MasterCraft Boat Holdings, Inc. reports record results for Fiscal 2022 Second Quarter

MasterCraft Boat Holdings, Inc © MasterCraft Boat Company

MasterCraft Boat Holdings, Inc. (NASDAQ: MCFT) today announced financial results for its fiscal 2022 second quarter ended January 2, 2022.

Highlights:

• Delivered the most profitable second quarter in the Company's history; the fifth consecutive record-setting quarter.
• Net sales for the second quarter increased to $159.5 million, up 34.4%.
• Net income was $15.4 million, up 23.2%.
• Diluted Net Income per share was $0.81, up 22.7%.
• Diluted Adjusted Net Income per share, a non-GAAP measure, was $0.91, up 21.3%.
• Adjusted EBITDA, a non-GAAP measure, increased to $25.0 million, up 17.4%.
• Share repurchases of $9.9 million during the quarter.

Fred Brightbill, Chief Executive Officer and Chairman, commented, "Once again, our business performed extremely well during the second quarter in a very challenging and dynamic environment. These results reflect a continuation of exceptional execution against our strategic and operational priorities as we delivered a record-setting performance for the fifth consecutive quarter. Net sales, diluted adjusted net income per share, and adjusted EBITDA were all the highest for any second quarter in the Company's history."

Brightbill continued, "During the quarter we increased production and, once again, took market share based on preliminary rolling twelve-month data through December. In addition to fully funding our growth initiatives, we have now spent more than 20% of the $50 million authorized under the share repurchase program, as we believe our stock represents an incredible value at recent prices."

Second Quarter Results

For the second quarter of 2022, MasterCraft Boat Holdings, Inc. reported consolidated net sales of $159.5 million, up $40.8 million from the second quarter of 2021. The increase was primarily due to increased volumes and favorable model mix. Higher prices and higher option sales also contributed to higher net sales.

Gross margin declined 260 basis points to 22.1 percent in second quarter 2022 from 24.7 percent in second quarter 2021. Higher revenues yielded a lower margin due to supply chain disruptions and inflationary pressures that drove material and labor costs higher. In response to worsening inflationary pressures, mid-cycle price increases phased in during the second quarter of fiscal 2022. The impact of these price increases will not be fully realized until the second half of the fiscal year. In addition, we incurred incremental overhead costs associated with the Merritt Island, Florida facility acquired in second quarter of fiscal 2021.

Operating expenses were $14.6 million for the second quarter, up $2.3 million from the prior-year period. Despite our increased costs, selling, general, and administrative expenses as a percentage of sales have decreased compared to the prior-year period. Selling and marketing expense increased due to timing of prior-year expenses being impacted by the Covid pandemic, resulting in lower costs for the second quarter of fiscal 2021. General and administrative expense increased as a result of increased variable compensation costs and continued investments in information technology.

Net income was $15.4 million for the second quarter, compared to $12.5 million in the prior-year period. Diluted net income per share was $0.81, compared to $0.66 for the second quarter 2021. Adjusted Net Income increased to $17.2 million for the second quarter, or $0.91 per diluted share, compared to $14.3 million, or $0.75 per diluted share, in the prior-year period.

Adjusted EBITDA was $25.0 million for the second quarter, compared to $21.3 million in the prior-year period. Adjusted EBITDA margin was 15.7 percent for the second quarter, down from 17.9 percent for the prior-year period, due to supply chain disruption and inflationary pressures that drove material and labor costs higher.

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, "We are once again raising our guidance on the strength of our operating performance, continuing strong retail demand, and unprecedented wholesale visibility. While we believe our team can continue to expertly navigate the challenging environment, we are expecting the supply chain to remain constrained in the second half, which will have an impact on the cadence of our financial results for the remainder of this fiscal year."

The Company's outlook is as follows:

• For full year fiscal 2022, consolidated net sales growth is now expected to be up in the 25 percent range. We continue to expect our Adjusted EBITDA margins to be in the 18 percent range, and Adjusted Earnings per share growth up in the 32 percent range year-over-year. This guidance represents a further increase to our already expected record year of all-organic growth. Driven by growth-oriented projects, we continue to expect capital expenditures to be in the $25 million range for the full year.
• For the third quarter of fiscal 2022, consolidated net sales growth is expected to be up in the 12 percent range. Net sales for the quarter are being constrained by an acute supplier disruption that will defer revenue into our fiscal fourth quarter. Adjusted EBITDA margins will be in the 17 percent range, and Adjusted Earnings per share growth up in the 4 percent range year-over-year.

MasterCraft Boat Holdings, Inc. will host a live conference call and webcast to discuss fiscal second quarter 2022 results today, February 3, 2022, 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 9976968. 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 9976968. The audio replay will be available beginning at 11:30 a.m. EST on Thursday, February 3, 2022, through 11:30 a.m. EST on Thursday, February 10, 2022.