MasterCraft Boat Holdings reports record earnings for fiscal 2021 first quarter

by MasterCraft Boat Holdings, Inc 13 Nov 2020 09:39 PST

MasterCraft Boat Holdings, Inc. (NASDAQ: MCFT) today announced financial results for its fiscal 2021 first quarter ended October 4, 2020.

Highlights:

• Most profitable first quarter in the Company's history
• Purchase of Merritt Island, Florida facility completed on October 26, 2020, increasing production capacity for the MasterCraft and Aviara brands
• Net sales for the first quarter decreased to $103.7 million, down 5.5 percent from $109.8 million in the prior-year period
• Net income was $9.6 million or $0.51 per diluted share, a 10.9 percent increase from $0.46 in the prior-year period
• Diluted Adjusted Net Income per share, a non-GAAP measure, was $0.58, a 7.4 percent increase from $0.54 in the prior-year period
• Adjusted EBITDA, a non-GAAP measure, grew 6.8 percent to $17.0 million from $15.9 million in the prior-year period
• Revolving credit facility was fully repaid, and the Company ended the quarter approaching $45.0 million of liquidity
• Current production rates exceed pre-COVID levels at all brands
• Guidance for full-year fiscal 2021 raised on strength of retail demand and wholesale production ramp up

Fred Brightbill, Chief Executive Officer and Chairman, commented, "MasterCraft delivered a strong performance highlighted by record profit and consistent execution on our key strategic priorities in what continues to be a challenging and dynamic operating environment. Our results reflect progress on scaling and accelerating production while efficiently managing our supply chain to meet increased demand. I am very proud of the hard work and disciplined execution of our team members as we have shifted from addressing the COVID-19 related shutdowns to restarting operations and aggressively ramping up production to deliver for our dealers and consumers."

Brightbill continued, "While our results are a testament to the strong retail demand for our leading brands, they are also a function of our continued execution on our strategy to drive sustainable, accelerated growth. The strength of our order book and increased consumer interest in recreational boating give us confidence in our outlook and ability to create shareholder value."

First quarter results

Net Sales for the first quarter were $103.7 million, a decrease of $6.0 million, or 5.5 percent, compared to $109.8 million for the prior-year period. The decrease was primarily due to lower sales volume as each segment continues to ramp up production. Partially offsetting the impact of lower sales volumes was a favorable mix of higher-priced and higher-contented models, lower dealer incentives, and higher parts sales volume driven by unprecedented boat usage this past boating season.

Gross profit increased $0.7 million, or 2.7 percent, to $26.2 million compared to $25.5 million for the prior-year period, principally driven by lower dealer incentives, higher prices, favorable model mix, and higher parts volume.

Gross margin was 25.3 percent for the first quarter, an increase of 200 basis points compared to the prior-year period. The increase was primarily attributable to lower dealer incentives, price increases, and a richer product mix driven by continuing strong retail demand, partially offset by lower overhead absorption driven by lower sales volume and higher labor costs.

Operating expenses were $12.8 million for the first quarter and flat compared to the prior-year period as lower selling and marketing costs were offset by higher general and administrative expenses due to additional spend related to product development and variable compensation costs.

Net income for the first quarter increased 10.9 percent to $9.6 million, or $0.51 per share, compared to $8.6 million, or $0.46 per share, for the prior-year period. Adjusted Net Income increased 7.8 percent to $10.9 million, or $0.58 per diluted share, compared to $10.1 million, or $0.54 per diluted share, in the prior-year period.

Adjusted EBITDA was $17.0 million for the first quarter, compared to $15.9 million in the prior-year period. Adjusted EBITDA margin was 16.3 percent, up from 14.5 percent in 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, "Due to a continuation of strong retail demand trends, historically low dealer inventory, the strength of our order book across our brands, and the increasing production rates we delivered in each segment over the course of the quarter, we are raising our guidance for fiscal 2021. Importantly, our guidance assumes that we are able to operate all of our facilities throughout the year without any COVID-19 related shutdowns."

The Company's outlook is as follows:

• For full year fiscal 2021, consolidated net sales is expected to grow in the mid 30 percent range year-over-year, with Adjusted EBITDA margins approaching 15 percent, and Adjusted Earnings per share growth in the mid 80 percent range year-over-year.

• For the fiscal second quarter, consolidated net sales is expected to be up in the mid-teens percent range year-over-year, with Adjusted EBITDA margins in the mid 13 percent range, and Adjusted Earnings per share growth approaching 20 percent.

Conference call and webcast information

MasterCraft Boat Holdings, Inc. will host a live conference call and webcast to discuss first quarter 2021 results today, November 11, 2020, at 8:30 a.m. EST. To access the call, dial (800) 219-6861 (domestic) or (574) 990-1024 (international) and provide the operator with the conference ID 7780229. 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 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 7780229. The audio replay will be available beginning at 11:30 a.m. EST on Wednesday, November 11, 2020, through 11:30 a.m. EST on Wednesday, November 25, 2020.

For more information visit MasterCraft.com.