lifted guidance on the better-than-planned performance.

Headquartered in Vonore, TN, MasterCraft makes sport boats, pontoon boats and luxury day boats through its three brands, MasterCraft, Crest, and Aviara.

Highlights

  • Net sales for the third quarter were $166.8 million, down 1.5 percent from the prior-year period;
  • Net income from continuing operations was $22.8 million, or $1.28 per diluted share, down 6.3 percent and 2.3 percent, respectively, from the prior-year period;
  • Diluted Adjusted Net Income per share, a non-GAAP measure, was $1.36, which equaled our record in the prior-year period;
  • Adjusted EBITDA, a non-GAAP measure, was $33.0 million, down 5.8 percent from the prior-year period;
  • Record operating cash flow due to strong earnings and diligent working capital management; and
  • Share repurchases of $7.0 million during the quarter.

Fred Brightbill, chief executive officer and chairman, commented, “Our business has performed extremely well through the fiscal third quarter, delivering financial results which have exceeded expectations. Adjusted diluted net income per share tied our record from last year for the best fiscal third quarter in the company’s history. Our exceptional operating results and diligent working capital management also continued into the third quarter, resulting in record operating cash flow.”

Brightbill continued, “During the quarter, we achieved our goal of refilling dealer inventories to optimal levels ahead of the summer selling season. Despite near-term macroeconomic headwinds, retail activity has performed closer to the upper end of our range of expectations through our fiscal third quarter. Our robust portfolio of innovative products and healthy dealer inventory levels position us to capitalize on the summer selling season. Additionally, our fortress balance sheet provides us with abundant financial flexibility to pursue our capital allocation priorities, first and foremost of which is an investment in growth. We are laying the foundation for future growth by actively investing in targeted initiatives designed to take advantage of the strong underlying secular industry trends.”

Third Quarter Results
Unless otherwise indicated, the financial results provided herein relate to our continuing operations, which exclude the NauticStar segment results reported as discontinued operations.

For the third quarter of fiscal 2023, MasterCraft Boat Holdings, Inc. reported consolidated net sales of $166.8 million, down $2.6 million from the third quarter of fiscal 2022. The net sales decrease reflects changes in model mix, decreased sales volumes, increased dealer incentives, and decreased options and content sales, partially offset by higher prices. Dealer incentives include higher floor plan financing costs and other incentives as a result of increased dealer inventories and interest rates.

Gross profit decreased $1.5 million and gross profit margin decreased 50 basis points in the third quarter of fiscal 2023 from the third quarter of fiscal 2022. The decreased margin was mainly due to higher costs from inflationary pressures, changes in model mix, higher dealer incentives, and increased warranty costs, partially offset by higher prices and improved production efficiencies.

Operating expenses increased $1.1 million for the third quarter of fiscal 2023, compared to the prior-year period primarily as a result of increased boat show-related costs and investments in digital marketing.

Net income from continuing operations was $22.8 million for the third quarter of fiscal 2023, compared to $24.3 million in the prior-year period. Diluted net income from continuing operations per share was $1.28, compared to $1.31 for the third quarter of fiscal 2022.

Adjusted Net Income was $24.1 million for the third quarter of fiscal 2023, or $1.36 per diluted share, compared to $25.1 million, or $1.36 per diluted share, in the prior-year period. Adjusted net income per diluted share was flat as a result of reduced weighted average share count and short-term investment income.

Adjusted EBITDA was $33.0 million for the third quarter of fiscal 2023, compared to $35.0 million in the prior-year period. Adjusted EBITDA margin was 19.8 percent for the third quarter, down from 20.7 percent for the prior-year period.

Outlook
Concluded Brightbill, “We are raising our guidance for the full year based on our strong performance and incremental retail demand visibility. Based on retail sales results through our fiscal third quarter and the general expectation that the onset of a potential downturn has been pushed into fiscal 2024, we now expect retail demand to perform closer to the high end of our range of expectations. We believe these conditions will allow us to achieve full-year wholesale unit sales at the upper end of our range of scenarios.”

Company Outlook
For the full-year fiscal 2023, consolidated net sales are now expected to be approximately $656 million, with Adjusted EBITDA of approximately $125 million, and Adjusted Earnings per share of approximately $5.05. We continue to expect capital expenditures to be approximately $30 million for the full year.