MasterCraft Boat (MCFT) - 2024 Q4 - Annual Results

MasterCraft Boat Holdings, Inc. Fiscal 2024 Results Financial Highlights The company reported a significant decline in financial performance, impacted by an impairment charge and the planned divestiture of its Aviara brand Fourth Quarter Fiscal 2024 Highlights (vs. Prior-Year Period) | Metric | Q4 FY2024 | Change vs. Q4 FY2023 | | :--- | :--- | :--- | | Net Sales | $67.2 million | -59.7% | | Net Loss from Continuing Operations | ($8.1) million | N/A (vs. $23.1M income) | | Diluted Adjusted Net Income (Loss) per Share | ($0.04) | Down from $1.37 | | Adjusted EBITDA | $0.8 million | -97.4% | Full Year Fiscal 2024 Highlights (vs. Prior-Year) | Metric | FY2024 | Change vs. FY2023 | | :--- | :--- | :--- | | Net Sales | $366.6 million | -44.6% | | Net Income from Continuing Operations | $8.7 million | Down from $90.5M | | Diluted Adjusted Net Income per Share | $1.22 | Down from $5.35 | | Adjusted EBITDA | $32.9 million | -74.9% | - The company has agreed to transfer the rights to its Aviara brand and related assets, with the transaction expected to close in Q1 fiscal 2025[1] - The company executed share repurchases totaling $4.5 million during the fourth quarter and $16.3 million for the full fiscal year[2] CEO Commentary and Strategic Priorities The CEO noted results exceeded expectations amid challenges and outlined priorities like inventory reduction and shareholder returns - Successfully navigated a challenging economic environment and a highly competitive retail landscape, delivering results ahead of the company's latest expectations[2] - Key strategic priorities executed during the year included destocking field inventory, advancing consumer-centric initiatives, and returning capital to shareholders[2][3] - Production plans are designed to prioritize dealer health, addressing above-optimal inventory levels and high carrying costs for dealers[3] - The company's strong financial position provides flexibility to pursue strategic initiatives like innovation and product development while continuing to return capital to shareholders[3] Detailed Financial Results Sales and profitability declined significantly due to lower volumes and higher incentives, with expenses rising from an impairment charge Fourth Quarter Fiscal 2024 Results Q4 net sales fell 59.7%, leading to a net loss of $8.1 million driven by reduced gross margin and a non-cash impairment charge - The $99.4 million decrease in net sales was attributed to lower unit volume and unfavorable model mix and options, partially offset by higher prices[4] - Gross margin percentage fell by 1,360 basis points due to lower cost absorption from decreased production volume and unfavorable mix[4] - Operating expenses increased by $6.4 million, primarily driven by $9.8 million in non-cash impairment charges recorded in the Aviara segment[5] Q4 FY2024 Financial Performance vs. Q4 FY2023 | Metric | Q4 FY2024 | Q4 FY2023 | | :--- | :--- | :--- | | Net Sales | $67.2M | $166.6M | | Net (Loss) Income from Continuing Ops | ($8.1M) | $23.1M | | Adjusted Net (Loss) Income | ($0.6M) | $23.9M | | Adjusted EBITDA | $0.8M | $32.7M | Full Year Fiscal 2024 Results Full-year net sales decreased 44.6%, with net income falling sharply due to lower volume, dealer incentives, and impairment costs - The $295.5 million decrease in net sales was due to lower unit volume, an increase in dealer incentives, and unfavorable model mix and options[7] - Gross margin percentage declined by 730 basis points, resulting from lower cost absorption and higher dealer incentives[7] - Operating expenses increased by $6.7 million, primarily due to a $9.8 million non-cash impairment charge in the Aviara segment and CEO transition costs[8] Full Year FY2024 Financial Performance vs. FY2023 | Metric | FY2024 | FY2023 | | :--- | :--- | :--- | | Net Sales | $366.6M | $662.0M | | Net Income from Continuing Ops | $8.7M | $90.5M | | Adjusted Net Income | $20.9M | $95.0M | | Adjusted EBITDA | $32.9M | $131.5M | Fiscal 2025 Outlook The company projects net sales of $265M-$300M for fiscal 2025, focusing on optimizing dealer inventory amid market uncertainty - The company's strategy for fiscal 2025 is to prioritize a healthy distribution network and