UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: October 4, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-37502 MASTERCRAFT BOAT HOLDINGS, INC. (Exact name of registrant as specified in its charter) (State or Other Jurisdiction (I.R.S. Employe ...

MasterCraft Boat Holdings, Inc. (NASDAQ:MCFT) Q1 2021 Earnings Conference Call November 11, 2020 8:30 AM ET Company Participants Tim Oxley - Chief Financial Officer Fred Brightbill - Chief Executive Officer and Chairman George Steinbarger - Chief Revenue Officer Conference Call Participants Joe Altobello - Raymond James Craig Kennison - Baird Eric Wold - B. Riley Mike Swartz - Truist Securities Brett Andress - KeyBanc Gerrick Johnson - BMO Capital Markets Operator Ladies and gentlemen, thank you for standin ...

FISCAL FIRST QUARTER 2021 RESULTS November 11, 2020 DISCLAIMER This presentation contains forward-looking statements within the meaning of the federal securities laws, which statements involve substantial risks and uncertainties. Forwardlooking statements generally relate to future events and include, without limitation, projections, forecasts and estimates about possible or assumed future results of the Company's business, financial condition, liquidity, results of operations, plans and objectives. In some ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended: June 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to MASTERCRAFT BOAT HOLDINGS, INC. (Exact name of registrant as specified in its charter) (State or Other Jurisdiction (Commission (I.R.S. Employer of Incorporation or Organizat ...

Financial Data and Key Metrics Changes - For fiscal year 2020, net sales decreased by 22% to $363.1 million, adjusted EBITDA decreased by 44% to $44.3 million, and fully diluted adjusted net income per share declined nearly 52% to $1.34 per share, primarily due to COVID-19 disruptions [8][10] - In Q4, net sales were $51.1 million, a decrease of 58.4% compared to $122.8 million in the prior year period, driven by production losses from COVID-19 shutdowns [27] - Adjusted net loss for Q4 was $1.8 million or a loss of $0.10 per share, compared to adjusted net income of $16.1 million or $0.85 per share in the prior year [30] Business Line Data and Key Metrics Changes - The MasterCraft brand historically generates approximately 80% of its annual retail sales from existing boat owners, with a growing percentage of retail sales coming from new and returning customers since March 2020 [14][12] - Dealer inventories across all brands declined to historically low levels, with dealer inventory turns at historically high levels, indicating strong retail demand [15][16] Market Data and Key Metrics Changes - The recreational boating industry experienced a renaissance during the pandemic, with increased consumer interest leading to unprecedented retail demand across all brands [11][12] - As of the end of August, dealers were under-inventoried by more than 2,100 units, with nearly half of the shortfall attributed to MasterCraft [16] Company Strategy and Development Direction - The company is ramping up production across all facilities while ensuring high-quality parts are received on time, aiming to meet retail demand and improve dealer inventory levels [18][19] - A purchase agreement was made for a new manufacturing facility in Merritt Island, Florida, dedicated to the Aviara brand, which is expected to enhance capacity and vertical integration [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term prospects of the markets served and the brands owned, citing historically low dealer inventory levels and unprecedented retail demand as positive indicators [33][41] - For fiscal 2021, consolidated net sales are expected to grow in the mid-20% range year-over-year, with adjusted earnings per share growth in the low to mid-40% range [35][36] Other Important Information - The company has maintained strong cash management practices, ending the year with over $41 million in liquidity [32] - The company expects to incur moderate adjusted EBITDA losses for Aviara in fiscal 2021 due to production ramp-up costs [36] Q&A Session Summary Question: Inventory levels and variations across brands - Management confirmed that inventory levels were between 40% and 50% below average across the brands, with current levels much lower than that [43] Question: Update on Crest brand performance - The Crest brand has seen strong year-over-year retail performance, with inventory levels significantly improved [44] Question: Aviara's revenue and facility costs - Aviara generated approximately $10 million in revenue last year, with an estimated $14 million purchase cost for the new facility and an additional $4 million to $6 million for setup [48][49] Question: Fiscal 2021 guidance and profitability - Management explained that profitability would be lower than fiscal 2019 due to inventory levels and costs associated with the new facility and ramp-up [51][52] Question: Retail demand and inventory shortfall - Management indicated that the 2,100 unit inventory shortfall would take longer to fill, but they are comfortable with the guidance provided [61][62] Question: Capacity to meet demand - Management stated that there are no constraints on terminal capacity, as moving Aviara will free up significant capacity for MasterCraft [65] Question: Average Selling Price (ASP) growth expectations - ASP growth is expected to be low in fiscal 2021, influenced by the types of boats sold [66] Question: First-time boat buyers metrics - The company noted a doubling in new boaters, with a focus on delivering a positive experience to retain them [69] Question: Retail trends approaching Labor Day - Management acknowledged that retail demand is starting to normalize as the selling season winds down [75]

MasterCraft Boat Holdings, Inc. (NASDAQ:MCFT) Q3 2020 Earnings Conference Call May 6, 2020 8:30 AM ET Company Participants Tim Oxley - Chief Financial Officer Fred Brightbill - Chief Executive Officer and Chairman Conference Call Participants Eric Wold - B. Riley FBR Joe Altobello - Raymond James Brett Andress - KeyBanc Capital Markets George Steinbarger - Chief Revenue Officer Mike Swartz - SunTrust Robinson Humphrey Tim Conder - Wells Fargo Securities Operator Ladies and gentlemen, thank you for standing ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited condensed consolidated financial statements, including operations, balance sheets, equity, and cash flows, highlighting a significant decline in net sales and net loss due to impairment and COVID-19 [Unaudited Condensed Consolidated Statements of Operations](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) Three Months Ended March 29, 2020 vs. March 31, 2019 | Metric | March 29, 2020 ($, thousands) | March 31, 2019 ($, thousands) | Change ($, thousands) | % Change | | :--------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | :------- | | NET