MasterCraft Boat (MCFT) - 2025 Q2 - Quarterly Report

Financial Performance - Net sales decreased by $26.4 million (29.4%) in Q2 2025 and $55.3 million (30.1%) in the first half of fiscal 2025 compared to the same periods in fiscal 2024, primarily due to planned lower unit volumes and unfavorable model mix [81]. - Gross margin percentage declined by 610 basis points in Q2 2025 and 600 basis points in the first half of fiscal 2025 compared to the prior-year periods, attributed to unfavorable model mix and lower cost absorption from decreased production volume [82]. - MasterCraft segment net sales fell by $17.6 million (24.2%) in Q2 2025 and $37.9 million (25.5%) in the first half of fiscal 2025 compared to the same prior-year periods, driven by lower unit volume and unfavorable model mix [83]. - Consolidated unit sales volume decreased by 303 units (35.4%) in Q2 2025 and 608 units (35.5%) in the first half of fiscal 2025 compared to the same prior-year periods [81]. - Operating income for continuing operations dropped to $186,000 in Q2 2025, a decrease of 98.3%, and $1.19 million in the first half of fiscal 2025, down 94.4% compared to the prior-year periods [81]. - Operating income decreased by $6.9 million and $13.5 million during the second quarter and first half of fiscal 2025, respectively, primarily due to decreased net sales [84]. - Net sales decreased by $8.8 million and $17.4 million during the second quarter and first half of fiscal 2025, respectively, mainly due to lower unit volumes and increased dealer incentives [85]. - Operating loss for the second quarter and first half of fiscal 2025 was $3.2 million and $5.9 million, respectively, compared to operating income of $0.5 million and $0.7 million in the same prior year periods [86]. Production and Inventory Management - The company adjusted production levels at the beginning of fiscal 2025 to improve dealer inventory, resulting in decreased net sales and reduced gross margins compared to fiscal 2024 [80]. - The company remains committed to aligning production levels with market demand while maintaining operational flexibility despite economic and industry headwinds [80]. - The MasterCraft segment's unit sales volume decreased by 91 units (18.5%) in Q2 2025 and 211 units (21.4%) in the first half of fiscal 2025 compared to the same prior-year periods [83]. Cash Flow and Debt Management - Cash and cash equivalents totaled $34.3 million as of December 29, 2024, an increase of $26.9 million from $7.4 million as of June 30, 2024 [96]. - Total debt as of June 30, 2024, was $49.3 million, with no amounts outstanding as of December 29, 2024 [96]. - As of December 29, 2024, the company had no amounts outstanding under the Revolving Credit Facility, with $100.0 million of available borrowing capacity [97]. - For the six months ended December 29, 2024, net cash provided by operating activities was $13.4 million, a decrease from $22.4 million for the same period in 2023 [100][103]. - Net cash provided by investing activities for the six months ended December 29, 2024 was $46.3 million, significantly higher than $15.2 million for the same period in 2023 [101][104]. - Net cash used in financing activities was $54.2 million for the six months ended December 29, 2024, compared to $14.1 million for the same period in 2023 [102][104]. - The company reported a net change in cash and cash equivalents from continuing operations of $5.5 million for the six months ended December 29, 2024, down from $23.4 million in the prior year [99]. Shareholder Returns and Capital Expenditures - The company repurchased 223,222 shares of common stock for $4.2 million during the six months ended December 29, 2024 [98]. - The company’s capital expenditures for the six months ended December 29, 2024 amounted to $4.6 million, focused on tooling, information technology, and machinery [101]. Market and Risk Management - The company did not have any off-balance sheet financing arrangements as of December 29, 2024 [105]. - There were no significant changes in critical accounting estimates or policies as of December 29, 2024 [106]. - The company’s market risk profile remained unchanged from the previous disclosures in the 2024 Annual Report [107].