MasterCraft Boat (MCFT) - 2025 Q4 - Annual Results

Executive Summary This section provides a high-level overview of the company's financial performance for Q4 and full year fiscal 2025, including key highlights and CEO commentary Fourth Quarter Fiscal 2025 Highlights MasterCraft Boat Holdings, Inc. reported a strong fourth quarter for fiscal 2025, with significant increases in net sales, income from continuing operations, and adjusted profitability metrics, alongside share repurchases | Metric | Q4 FY2025 | Q4 FY2024 | Change (%) | | :-------------------------------- | :-------- | :-------- | :--------- | | Net sales | $79.5 million | $54.3 million | 46.4% | | Income from continuing operations | $5.5 million | $0.3 million | 1733.3% | | Diluted EPS (continuing operations) | $0.33 | $0.02 | 1550.0% | | Adjusted Net Income (non-GAAP) | $6.6 million | $0.6 million | 1000.0% | | Adjusted EPS (non-GAAP) | $0.40 | $0.04 | 900.0% | | Adjusted EBITDA (non-GAAP) | $9.5 million | $1.5 million | 533.3% | | Share repurchases | $4.5 million | N/A | N/A | Full Year Fiscal 2025 Highlights For the full fiscal year 2025, the company experienced a decrease in net sales and adjusted profitability compared to the prior year, primarily due to planned production adjustments to align with retail demand | Metric | FY2025 | FY2024 | Change (%) | | :-------------------------------- | :------- | :------- | :--------- | | Net sales | $284.2 million | $322.3 million | (11.8)% | | Income from continuing operations | $10.7 million | $23.2 million | (53.9)% | | Diluted EPS (continuing operations) | $0.65 | $1.36 | (52.2)% | | Adjusted Net Income (non-GAAP) | $15.1 million | $28.9 million | (47.7)% | | Adjusted EPS (non-GAAP) | $0.92 | $1.69 | (45.5)% | | Adjusted EBITDA (non-GAAP) | $24.4 million | $40.2 million | (39.3)% | | Net cash from operating activities | $38.2 million | N/A | N/A | | Free Cash Flow | $29.0 million | N/A | N/A | | Cash and investments (year-end) | $79.4 million | N/A | N/A | - Planned decrease in production led to approximately 30% lower dealer inventory levels compared to the prior year[5] CEO Commentary CEO Brad Nelson highlighted the company's successful navigation of a challenging economic environment in fiscal 2025, emphasizing strengthened dealer health, new product initiatives, and significant free cash flow generation - MasterCraft successfully navigated a challenging economic and industry backdrop in fiscal 2025[4] - Key achievements include strengthening dealer health, advancing new product initiatives, and generating significant free cash flow[4] - The company returned nearly $10 million of capital to shareholders, demonstrating a disciplined capital allocation approach[4] - A strong financial foundation provides flexibility for core strategic initiatives, including investments in innovation and dealer health[6] Financial Results - Fourth Quarter Fiscal 2025 This section details the company's financial performance for the fourth quarter of fiscal 2025, including net sales, gross margin, operating expenses, and adjusted non-GAAP metrics Net Sales and Gross Margin (Q4 FY2025) Consolidated net sales for the fourth quarter of fiscal 2025 increased significantly due to favorable model mix from new product introductions, higher unit volumes, decreased dealer incentives, and favorable option sales | Metric | Q4 FY2025 | Q4 FY2024 | Change | | :------------------ | :-------- | :-------- | :----- | | Consolidated Net Sales | $79.5 million | $54.3 million | +$25.2 million | | Gross Margin Percentage | 23.2% | 15.8% | +740 bps | - Increase in net sales primarily driven by favorable model mix from new product introductions, increased unit volumes, decreased dealer incentives, and favorable option sales[6] Operating Expenses and Income (Q4 FY2025) Operating expenses rose in Q4 FY2025 due to increased variable compensation, sales and marketing, and administrative costs, while income from continuing operations and diluted EPS saw substantial improvements | Metric | Q4 FY2025 | Q4 FY2024 | Change | | :-------------------------------- | :-------- | :-------- | :----- | | Operating Expenses | N/A | N/A | +$3.3 