SALES | 102,562 | 128,390 | (25,828) | (20.1%) | | GROSS PROFIT | 21,274 | 31,357 | (10,083) | (32.2%) | | OPERATING INCOME (LOSS) | (47,177) | 18,464 | (65,641) | (355.5%) | | NET INCOME (LOSS) | (36,713) | 12,763 | (49,476) | (387.7%) | | Basic Net Income (Loss) Per Share | (1.96) | 0.68 | | | | Diluted Net Income (Loss) Per Share| (1.96) | 0.68 | | | Nine Months Ended March 29, 2020 vs. March 31, 2019 | Metric | March 29, 2020 ($, thousands) | March 31, 2019 ($, thousands) | Change ($, thousands) | % Change | | :--------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | :------- | | NET SALES | 311,979 | 343,572 | (31,593) | (9.2%) | | GROSS PROFIT | 67,949 | 81,633 | (13,684) | (16.8%) | | OPERATING INCOME (LOSS) | (24,145) | 44,796 | (68,941) | (153.9%) | | NET INCOME (LOSS) | (21,211) | 31,415 | (52,626) | (167.5%) | | Basic Net Income (Loss) Per Share | (1.13) | 1.68 | | | | Diluted Net Income (Loss) Per Share| (1.13) | 1.67 | | | [Unaudited Condensed Consolidated Balance Sheets](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) Balance Sheet Highlights (March 29, 2020 vs. June 30, 2019) | Metric | March 29, 2020 ($, thousands) | June 30, 2019 ($, thousands) | Change ($, thousands) | | :--------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | | Cash and cash equivalents | 40,991 | 5,826 | 35,165 | | Total current assets | 98,980 | 54,364 | 44,616 | | Goodwill | 29,593 | 74,030 | (44,437) | | Other intangible assets, net | 64,836 | 79,799 | (14,963) | | Total assets | 250,268 | 248,773 | 1,495 | | Total current liabilities | 65,924 | 68,546 | (2,622) | | Long-term debt, net | 129,429 | 105,016 | 24,413 | | Total liabilities | 198,912 | 176,457 | 22,455 | | Total stockholders' equity | 51,356 | 72,316 | (20,960) | [Unaudited Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Stockholders' Equity Changes (June 30, 2019 to March 29, 2020) | Metric | June 30, 2019 ($, thousands) | March 29, 2020 ($, thousands) | Change ($, thousands) | | :------------------------- | :-------------------------- | :-------------------------- | :-------------------- | | Total Stockholders' Equity | 72,316 | 51,356 | (20,960) | | Accumulated Deficit | (43,454) | (64,665) | (21,211) | - The decrease in total stockholders' equity is primarily due to a **net loss of $36.7 million** for the quarter ended March 29, 2020, and a cumulative net loss of **$21.2 million** for the nine months ended March 29, 2020[19](index=19&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary (Nine Months Ended March 29, 2020 vs. March 31, 2019) | Activity | March 29, 2020 ($, thousands) | March 31, 2019 ($, thousands) | Change ($, thousands) | | :--------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | | Net cash provided by operating activities | 23,900 | 39,552 | (15,652) | | Net cash used in investing activities | (13,576) | (92,111) | 78,535 | | Net cash provided by financing activities | 24,841 | 50,111 | (25,270) | | NET CHANGE IN CASH AND CASH EQUIVALENTS | 35,165 | (2,448) | 37,613 | | Cash and cash equivalents — End of Period | 40,991 | 5,461 | 35,530 | - The significant increase in cash and cash equivalents at the end of the period is primarily due to a **$35.0 million draw on the revolving credit facility** as a precautionary measure against the COVID-19 pandemic[22](index=22&type=chunk)[60](index=60&type=chunk)[101](index=101&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [1. Organization, Basis of Presentation, and Significant Accounting Policies](index=8&type=section&id=1.%20ORGANIZATION%2C%20BASIS%20OF%20PRESENTATION%2C%20AND%20SIGNIFICANT%20ACCOUNTING%20POLICIES) - The Company operates in three reportable segments: MasterCraft, NauticStar, and Crest, focusing on recreational powerboats[25](index=25&type=chunk) - The COVID-19 pandemic has caused widespread business disruption, leading to the suspension of manufacturing operations in late March 2020 and temporary layoffs, with operations expected to resume in May 2020[28](index=28&type=chunk)[30](index=30&type=chunk) - The Company adopted ASC 842 (Leases) on July 1, 2019, recognizing operating lease assets and liabilities of **$3.9 million** each on the balance sheet[33](index=33&type=chunk)[34](index=34&type=chunk) [2. Revenue Recognition](index=10&type=section&id=2.%20REVENUE%20RECOGNITION) Net Sales by Segment and Product Category (Three Months Ended March 29, 2020) | Major Product Categories | MasterCraft ($, thousands) | NauticStar ($, thousands) | Crest ($, thousands) | Total ($, thousands) | | :----------------------- | :------------------------- | :------------------------ | :------------------- | :------------------- | | Boats and trailers | 68,684 | 14,053 | 17,696 | 100,433 | | Parts | 1,705 | 103 | 136 | 1,944 | | Other revenue | 142 | — | 43 | 185 | | **Total** | **70,531** | **14,156** | **17,875** | **102,562** | Net Sales by Segment and Product Category (Nine Months Ended March 29, 2020) | Major Product Categories | MasterCraft ($, thousands) | NauticStar ($, thousands) | Crest ($, thousands) | Total ($, thousands) | | :----------------------- | :------------------------- | :------------------------ | :------------------- | :------------------- | | Boats and trailers | 204,303 | 47,372 | 52,417 | 304,092 | | Parts | 6,411 | 349 | 437 | 7,197 | | Other revenue | 487 | 6 | 197 | 690 | | **Total** | **211,201** | **47,727** | **53,051** | **311,979** | - Contract liabilities for customer deposits decreased from **$0.8 million** as of June 30, 2019, to **$0.4 million** as of March 29, 2020, with the recognized amount contributing to revenue during the nine-month period[42](index=42&type=chunk) [3. Related Party Transactions](index=11&type=section&id=3.%20RELATED%20PARTY%20TRANSACTIONS) - The Company purchased the Crest manufacturing facility from Crest Marine Real Estate LLC, a related party, for **$4.1 million** on October 24, 2019, exercising a purchase option[43](index=43&type=chunk)[66](index=66&type=chunk) - Crest purchased **$1.8 million** of fiberglass component parts from a supplier that ceased being a related party on January 31, 2020, following a divestment of minority ownership interest[44](index=44&type=chunk) [4. Inventories](index=12&type=section&id=4.%20INVENTORIES) Inventories (March 29, 2020 vs. June 30, 2019) | Category | March 29, 2020 ($, thousands) | June 30, 2019 ($, thousands) | Change ($, thousands) | | :-------------------- | :----------------------------- | :----------------------------- | :-------------------- | | Raw materials and supplies | 24,028 | 20,034 | 3,994 | | Work in process | 5,898 | 4,571 | 1,327 | | Finished goods | 8,982 | 7,207 | 1,775 | | Obsolescence reserve | (1,749) | (1,152) | (597) | | **Total inventories** | **37,159** | **30,660** | **6,499** | [5. Accrued Expenses and Other Current Liabilities](index=12&type=section&id=5.