MasterCraft Boat Holdings, Inc. reported consolidated net sales of $65.4 million in the first quarter of fiscal 2025, down $28.9 million, or 30.7 percent, from the first quarter of fiscal 2024. The decrease in net sales was primarily due to lower unit volumes and an unfavorable model mix, as expected.

Results for the quarter reflect the company’s continuing operations, which exclude the former Aviara segment.

Gross margin declined 570 basis points year-over-year in the first quarter, compared to the prior-year Q1 period.

“Lower margins were the result of lower cost absorption due to planned decreased production volume and higher dealer incentives as a percentage of net sales,” the company said in a media release. “Dealer incentives include measures taken by the company to assist dealers as the retail environment remains very competitive.”

Operating expenses decreased $1.1 million for the first quarter compared to the prior year Q1 period. The decrease in operating expenses resulted from lower share-based compensation expenses and lower professional fees.

Income from continuing operations was $1.0 million for the first quarter, compared to $8.5 million in the prior-year Q1 period. Diluted income from continuing operations per share was 6 cents, compared to 50 cents per share for the first quarter of fiscal 2024.

Adjusted net income was $1.9 million, or 12 cents per diluted share, for the first quarter, compared to $10.3 million, or 60 cents per diluted share, in the prior-year Q1 period.

Adjusted EBITDA was $3.8 million, or 5.9 percent of sales, for the first quarter, compared to $14.0 million, 14.9 percent, in the prior-year Q1 period.

“Our business executed well during the first quarter as we delivered results above expectations despite facing a backdrop of continued economic and industry headwinds,” commented Brad Nelson, CEO of MasterCraft Boat Holdings, Inc. “Our strong quarter was led by significant progress rebalancing dealer inventories and sets a strong foundation for the rest of the fiscal year. With the summer selling season now complete, we are focused on shipping our enhanced product ahead of the boat show season, while we continue to carefully manage dealer health.”

Nelson continued, “We maintain a disciplined approach to capital allocation as we prioritize balance sheet resilience throughout the business cycle. Our strong balance sheet and cash flow generation is a significant advantage which provides us with abundant financial flexibility. We are well positioned to pursue our capital allocation priorities, including targeted investment in long-term growth through focused innovation, product, and brand development.”

On August 8, 2024, Mastercraft entered into an asset purchase agreement under which the company would transfer rights to the Aviara brand of luxury dayboats and certain related assets to a subsidiary of MarineMax, Inc. The transaction was completed on October 18, 2024.

Additionally, on September 12, 2024, Mastercraft agreed to sell its Aviara manufacturing facility for $26.5 million. The transaction is expected to be completed in the company’s fiscal 2025 second quarter.

The company has reported the results of operations for its Aviara segment as discontinued operations in its condensed consolidated statement of operations, and the related assets and liabilities held-for-sale are classified as held-for-sale in its condensed consolidated balance sheets.

On September 27, 2024, the company entered into the Fourth Amendment to the Credit Agreement to obtain the necessary consents and waivers to the restrictions in the covenants of the Credit Agreement, as related to the Aviara transaction and plans to sell certain facility assets, and a waiver to the fixed charge covenant ratio for certain periods. The company drew $49.5 million on its Revolving Credit Facility in conjunction with the amendment, leaving $50.5 million of available borrowing capacity.

Outlook
“Given the incremental retail visibility and progress reducing field inventories during the quarter, we are raising the lower end of our full-year guidance,” Nelson noted. “We are encouraged by recent industry and economic developments, including easing interest rates, which could commence a return to a more normalized environment by catalyzing wholesale and retail demand for recreational boats. We will continue to monitor retail results, dealer sentiment, and broader economic conditions closely and are well-equipped to adjust our production plans for a range of scenarios.”

For full year fiscal 2025, MCFT now expects consolidated net sales to be between $270 million and $300 million, with Adjusted EBITDA between $17 million and $26 million, and Adjusted Earnings per share of between 55 cents and 95 cents per share.

Capital expenditures are projected to be approximately $12 million for the full year.

For fiscal second quarter 2025, consolidated net sales are expected to be approximately $60 million, with Adjusted EBITDA of approximately $1 million, and Adjusted loss per share of roughly one cent.

Image courtesy MasterCraft Boat Holdings, Inc.