MasterCraft Boat Holdings, Inc. reports record results for Fiscal 2023 second quarter

MasterCraft Boat Holdings, Inc © MasterCraft Boat Company

MasterCraft Boat Holdings, Inc. (NASDAQ: MCFT) today announced financial results for its fiscal 2023 second quarter ended January 1, 2023.

Highlights:

Unless otherwise indicated, the highlights and commentary provided herein relate to our continuing operations, which exclude the NauticStar segment. Results for NauticStar are reported as discontinued operations.

• Net sales, diluted adjusted earnings per share, and Adjusted EBITDA were all the highest for any second quarter in the Company's history
• Ninth consecutive year-over-year record-setting quarter
• Record net sales for the second quarter increased to $159.2 million, up 10.2% from the prior-year period
• Record net income from continuing operations was $20.0 million, or $1.12 per diluted share, up 11.9% and 19.1%, respectively, from the prior-year period
• Record Diluted Adjusted Net Income per share, a non-GAAP measure, was $1.20, up 18.8% from the prior-year period
• Record Adjusted EBITDA, a non-GAAP measure, increased to $29.8 million, up 9.8% from the prior-year period
• Share repurchases of $4.8 million during the quarter
• Record operating cash flow, driven by record earnings and diligent working capital management

Fred Brightbill, Chief Executive Officer and Chairman, commented, "Our business has performed extremely well through the first half of fiscal 2023, delivering record financial results which have exceeded expectations. Our diligent approach to business planning and our best-in-class operating model have allowed us to operate efficiently and have provided us with the confidence and agility to respond to a range of potential retail demand scenarios. Our robust portfolio of innovative products, healthy dealer inventory levels, and our flexible production capabilities position us well to capitalize on the boat show and summer selling seasons."

Brightbill continued, "Net sales, diluted adjusted earnings per share, and Adjusted EBITDA were all the highest for any second quarter in the Company's history, and it is our ninth consecutive year-over-year record-setting quarter. Strong operating results and diligent working capital management also allowed us to generate the most cash flow from operations and free cash flow in the Company's history. This exceptional operational and financial performance was enabled by our strategic focus on the consumer, and through investments in people and operations."

Second Quarter Results

Unless otherwise indicated, the financial results provided herein relate to our continuing operations, which excludes the NauticStar segment. Results for NauticStar are reported as discontinued operations.

For the second quarter of fiscal 2023, MasterCraft Boat Holdings, Inc. reported consolidated net sales of $159.2 million, up $14.8 million from the second quarter of fiscal 2022. The net sales increase reflects higher prices, partially offset by decreased sales volume and increased dealer incentives. Dealer incentives include higher floor plan financing costs and other incentives as dealer inventories recover.

Gross profit increased $1.9 million and gross profit margin decreased 120 basis points to 24.0 percent in the second quarter of fiscal 2023 from 25.2 percent in the second 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 decreased $1.0 million for the second quarter of fiscal 2023, compared to the prior-year period primarily as a result of decreased variable compensation costs.

Net income from continuing operations was $20.0 million for the second quarter of fiscal 2023, compared to $17.9 million in the prior-year period. Diluted net income from continuing operations per share was $1.12, compared to $0.94 for the second quarter of fiscal 2022.

Adjusted Net Income increased to $21.3 million for the second quarter of fiscal 2023, or $1.20 per diluted share, compared to $19.2 million, or $1.01 per diluted share, in the prior-year period.

Adjusted EBITDA was $29.8 million for the second quarter of fiscal 2023, compared to $27.2 million in the prior-year period. Adjusted EBITDA margin was 18.7 percent for the second quarter, down from 18.8 percent for 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, "Looking forward, we are raising our guidance for the full year based on our strong performance and incremental retail demand visibility. We will continue to monitor the strength of retail demand and adjust our production plans as appropriate to maintain healthy dealer inventories. Our guidance continues to reflect the potential for a range of retail demand scenarios as we approach the all-important summer selling season."

The Company's outlook is as follows:

• For full year fiscal 2023, consolidated net sales is now expected to be between $620 million and $640 million, with Adjusted EBITDA between $111 million and $118 million, and Adjusted Earnings per share of between $4.40 and $4.66. We continue to expect capital expenditures to be approximately $30 million for the full year.
• For the third quarter of fiscal 2023, consolidated net sales is expected to be approximately $158 million, with Adjusted EBITDA of approximately $26 million, and Adjusted Earnings per share of approximately $1.04.

Conference Call and Webcast Information

MasterCraft Boat Holdings, Inc. will host a live conference call and webcast to discuss fiscal second quarter 2023 results today, February 8, 2023, at 8:30 a.m. EDT. Participants may access the conference call live via webcast on the investor section of the Company's website, www.Investors.MasterCraft.com, by clicking on the webcast icon. To participate via telephone, please register in advance at this link. Upon registration, all telephone participants will receive a confirmation email detailing how to join the conference call, including the dial-in number along with a unique passcode and registrant ID that can be used to access the call. A replay of the conference call and webcast will be archived on the Company's website.