%20ACCURRED%20EXPENSES%20AND%20OTHER%20CURRENT%20LIABILITIES) Accrued Expenses and Other Current Liabilities (March 29, 2020 vs. June 30, 2019) | Category | March 29, 2020 ($, thousands) | June 30, 2019 ($, thousands) | Change ($, thousands) | | :--------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | | Warranty | 19,318 | 17,205 | 2,113 | | Dealer incentives | 11,172 | 12,623 | (1,451) | | Compensation and related accruals | 2,757 | 3,494 | (737) | | Floor plan interest | 2,570 | 2,060 | 510 | | Insurance premium financing | 941 | — | 941 | | **Total** | **42,912** | **41,421** | **1,491** | Warranty Liabilities Activity (Nine Months Ended March 29, 2020 vs. March 31, 2019) | Activity | March 29, 2020 ($, thousands) | March 31, 2019 ($, thousands) | | :--------------------------------- | :----------------------------- | :----------------------------- | | Balance at the beginning of the period | 17,205 | 13,077 | | Provisions | 5,828 | 5,735 | | Payments made | (5,921) | (5,223) | | **Balance at the end of the period** | **19,318** | **16,733** | [6. Goodwill and Other Intangible Assets](index=13&type=section&id=6.%20GOODWILL%20AND%20OTHER%20INTANGIBLE%20ASSETS) - The Company recorded goodwill and other intangible asset impairment charges totaling **$56.4 million** during the three months ended March 29, 2020, primarily due to a decline in market conditions and outlook, exacerbated by the COVID-19 pandemic[50](index=50&type=chunk)[52](index=52&type=chunk) Impairment Charges by Segment (Three and Nine Months Ended March 29, 2020) | Asset Type | NauticStar ($, thousands) | Crest ($, thousands) | Consolidated ($, thousands) | | :--------- | :------------------------ | :------------------- | :-------------------------- | | Goodwill | 8,199 | 36,238 | 44,437 | | Trade name | 5,000 | 7,000 | 12,000 | | **Total** | **13,199** | **43,238** | **56,437** | - As a result of the impairment, goodwill for NauticStar and Crest segments was reduced to zero, while MasterCraft's goodwill remained unimpaired[54](index=54&type=chunk)[159](index=159&type=chunk) [7. Long-Term Debt](index=14&type=section&id=7.%20LONG-TERM%20DEBT) Long-Term Debt (March 29, 2020 vs. June 30, 2019) | Category | March 29, 2020 ($, thousands) | June 30, 2019 ($, thousands) | | :--------------------------------- | :----------------------------- | :----------------------------- | | Revolver | 35,000 | - | | Senior secured term loans | 104,703 | 115,349 | | Debt issuance costs on term loans | (1,270) | (1,608) | | **Total debt** | **138,433** | **113,741** | | Long-term debt, net of current portion | 129,429 | 105,016 | - On March 19, 2020, the Company drew **$35.0 million** on its revolving credit facility as a precautionary measure due to COVID-19 uncertainty, resulting in **$35.0 million** outstanding and no remaining borrowing availability as of March 29, 2020[60](index=60&type=chunk)[101](index=101&type=chunk)[145](index=145&type=chunk) - On May 7, 2020, the Company amended its credit agreement to temporarily replace financial covenants with an Interest Coverage Ratio, Minimum Liquidity threshold, and Maximum Unfinanced Capital Expenditures limitation through March 31, 2021, and revised interest rate margins[61](index=61&type=chunk)[62](index=62&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk) [8. Leases](index=15&type=section&id=8.%20LEASES) - Upon adopting ASC 842 on July 1, 2019, the Company recognized **$3.9 million** in operating lease assets and liabilities; the Crest Facility lease was reclassified to a finance lease and subsequently purchased for **$4.1 million** on October 24, 2019[33](index=33&type=chunk)[65](index=65&type=chunk)[66](index=66&type=chunk) Lease Assets and Liabilities (March 29, 2020) | Category | Classification | Amount ($, thousands) | | :--------------------------------- | :----------------------------- | :-------------------- | | Operating lease assets | Operating lease assets | 779 | | Current operating lease liabilities| Accrued expenses and other current liabilities | 334 | | Non-current operating lease liabilities | Operating lease liabilities | 445 | | **Total lease liabilities** | | **779** | - Total operating lease cost for the nine months ended March 29, 2020, was **$0.4 million**, with a weighted-average discount rate of **4.73%** and a remaining lease term of **2.36 years**[68](index=68&type=chunk)[69](index=69&type=chunk) [9. Income Taxes](index=17&type=section&id=9.%20INCOME%20TAXES) - The CARES Act, signed on March 27, 2020, restored net operating loss carryback rules and modified interest expense limits, but the Company has not identified any material effect on its financial statements[72](index=72&type=chunk) Effective Tax Rates | Period | March 29, 2020 | March 31, 2019 | | :-------------------- | :------------- | :------------- | | Three Months Ended | 23.9% | 23.1% | | Nine Months Ended | 23.7% | 21.4% | - The higher effective tax rates for the three and nine months ended March 29, 2020, compared to the prior year, are primarily due to favorable discrete adjustments in the prior periods[73](index=73&type=chunk) [10. Net Income (Loss) Per Share](index=17&type=section&id=10.%20NET%20INCOME%20%28LOSS%29%20PER%20SHARE) Net Income (Loss) Per Share | Metric | Three Months Ended March 29, 2020 | Three Months Ended March 31, 2019 | Nine Months Ended March 29, 2020 | Nine Months Ended March 31, 2019 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Net income (loss) | (36,713) | 12,763 | (21,211) | 31,415 | | Basic net income per share | (1.96) | 0.68 | (1.13) | 1.68 | | Diluted net income (loss) per share| (1.96) | 0.68 | (1.13) | 1.67 | - The net loss per share for both the three and nine months ended March 29, 2020, reflects the significant goodwill and intangible asset impairment charges recorded during the period[74](index=74&type=chunk)[111](index=111&type=chunk) [11. Share-Based Compensation](index=18&type=section&id=11.%20SHARE-BASED%20COMPENSATION) Share-Based Compensation Expense ($, thousands) | Award Type | Three Months Ended March 29, 2020 | Three Months Ended March 31, 2019 | Nine Months Ended March 29, 2020 | Nine Months Ended March 31, 2019 | | :-------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Restricted stock awards | 378 | 50 | 898 | 667 | | Performance stock units | (219) | 116 | (204) | 341 | | Stock options | - | 205 | 9 | 151 | | **Total** | **159** | **371** | **703** | **1,159** | - Share-based compensation expense was lowered by approximately **$0.4 million** for the three months ended March 29, 2020, due to a reduced probability of attaining Performance Stock Units (PSUs) performance criteria[77](index=77&type=chunk) - As of March 29, 2020, there was **$1.6 million** of unrecognized compensation expense for nonvested RSAs (expected over **1.7 years**) and **$0.3 million** for nonvested PSUs (expected over **2.0 years**)[80](index=80&type=chunk)[84](index=84&type=chunk) [12. Segment Information](index=19&type=section&id=12.