Mastercraft Boat Holdings reports record earnings for fiscal 2021 second quarter

MasterCraft Boat Holdings, Inc © MasterCraft Boat Company

MasterCraft Boat Holdings, Inc. (NASDAQ: MCFT) today announced financial results for its fiscal 2021 second quarter ended January 3, 2021.

Highlights:

• Most profitable second quarter in the Company's history
• Net sales increased to $118.7 million, up 19 percent from $99.6 million in the prior-year period
• Gross margin expanded by 340 basis points to 24.7%
• Net income was $12.5 million or $0.66 per diluted share, a 78 percent increase from $0.37 in the prior-year period
• Diluted Adjusted Net Income per share, a non-GAAP measure, was $0.75, a 74 percent increase from $0.43 in the prior-year period
• Adjusted EBITDA, a non-GAAP measure, grew 57 percent to $21.3 million from $13.6 million in the prior-year period
• Adjusted EBITDA margin expanded by 430 basis points to 17.9%
• 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 once again delivered financial and operational performance that exceeded expectations, highlighted by our second consecutive quarter of record profits. This performance was a direct result of our team members' consistent execution on our key strategic priorities and the strength of our brands. In what has continued to be a challenging and dynamic operating environment, we have been able to scale and accelerate production while efficiently managing our supply chain to deliver for our dealers and consumers."

Brightbill continued, "Execution of our consumer-centric strategy remains our top focus as we look to drive sustainable, accelerated growth. Strong retail demand across all our brands continued in our fiscal second quarter, resulting in a record wholesale backlog that has provided us with tremendous confidence in our outlook and ability to create shareholder value."

Second Quarter Results

Net Sales for the second quarter were $118.7 million, an increase of $19.0 million or 19.1 percent, compared to $99.6 million for the prior-year period. The increase was primarily due to higher sales volumes at each of our segments, a favorable mix of higher-priced and higher-contented models and lower dealer incentives.

Gross profit increased $8.1 million, or 38.5 percent, to $29.3 million compared to $21.1 million for the prior-year period, principally driven by a favorable mix of higher-priced and higher-contented models, higher sales volumes, and lower dealer incentives. This favorability was partially offset by higher compensation costs and costs associated with the transition of Aviara to our Merritt Island facility.

Gross margin was 24.7 percent for the second quarter, an increase of 340 basis points compared to the prior-year period. The increase was primarily attributable to favorable overhead absorption driven by higher sales volume, higher prices, lower dealer incentives and materials cost containment, partially offset by higher labor costs.

Operating expenses were $12.3 million for the second quarter, an increase of $1.5 million or 14.1 percent, compared to the prior-year period primarily driven by higher general and administrative expenses, resulting from higher incentive compensation costs and additional investment related to product development. This increase was partially offset by lower selling and marketing costs, primarily due to the timing of anticipated expense, which has been delayed by the COVID-19 pandemic until later in the fiscal year.

Net income for the second quarter increased to $12.5 million, or $0.66 per share, compared to $6.9 million, or $0.37 per share, for the prior-year period. Adjusted Net Income increased to $14.3 million, or $0.75 per diluted share, compared to $8.2 million, or $0.43 per diluted share, in the prior-year period.

Adjusted EBITDA was $21.3 million for the second quarter, compared to $13.6 million in the prior-year period. Adjusted EBITDA margin was 17.9 percent, up from 13.6 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 disruptions."

The Company's outlook is as follows:

• For full year fiscal 2021, consolidated net sales is expected to grow in the mid to high 30 percent range year-over-year, with Adjusted EBITDA margins in the low 15 percent range, and Adjusted Earnings per share growth approaching 100 percent year-over-year.

• For the fiscal third quarter, consolidated net sales is expected to be up in the mid-30 percent range year-over-year, with Adjusted EBITDA margins approaching 15 percent, and Adjusted Earnings per share growth approaching 60 percent.

Conference call and webcast information

MasterCraft Boat Holdings, Inc. will host a live conference call and webcast to discuss fiscal second quarter 2021 results today, February 10, 2021, 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 7342619. 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 7342619. The audio replay will be available beginning at 11:30 a.m. EST on Wednesday, February 10, 2021, through 11:30 a.m. EST on Wednesday, February 24, 2021.

For more information visit MasterCraft.com.