optimize dealer inventory levels to be well-positioned for a market upswing[10] Full Year Fiscal 2025 Guidance | Metric | Projected Range | | :--- | :--- | | Consolidated Net Sales | $265M - $300M | | Adjusted EBITDA | $15M - $26M | | Adjusted Earnings per Share | $0.36 - $0.87 | | Capital Expenditures | ~$12M | First Quarter Fiscal 2025 Guidance | Metric | Projection | | :--- | :--- | | Consolidated Net Sales | ~$61M | | Adjusted EBITDA | ~$2M | | Adjusted Earnings per Share | ~$0.04 | Consolidated Financial Statements Financial statements show a significant reduction in sales and profitability, with a smaller balance sheet reflecting decreased assets and liabilities Consolidated Statements of Operations Net sales for fiscal 2024 fell to $366.6 million, causing net income from continuing operations to drop to $8.7 million from $90.5 million Fiscal Year Income Statement Summary (in thousands) | Account | Year Ended June 30, 2024 | Year Ended June 30, 2023 | | :--- | :--- | :--- | | Net sales | $366,588 | $662,046 | | Gross profit | $67,097 | $169,713 | | Operating income | $7,632 | $116,915 | | Net income from continuing operations | $8,722 | $90,452 | | Diluted EPS from continuing operations | $0.51 | $5.09 | Three Months Income Statement Summary (in thousands) | Account | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net sales | $67,182 | $166,566 | | Gross profit | $8,184 | $42,915 | | Operating (loss) income | ($11,935) | $29,206 | | Net (loss) income from continuing operations | ($8,107) | $23,052 | | Diluted EPS from continuing operations | ($0.49) | $1.32 | Consolidated Balance Sheets Total assets decreased to $318.0 million from $354.0 million, driven by lower cash and inventories, while total liabilities also declined Key Balance Sheet Items (in thousands) | Account | June 30, 2024 | June 30, 2023 | | :--- | :--- | :--- | | Assets | | | | Total current assets | $155,074 | $195,499 | | Total assets | $317,984 | $353,976 | | Liabilities & Equity | | | | Total current liabilities | $77,936 | $102,540 | | Total liabilities | $134,105 | $161,887 | | Total equity | $183,879 | $192,089 | Supplemental and Segment Data Consolidated unit sales dropped 50.9%, with significant declines in the MasterCraft and Pontoon segments, and the Crest segment was renamed Full Year Unit Sales Volume by Segment (FY2024 vs. FY2023) | Segment | FY2024 Units | FY2023 Units | % Change | | :--- | :--- | :--- | :--- | | MasterCraft | 1,755 | 3,407 | (48.5%) | | Pontoon | 1,241 | 2,836 | (56.2%) | | Aviara | 134 | 134 | 0.0% | | Consolidated | 3,130 | 6,377 | (50.9%) | Full Year Net Sales by Segment (FY2024 vs. FY2023, in thousands) | Segment | FY2024 Net Sales | FY2023 Net Sales | % Change | | :--- | :--- | :--- | :--- | | MasterCraft | $262,736 | $468,656 | (43.9%) | | Pontoon | $59,615 | $141,247 | (57.8%) | | Aviara | $44,237 | $52,143 | (15.2%) | | Consolidated | $366,588 | $662,046 | (44.6%) | - During the fourth quarter of fiscal 2024, the company changed the name of its 'Crest' operating segment to 'Pontoon'[20] Non-GAAP Financial Measures Reconciliation The company reconciles GAAP to non-GAAP metrics, adjusting for items like impairment charges to show core operational performance - The company uses non-GAAP measures to assess operating performance by eliminating items not considered indicative of core operations, such as impairment charges, share-based compensation, and CEO transition costs[21][22] Reconciliation of Net Income to Adjusted EBITDA (Full Year, in thousands) | Line Item | FY2024 | FY2023 | | :--- | :--- | :--- | | Net income from continuing operations | $8,722 | $90,452 | | Adjustments (Taxes, Interest, D&A, etc.) | $10,092 | $37,032 | | EBITDA | $18,814 | $127,484 | | Impairments | $9,827 | $— | | Share-based compensation | $2,598 | $3,656 | | CEO transition costs | $1,708 | $— | | Adjusted EBITDA | $32,947 | $131,452 | Reconciliation of Net Income to Adjusted Net Income (Full Year, in thousands) | Line Item | FY2024 | FY2023 | | :--- | :--- | :--- | | Net income from continuing operations | $8,722 | $90,452 | | Pre-tax adjustments (Impairments, Amortization, etc.) | $14,133 | $5,817 | | Adjusted income tax expense | ($5,214) | ($28,383) | | Adjusted Net Income | $20,860 | $95,021 |