%20SEGMENT%20INFORMATION) - The Company operates in three segments: MasterCraft (performance sport boats, luxury day boats including Aviara), NauticStar (saltwater fishing and recreational boats), and Crest (pontoon boats)[85](index=85&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk) Net Sales by Segment ($, thousands) | Segment | Three Months Ended March 29, 2020 | Three Months Ended March 31, 2019 | Nine Months Ended March 29, 2020 | Nine Months Ended March 31, 2019 | | :-------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | MasterCraft | 70,531 | 79,431 | 211,201 | 232,062 | | NauticStar | 14,156 | 21,652 | 47,727 | 58,255 | | Crest | 17,875 | 27,307 | 53,051 | 53,255 | | **Consolidated** | **102,562** | **128,390** | **311,979** | **343,572** | Operating Income (Loss) by Segment ($, thousands) | Segment | Three Months Ended March 29, 2020 | Three Months Ended March 31, 2019 | Nine Months Ended March 29, 2020 | Nine Months Ended March 31, 2019 | | :-------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | MasterCraft | 11,062 | 14,620 | 33,869 | 37,563 | | NauticStar | (15,246) | 1,544 | (15,892) | 2,698 | | Crest | (42,993) | 2,300 | (42,122) | 4,535 | | **Consolidated** | **(47,177)** | **18,464** | **(24,145)** | **44,796** | [13. Acquisition](index=20&type=section&id=13.%20ACQUISITION) - The Company acquired Crest, a pontoon boat manufacturer, on October 1, 2018, and its results have been included in consolidated operations since then[92](index=92&type=chunk) Unaudited Pro Forma Financial Results (Crest Acquisition as if July 1, 2017) | Metric | Three Months Ended March 31, 2019 ($, thousands) | Nine Months Ended March 31, 2019 ($, thousands) | | :-------------------- | :-------------------------------- | :-------------------------------- | | Net sales | 128,390 | 364,565 | | Net income | 12,765 | 32,944 | | Basic earnings per share | 0.68 | 1.77 | | Diluted earnings per share | 0.68 | 1.76 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a detailed discussion of the Company's financial condition and results of operations, highlighting the significant impact of the COVID-19 pandemic on sales, profitability, and liquidity, including non-GAAP financial measures and critical accounting policies [Overview](index=22&type=section&id=Overview) - The COVID-19 pandemic led to the suspension of manufacturing operations in late March 2020, temporary layoffs, and a **$35.0 million draw** on the revolving credit facility to preserve financial flexibility[99](index=99&type=chunk)[101](index=101&type=chunk) - The Company recorded **$56.4 million** in goodwill and other intangible asset impairment charges related to the NauticStar and Crest segments due to declining market conditions and outlook[103](index=103&type=chunk) Key Financial Overview (Q3 2020 vs Q3 2019) | Metric | Q3 2020 ($, millions) | Q3 2019 ($, millions) | Change (%) | | :-------------------- | :-------------------- | :-------------------- | :--------- | | Net Sales | 102.6 | 128.4 | (20.1%) | | Gross Profit | 21.3 | 31.4 | (32.2%) | | Net Income (Loss) | (36.7) | 12.8 | (387.7%) | | Diluted EPS | (1.96) | 0.68 | | - The Aviara brand, launched in fiscal 2020, began selling its AV32 and AV36 models, with the AV40 expected in Q1 fiscal 2021, contributing to the MasterCraft segment[112](index=112&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) Consolidated Results of Operations (Three Months Ended March 29, 2020 vs. March 31, 2019) | Metric | March 29, 2020 ($, thousands) | March 31, 2019 ($, thousands) | Change ($, thousands) | % Change | | :--------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | :------- | | NET SALES | 102,562 | 128,390 | (25,828) | (20.1%) | | GROSS PROFIT | 21,274 | 31,357 | (10,083) | (32.2%) | | OPERATING INCOME (LOSS) | (47,177) | 18,464 | (65,641) | (355.5%) | | NET INCOME (LOSS) | (36,713) | 12,763 | (49,476) | (387.7%) | - Net sales decreased by **20.1%** for the quarter, driven by lower unit sales volume across all segments due to production cuts in anticipation of COVID-19 impact and dealer inventory right-sizing, partially offset by Aviara sales and higher MasterCraft average wholesale prices[105](index=105&type=chunk)[115](index=115&type=chunk)[116](index=116&type=chunk) - Operating expenses increased by **430.9%** for the quarter, primarily due to the **$56.4 million** impairment charges[118](index=118&type=chunk) Consolidated Results of Operations (Nine Months Ended March 29, 2020 vs. March 31, 2019) | Metric | March 29, 2020 ($, thousands) | March 31, 2019 ($, thousands) | Change ($, thousands) | % Change | | :--------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | :------- | | NET SALES | 311,979 | 343,572 | (31,593) | (9.2%) | | GROSS PROFIT | 67,949 | 81,633 | (13,684) | (16.8%) | | OPERATING INCOME (LOSS) | (24,145) | 44,796 | (68,941) | (153.9%) | | NET INCOME (LOSS) | (21,211) | 31,415 | (52,626) | (167.5%) | - Nine-month net sales decreased by **9.2%**, primarily due to lower unit sales volume across segments and softness in the saltwater fishing category, partially offset by Aviara sales and lower sales discounts for Canadian dealers[106](index=106&type=chunk)[123](index=123&type=chunk)[130](index=130&type=chunk) - Nine-month operating expenses increased by **150.0%**, mainly due to the **$56.4 million** impairment charges, partially offset by lower acquisition-related costs and incentive compensation at MasterCraft[126](index=126&type=chunk) [Non-GAAP Measures](index=28&type=section&id=Non-GAAP%20Measures) - The Company uses non-GAAP measures like EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, and Adjusted Net Income per share to provide additional insights into core operating performance by excluding certain non-cash charges or non-recurring items[97](index=97&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk)[131](index=131&type=chunk) Adjusted EBITDA ($, thousands) | Metric | Three Months Ended March 29, 2020 | Three Months Ended March 31, 2019 | Nine Months Ended March 29, 2020 | Nine Months Ended March 31, 2019 | | :-------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Net income (loss) | (36,713) | 12,763 | (21,211) | 31,415 | | EBITDA | (44,545) | 20,555 | (16,459) | 50,246 | | Goodwill and other intangible asset impairment | 56,437 | - | 56,437 | - | | COVID-19 Shutdown costs | 1,506 | - | 1,506 | - | | Aviara start-up costs | 398 | 937 | 1,213 | 1,700 | | Share-based compensation | 159 | 371 | 703 | 1,159 | | **Adjusted EBITDA** | **13,955** | **21,890** | **43,400** | **55,531** | | Adjusted EBITDA Margin | 13.6% | 17.0% | 13.9% | 16.2% | Adjusted Net Income ($, thousands) | Metric | Three Months Ended March 29, 2020 | Three Months Ended March 31, 2019 | Nine Months Ended March 29, 2020 | Nine Months Ended March 31, 2019 | | :-------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Net income (loss) | (36,713) | 12,763 | (21,211) | 31,415 | | Adjusted Net Income | 8,622 | 14,641 | 26,895 | 36,948 | | Adjusted Net Income per share (Diluted) | 0.46 | 0.78 | 1.42 | 1.96 | [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) - The Company's primary liquidity needs are for working capital, capital expenditures, and debt service, funded by operating activities and long-term debt[145](index=145&type=chunk) - Net cash provided by operating activities decreased by **39.6%** for the nine months ended March 29, 2020, primarily due to unfavorable working capital usage and lower operating income[146](index=146&type=chunk)[147](index=147&type=chunk) - Net cash used in investing activities decreased significantly by **85.3%** due to the absence of a major acquisition comparable to the prior year's Crest acquisition (**$81.7 million**)[146](index=146&type=chunk)[149](index=149&type=chunk) - Net cash provided by financing activities decreased by **50.4%**, mainly due to lower proceeds from long-term debt issuance compared to the prior year's funding for the Crest acquisition, despite a **$35.0 million** draw on the revolving credit facility[146](index=146&type=chunk)[150](index=150&type=chunk) [Critical Accounting Policies](index=34&type=section&id=Critical%20Accounting%20Policies) - The Company reviews goodwill and other intangibles for impairment annually in the fourth quarter and whenever events indicate impairment, using income and market approaches[157](index=157&type=chunk)[158](index=158&type=chunk) - An interim impairment analysis as of March 29, 2020, resulted in the impairment of all goodwill for the NauticStar and Crest reporting units, while MasterCraft's goodwill remained unimpaired[159](index=159&type=chunk) - Key uncertainties in fair value calculations include assumptions for revenue growth, operating margins, discount rates, customer attrition rates, and royalty rates, which could lead to future impairment charges if adverse changes occur[158](index=158&type=chunk)[160](index=160&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there have been no material changes in market risk from those disclosed in the Company's 2019 Annual Report - No material changes in market risk have occurred since the 2019 Annual Report[161](index=161&type=chunk) [Item 4. Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the Company's disclosure controls and procedures as of March 29, 2020, and reports no material changes in internal control over financial reporting during the quarter - The Company's disclosure controls and procedures were effective at a reasonable assurance level as of March 29, 2020[165](index=165&type=chunk) - There have been no material changes in internal control over financial reporting during the quarter ended March 29, 2020[166](index=166&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) This section states that there are no legal proceedings to report - No legal proceedings to report[168](index=168&type=chunk) [Item 1A. Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) This section highlights the significant negative impacts and uncertainties posed by the COVID-19 pandemic on the Company's business, operations, supply chain, and financial condition, noting that the full extent of the impact cannot be reasonably estimated - The COVID-19 pandemic has had, and may continue to have, material adverse effects on the Company's operations, business, customers, dealers, and suppliers[169](index=169&type=chunk) - Impacts include mandatory business closures, travel restrictions, supply chain disruptions, uncertain demand, potential delays in receivable payments, and additional goodwill/intangible asset impairment charges[169](index=169&type=chunk)[170](index=170&type=chunk) - The severity and duration of the pandemic's impact are uncertain and cannot be predicted, making it challenging to estimate the future financial impact, which could be material and prolonged[171](index=171&type=chunk) [Item 2. Unregistered Sales of Securities and Use of Proceeds](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Securities%20and%20Use%20of%20Proceeds) This section indicates no unregistered sales of securities or use of proceeds to report - No unregistered sales of securities or use of proceeds to report[172](index=172&type=chunk) [Item 3. Defaults Upon Senior Securities](index=36&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there are no defaults upon senior securities to report - No defaults upon senior securities to report[173](index=173&type=chunk) [Item 4. Mine Safety Disclosures](index=37&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates no mine safety disclosures to report - No mine safety disclosures to report[174](index=174&type=chunk) [Item 5. Other Information](index=37&type=section&id=Item%205.%20Other%20Information) This section details the Amendment No. 3 to the Fourth Amended and Restated Credit and Guaranty Agreement, which temporarily modifies the Company's financial covenants and interest rate margins in response to market uncertainties - On May 7, 2020, the Company entered into Amendment No. 3 to its credit agreement, temporarily replacing Total Net Leverage Ratio and Fixed Charge Coverage Ratio covenants with an Interest Coverage Ratio, Minimum Liquidity threshold, and Maximum Unfinanced Capital Expenditures limitation until March 31, 2021[175](index=175&type=chunk) - The amendment also added a **50 basis point floor** on LIBOR and modified applicable LIBOR and prime interest rate margins[175](index=175&type=chunk)[176](index=176&type=chunk) [Item 6. Exhibits, Financial Statement Schedules](index=38&type=section&id=Item%206.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists the exhibits filed with the quarterly report, including corporate governance documents, the Third Amendment to the Credit Agreement, and certifications - Key exhibits include corporate organizational documents, Amendment No. 3 to the Fourth Amended and Restated Credit and Guaranty Agreement, and certifications from the CEO and CFO[179](index=179&type=chunk) SIGNATURES [Signatures](index=39&type=section&id=SIGNATURES) This section contains the signatures of the Company's Chief Executive Officer and Chief Financial Officer, certifying the report's submission - The report is signed by Frederick A. Brightbill, Chief Executive Officer, and Timothy M. Oxley, Chief Financial Officer, on May 8, 2020[183](index=183&type=chunk)

| --- | --- | --- | |-------------------------------------------------------------------|-------|--------| | | | | | | | | | MASTERCRAFT | | | | BOAT HOLDINGS INC. FISCAL THIRD QUARTER 2020 RESULTS MAY 6, 2020 | | | | | | | | MasterCraft | Nauti | AVIARA | DISCLAIMER This presentation contains forward-looking statements within the meaning of the federal securities laws, which statements invol ve substantial risks and uncertainties. Forward-looking statements generally relate to futu re events and include, w ...

[PART I — FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited condensed consolidated financial statements, including operations, balance sheets, cash flows, and related accounting notes - The Company's fiscal year runs from July 1 to June 30, with interim results subject to seasonality[25](index=25&type=chunk)[27](index=27&type=chunk) - The Company adopted ASC 842 (Leases) on July 1, 2019, recognizing operating lease assets and liabilities for leases over twelve months, with no material impact on statements of operations[29](index=29&type=chunk)[31](index=31&type=chunk) Unaudited Condensed Consolidated Statements of Operations (Three Months Ended) | Metric (in thousands) | Dec 29, 2019 | Dec 30, 2018 | | :-------------------- | :----------- | :----------- | | NET SALES | $99,628 | $121,541 | | COST OF SALES | $78,486 | $94,467 | | GROSS PROFIT | $21,142 | $27,074 | | OPERATING INCOME | $10,335 | $14,722 | | NET INCOME | $6,879 | $10,188 | | Basic EPS | $0.37 | $0.55 | | Diluted EPS | $0.37 | $0.54 | Unaudited Condensed Consolidated Statements of Operations (Six Months Ended) | Metric (in thousands) | Dec 29, 2019 | Dec 30, 2018 | | :-------------------- | :----------- | :----------- | | NET SALES | $209,417 | $215,182 | | COST OF SALES | $162,742 | $164,906 | | GROSS PROFIT | $46,675 | $50,276 | | OPERATING INCOME | $23,032 | $26,332 | | NET INCOME | $15,502 | $18,652 | | Basic EPS | $0.83 | $1.00 | | Diluted EPS | $0.83 | $0.99 | Unaudited Condensed Consolidated Balance Sheets (Assets) | Asset (in thousands) | Dec 29, 2019 | June 30, 2019 | | :------------------- | :----------- | :------------ | | Cash and cash equivalents | $5,448 | $5,826 | | Total current assets | $45,338 | $54,364 | | Property, plant and equipment, net | $41,562 | $33,636 | | Goodwill | $74,030 | $74,030 | | Other intangible assets, net | $77,824 | $79,799 | | Total assets | $245,818 | $248,773 | Unaudited Condensed Consolidated Balance Sheets (Liabilities & Equity) | Liability/Equity (in thousands) | Dec 29, 2019 | June 30, 2019 | | :------------------------------ | :----------- | :------------ | | Total current liabilities | $57,434 | $68,546 | | Long-term debt, net | $96,683 | $105,016 | | Total liabilities | $157,908 | $176,457 | | Total stockholders' equity | $87,910 | $72,316 | | Total liabilities and stockholders' equity | $245,818 | $248,773 | Unaudited Condensed Consolidated Statements of Cash Flows (Six Months Ended) | Cash Flow Activity (in thousands) | Dec 29, 2019 | Dec 30, 2018 | | :-------------------------------- | :----------- | :----------- | | Net cash provided by operating activities | $19,844 | $27,861 | | Net cash used in investing activities | $(11,477) | $(87,746) | | Net cash provided by (used in) financing activities | $(8,745) | $70,470 | | NET CHANGE IN CASH AND CASH EQUIVALENTS | $(378) | $10,585 | | CASH AND CASH EQUIVALENTS — END OF PERIOD | $5,448 | $18,494 | Revenue by Major Product Category and Segment (Three Months Ended Dec 29, 2019) | Category/Segment (in thousands) | MasterCraft | NauticStar | Crest | Total | | :------------------------------ | :---------- | :--------- | :---- | :---- | | Boats and trailers | $66,332 | $15,485 | $16,097 | $97,914 | | Parts | $1,276 | $87 | $121 | $1,484 | | Other revenue | $149 | $4 | $77 | $230 | | Total | $67,757 | $15,576 | $16,295 | $99,628 | Revenue by Major Product Category and Segment (Six Months Ended Dec 29, 2019) | Category/Segment (in thousands) | MasterCraft | NauticStar | Crest | Total | | :------------------------------ | :---------- | :--------- | :---- | :---- | | Boats and trailers | $135,619 | $33,319 | $34,721 | $203,659 | | Parts | $4,707 | $246 | $301 | $5,254 | | Other revenue | $344 | $6 | $154 | $504 | | Total | $140,670 | $33,571 | $35,176 | $209,417 | - The Company purchased the Crest manufacturing facility for **$4.1 million** on October 24, 2019, by exercising a purchase option from a related party[40](index=40&type=chunk)[55](index=55&type=chunk) Goodwill by Segment (in thousands) | Segment | Gross Amount | Accumulated Impairment Losses | Total | | :---------- | :----------- | :---------------------------- | :---- | | MasterCraft | $29,593 | $- | $29,593 | | NauticStar | $36,199 | $(28,000) | $8,199 | | Crest | $36,238 | $- | $36,238 | | Total | $102,030 | $(28,000) | $74,030 | - Amortization expense for other intangible assets was **$1.0 million** for the three months ended December 29, 2019, and **$2.0 million** for the six months ended December 29, 2019, with estimated amortization for fiscal year 2020 at **$4.0 million**[46](index=46&type=chunk) - The Company's effective tax rate increased to **24.4%** for Q2 2020 (vs. **19.7%** in Q2 2019) and **24.2%** for the six months ended Dec 29, 2019 (vs. **20.2%** in prior year), primarily due to favorable discrete adjustments in the prior year[61](index=61&type=chunk) Share-Based Compensation Expense (in thousands) | Award Type | Three Months Ended Dec 29, 2019 | Three Months Ended Dec 30, 2018 | | :-------------------- | :------------------------------ | :------------------------------ | | Restricted stock awards | $268 | $260 | | Performance stock units | $(236) | $97 | | Stock options | $- | $47 | | Total | $32 | $404 | - Approximately **$0.5 million** of share-based compensation expense was reversed during the three months ended December 29, 2019, due to the forfeiture of nonvested RSAs and PSUs following an executive officer's resignation[65](index=65&type=chunk) - The Company operates in three reportable segments: MasterCraft (performance sport boats, luxury day boats), NauticStar (saltwater fishing and recreational boats), and Crest (pontoon boats)[73](index=73&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk)[76](index=76&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's analysis of financial condition, operations, non-GAAP measures, liquidity, and critical accounting policies - Net sales for Q2 2020 decreased by **18.0%** to **$99.6 million**, primarily due to lower wholesale unit volumes driven by production cuts in response to a challenging retail market[86](index=86&type=chunk) - Gross profit for Q2 2020 decreased by **21.9%**, mainly due to lower unit sales volume across all segments, partially offset by price increases, lower Canadian dealer discounts, and reduced MasterCraft warranty costs[88](index=88&type=chunk)[95](index=95&type=chunk)[96](index=96&type=chunk) - Net income for Q2 2020 was **$6.9 million**, a **32.5%** decrease, with diluted EPS at **$0.37**, down **31.5%** from the prior year[90](index=90&type=chunk) - Operating expenses decreased by **12.5%** in Q2 2020, driven by lower acquisition-related costs for Crest, reduced share-based compensation due to an executive officer's resignation, and lower variable compensation[97](index=97&type=chunk) - Interest expense decreased by **39.4%** in Q2 2020 due to **$31.0 million** in voluntary term loan prepayments over the last twelve months and lower effective interest rates[98](index=98&type=chunk) - The Aviara brand, a new luxury day boat line, began selling its AV32 model in Q1 2020 and AV36 in Q2 2020, with an AV40 model expected in late fiscal 2020, and is part of the MasterCraft segment[92](index=92&type=chunk)[115](index=115&type=chunk) Consolidated Unit Sales Volume (Three Months Ended) | Segment | Dec 29, 2019 | Dec 30, 2018 | Change | % Change | | :---------- | :----------- | :----------- | :----- | :------- | | MasterCraft | 716 | 893 | (177) | (19.8%) | | NauticStar | 337 | 480 | (143) | (29.8%) | | Crest | 420 | 675 | (255) | (37.8%) | | Consolidated| 1,473 | 2,048 | (575) | (28.1%) | Consolidated Net Sales by Segment (Three Months Ended) | Segment | Dec 29, 2019 (in thousands) | Dec 30, 2018 (in thousands) | Change (in thousands) | % Change | | :---------- | :-------------------------- | :-------------------------- | :-------------------- | :------- | | MasterCraft | $67,757 | $76,397 | $(8,640) | (11.3%) | | NauticStar | $15,576 | $19,196 | $(3,620) | (18.9%) | | Crest | $16,295 | $25,948 | $(9,653) | (37.2%) | | Consolidated| $99,628 | $121,541 | $(21,913) | (18.0%) | Adjusted EBITDA and Margin | Metric | Three Months Ended Dec 29, 2019 (in thousands) | Three Months Ended Dec 30, 2018 (in thousands) | Six Months Ended Dec 29, 2019 (in thousands) | Six Months Ended Dec 30, 2018 (in thousands) | | :------------------ | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net income | $6,879 | $10,188 | $15,502 | $18,652 | | EBITDA | $13,018 | $16,645 | $28,085 | $29,691 | | Adjusted EBITDA | $13,557 | $18,613 | $29,444 | $33,641 | | Adjusted EBITDA Margin | 13.6% | 15.3% | 14.1% | 15.6% | - Net cash provided by operating activities decreased by **28.8%** to **$19.8 million** for the six months ended December 29, 2019, primarily due to unfavorable working capital usage and lower operating income[123](index=123&type=chunk)[124](index=124&type=chunk) - Net cash used in investing activities decreased significantly by **86.9%** to **$11.5 million**, mainly due to the prior year's **$81.7 million** Crest acquisition, with current period outlays including the Crest manufacturing facility purchase, expansion, molds, and equipment[123](index=123&type=chunk)[125](index=125&type=chunk) - Net financing cash flow decreased by **112.4%** to **$(8.7) million**, primarily due to lower proceeds from long-term debt issuance compared to the prior year when **$80 million** was raised for the Crest acquisition, with **$8.3 million** in principal payments, including **$6.0 million** in voluntary prepayments[123](index=123&type=chunk)[126](index=126&type=chunk) - The Company had **$35.0 million** in borrowing availability under its Revolving Credit Facility as of December 29, 2019, with no outstanding borrowings[51](index=51&type=chunk)[123](index=123&type=chunk) [Overview](index=20&type=section&id=Overview) Overview of Q2 2020 performance, noting decreases in sales and profit, and the launch of the new Aviara brand - Net sales for the second quarter of 2020 decreased by **18.0%** to **$99.6 million**, primarily due to lower wholesale unit volumes resulting from production cuts in response to a challenging retail market environment, including weather impacts and softness in the saltwater category[86](index=86&type=chunk) - Gross profit for the second quarter of 2020 decreased by **21.9%**, mainly due to lower unit sales volume across all segments, partially offset by price increases, lower sales discounts for Canadian dealers, and reduced warranty costs for the MasterCraft segment[88](index=88&type=chunk) - Net income for the second quarter of 2020 was **$6.9 million**, a **32.5%** decrease compared to the prior year, with diluted net income per share at **$0.37**, down **31.5%**[90](index=90&type=chunk) - The Aviara brand, a new luxury day boat line, began selling its AV32 model in Q1 2020 and AV36 in Q2 2020, with an AV40 model expected in late fiscal 2020, and is part of the MasterCraft reportable segment[92](index=92&type=chunk) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) Analyzes consolidated operations for three and six months, detailing changes in sales, gross profit, and operating expenses Consolidated Statements of Operations (Three Months Ended) | Metric (in thousands) | Dec 29, 2019 | Dec 30, 2018 | Change | % Change | | :-------------------- | :----------- | :----------- | :----- | :------- | | NET SALES | $99,628 | $121,541 | $(21,913) | (18.0%) | | GROSS PROFIT | $21,142 | $27,074 | $(5,932) | (21.9%) | | OPERATING INCOME | $10,335 | $14,722 | $(4,387) | (29.8%) | | NET INCOME | $6,879 | $10,188 | $(3,309) | (32.5%) | Consolidated Statements of Operations (Six Months Ended) | Metric (in thousands) | Dec 29, 2019 | Dec 30, 2018 | Change | % Change | | :-------------------- | :----------- | :----------- | :----- | :------- | | NET SALES | $209,417 | $215,182 | $(5,765) | (2.7%) | | GROSS PROFIT | $46,675 | $50,276 | $(3,601) | (7.2%) | | OPERATING INCOME | $23,032 | $26,332 | $(3,300) | (12.5%) | | NET INCOME | $15,502 | $18,652 | $(3,150) | (16.9%) | - Net sales decrease for the three months ended December 29, 2019, was primarily driven by: MasterCraft segment (**$8.6 million decrease** due to lower unit sales volume, partially offset by Aviara sales and higher-priced models), Crest segment (**$9.7 million decrease** due to lower unit sales volume), and NauticStar segment (**$3.6 million decrease** due to lower unit sales volume, partially offset by larger products and higher average wholesale prices)[94](index=94&type=chunk)[100](index=100&type=chunk) - Net sales decrease for the six months ended December 29, 2019, was primarily due to: MasterCraft segment (**$12.0 million decrease**), NauticStar segment (**$3.0 million decrease**), partially offset by a **$9.2 million net increase** from the Crest acquisition (adding **$18.9 million in Q1 2020**, offset by **$9.7 million decrease in Q2 2020**)[102](index=102&type=chunk) - Operating expenses for the six months ended December 29, 2019, decreased by **$0.3 million**, primarily due to a **$2.3 million** decrease in the MasterCraft segment (lower acquisition-related costs, share-based compensation, and variable compensation), partially offset by **$2.2 million** added from Crest's Q1 2020 results[105](index=105&type=chunk)[110](index=110&type=chunk) [Non-GAAP Measures](index=25&type=section&id=Non-GAAP%20Measures) Explains the Company's use of non-GAAP financial measures, detailing adjustments and providing comparative data - The Company uses non-GAAP financial measures like EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, and Adjusted Net Income per share to provide additional information to investors, aligning with management's internal metrics and facilitating consistent performance comparisons[107](index=107&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk) - Adjustments to GAAP measures include Aviara brand startup costs, transaction expenses from acquisitions, and non-cash items such as share-based compensation and acquisition-related inventory step-up adjustments[107](index=107&type=chunk)[108](index=108&type=chunk) Adjusted Net Income and Adjusted Net Income per share | Metric | Three Months Ended Dec 29, 2019 | Three Months Ended Dec 30, 2018 | Six Months Ended Dec 29, 2019 | Six Months Ended Dec 30, 2018 | | :-------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Net income | $6,879 | $10,188 | $15,502 | $18,652 | | Adjusted Net Income | $8,160 | $12,097 | $18,273 | $22,308 | | Adjusted Net Income per share (Basic) | $0.44 | $0.65 | $0.98 | $1.20 | | Adjusted Net Income per share (Diluted) | $0.43 | $0.64 | $0.96 | $1.18 | [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) Details liquidity needs, capital sources, borrowing availability, and changes in operating, investing, and financing cash flows - Primary liquidity needs are for working capital, capital expenditures, and debt service, with funds sourced from operating activities and long-term debt refinancing/issuance[123](index=123&type=chunk) - As of December 29, 2019, the Company had **$35.0 million** in borrowing availability under its Revolving Credit Facility, with no outstanding borrowings[51](index=51&type=chunk)[123](index=123&type=chunk) - Net cash provided by operating activities decreased by **$8.0 million** (**28.8%**) for the six months ended December 29, 2019, primarily due to unfavorable working capital usage and lower operating income[123](index=123&type=chunk)[124](index=124&type=chunk) - Net cash used in investing activities decreased by **$76.3 million** (**86.9%**) for the six months ended December 29, 2019, mainly due to the prior year's **$81.7 million** Crest acquisition, with current period investing including the purchase of the Crest manufacturing facility[123](index=123&type=chunk)[125](index=125&type=chunk) - Net financing cash flow decreased by **$79.2 million** (**112.4%**) for the six months ended December 29, 2019, primarily due to lower proceeds from long-term debt issuance compared to the prior year's **$80 million** for the Crest acquisition, with **$8.3 million** in principal payments, including **$6.0 million** of voluntary prepayments[123](index=123&type=chunk)[126](index=126&type=chunk) [Off-Balance Sheet Arrangements](index=29&type=section&id=Off-Balance%20Sheet%20Arrangements) Confirms the absence of any off-balance sheet financing arrangements as of the reporting date - The Company did not have any off-balance sheet financing arrangements as of December 29, 2019[127](index=127&type=chunk) [Contractual Obligations](index=29&type=section&id=Contractual%20Obligations) Details the impact of the Crest manufacturing facility purchase on operating lease obligations - The Company completed the purchase of the leased Crest manufacturing facility on October 24, 2019, impacting its operating lease obligations[128](index=128&type=chunk) - Operating Lease Obligations were reduced by: **$0.3 million (less than 1 year)**, **$0.7 million (1-3 years)**, **$0.7 million (4-5 years)**, and **$1.8 million (more than 5 years)**[131](index=131&type=chunk) [Emerging Growth Company](index=29&type=section&id=Emerging%20Growth%20Company) Discusses the Company's status as an emerging growth company and its election on accounting standard transition periods - The Company is an emerging growth company under the JOBS Act, allowing it to take advantage of certain exemptions from reporting requirements, such as auditor attestation and reduced executive compensation disclosures[129](index=129&type=chunk) - The Company has irrevocably opted out of the extended transition period for complying with new or revised accounting standards, meaning it will comply on the same dates as non-emerging growth companies[132](index=132&type=chunk) [Critical Accounting Policies](index=30&type=section&id=Critical%20Accounting%20Policies) States no significant changes in critical accounting policies or estimation procedures from the prior fiscal year - As of December 29, 2019, there were no significant changes in the Company's critical accounting policies or estimation procedures from those presented in its Annual Report on Form 10-K for the fiscal year ended June 30, 2019[133](index=133&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Refers to the Annual Report on Form 10-K for market risk disclosures, with no material changes reported - There have been no material changes in market risk from those disclosed in the Annual Report on Form 10-K for the fiscal year ended June 30, 2019[134](index=134&type=chunk) [Item 4. Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Confirms effective disclosure controls and procedures, with no material changes in internal control over financial reporting - The Company's disclosure controls and procedures were evaluated and deemed effective at a reasonable assurance level as of December 29, 2019[135](index=135&type=chunk)[136](index=136&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended December 29, 2019[137](index=137&type=chunk) [PART II – OTHER INFORMATION](index=31&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) No legal proceedings to report for the period - No legal proceedings to report[139](index=139&type=chunk) [Item 1A. Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors, except for updated emphasis on third-party supplier dependence and global disruption - No material changes to risk factors disclosed in the Annual Report on Form 10-K, except for an updated risk regarding dependence on third-party suppliers[140](index=140&type=chunk) - A new risk factor highlights the dependence on third-party suppliers for components and raw materials, noting potential disruptions from changes in economic, political, and welfare conditions in various countries, including the inability of suppliers to meet demands due to infectious diseases and epidemics like the coronavirus outbreak[140](index=140&type=chunk) [Item 2. Unregistered Sales of Securities and Use of Proceeds](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of securities or use of proceeds to report - No unregistered sales of securities and use of proceeds to report[141](index=141&type=chunk) [Item 3. Defaults Upon Senior Securities](index=31&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities to report - No defaults upon senior securities to report[142](index=142&type=chunk) [Item 4. Mine Safety Disclosures](index=31&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) No mine safety disclosures to report - No mine safety disclosures to report[143](index=143&type=chunk) [Item 5. Other Information](index=31&type=section&id=Item%205.%20Other%20Information) No other information to report - No other information to report[144](index=144&type=chunk) [Item 6. Exhibits, Financial Statement Schedules](index=32&type=section&id=Item%206.%20Exhibits%2C%20Financial%20Statement%20Schedules) Lists all exhibits and financial statement schedules filed, including organizational documents and certifications - The report includes various exhibits such as Amended and Restated Certificate of Incorporation, By-laws, Letter Agreement, Offer Letter, Rule 13a-14(a)/15d-14(a) Certifications, Section 1350 Certifications, and XBRL Instance Documents[146](index=146&type=chunk) [SIGNATURES](index=33&type=section&id=SIGNATURES) - The report was signed by Frederick A. Brightbill, Chief Executive Officer, and Timothy M. Oxley, Chief Financial Officer, on February 5, 2020[150](index=150&type=chunk)

MasterCraft Boat Holdings, Inc. (NASDAQ:MCFT) Q2 2020 Earnings Conference Call February 5, 2020 8:30 AM ET Company Participants Tim Oxley – Chief Financial Officer Fred Brightbill – Chief Executive Officer and Board Chair George Steinbarger – Vice President-Strategy and Business Development Conference Call Participants Brett Andress – KeyBanc Capital Markets Michael Swartz – SunTrust Robinson Humphrey Joe Altobello – Raymond James Eric Wold – B. Riley Craig Kennison – Baird Marc Torrente – Wells Fargo Opera ...