million | | Income from continuing operations | $5.5 million | $0.3 million | +$5.2 million | | Diluted EPS (continuing operations) | $0.33 | $0.02 | +$0.31 | | Operating Income (loss) | $5,928 | ($592) | +$6,520 | | Total Operating Expenses | $12,482 | $9,197 | +$3,285 | - Increased operating expenses were due to higher variable compensation, sales and marketing, and administrative costs[7] Adjusted Non-GAAP Metrics (Q4 FY2025) Adjusted Net Income and Adjusted EBITDA for Q4 FY2025 showed significant year-over-year growth, with Adjusted EBITDA margin improving substantially | Metric | Q4 FY2025 | Q4 FY2024 | Change | | :-------------------------- | :-------- | :-------- | :----- | | Adjusted Net Income | $6.6 million | $0.6 million | +$6.0 million | | Adjusted EPS (diluted) | $0.40 | $0.04 | +$0.36 | | Adjusted EBITDA | $9.5 million | $1.6 million | +$7.9 million | | Adjusted EBITDA Margin | 12.0% | 2.9% | +910 bps | Financial Results - Full Year Fiscal 2025 This section presents the company's comprehensive financial results for the full fiscal year 2025, analyzing net sales, gross margin, operating expenses, and adjusted non-GAAP metrics Net Sales and Gross Margin (Full Year FY2025) Consolidated net sales for fiscal 2025 decreased compared to the prior year, primarily due to planned lower unit volumes to align dealer inventories with retail demand and changes in price | Metric | FY2025 | FY2024 | Change | | :------------------ | :------- | :------- | :----- | | Consolidated Net Sales | $284.2 million | $322.3 million | -$38.1 million | | Gross Margin Percentage | 20.0% | 22.2% | -220 bps | - Decrease in net sales primarily due to planned lower unit volumes to align dealer inventories with retail demand and changes in price[10] - Lower gross margins resulted from lower cost absorption due to decreased production volume, material and overhead inflation, and changes in sales price[11] Operating Expenses and Income (Full Year FY2025) Operating expenses for fiscal 2025 increased slightly due to variable compensation costs, while income from continuing operations and diluted EPS significantly decreased year-over-year | Metric | FY2025 | FY2024 | Change | | :-------------------------------- | :------- | :------- | :----- | | Operating Expenses | N/A | N/A | +$1.5 million | | Income from continuing operations | $10.7 million | $23.2 million | -$12.5 million | | Diluted EPS (continuing operations) | $0.65 | $1.36 | -$0.71 | | Operating Income (loss) | $11,232 | $27,476 | -$16,244 | | Total Operating Expenses | $45,633 | $44,134 | +$1,499 | - Operating expenses increased due to increased variable compensation costs[11] Adjusted Non-GAAP Metrics (Full Year FY2025) Adjusted Net Income and Adjusted EBITDA for fiscal 2025 both declined compared to the prior year, with a corresponding decrease in Adjusted EBITDA margin | Metric | FY2025 | FY2024 | Change | | :-------------------------- | :------- | :------- | :----- | | Adjusted Net Income | $15.1 million | $28.9 million | -$13.8 million | | Adjusted EPS (diluted) | $0.92 | $1.69 | -$0.77 | | Adjusted EBITDA | $24.4 million | $40.2 million | -$15.8 million | | Adjusted EBITDA Margin | 8.6% | 12.5% | -390 bps | Fiscal 2026 Outlook This section outlines the company's financial guidance and strategic expectations for fiscal year 2026 and the first quarter of fiscal 2026 Management Commentary on Outlook Management anticipates continued progress in destocking, product innovation, and distribution network expansion to position the company well for fiscal 2026 and beyond - Ongoing destocking progress, product innovation, and expanded distribution network are expected to position the company well for fiscal 2026[15] - The company has detailed plans for various retail demand scenarios and will continue cost discipline and tight working capital management[15] - Expects to generate positive free cash flow again in fiscal 2026[15] - Focus will remain on maintaining a healthy dealer network, sustained innovation, and leveraging competitive advantages[15] Financial Guidance for FY2026 and Q1 FY2026 MasterCraft provided financial guidance for both the full fiscal year 2026 and the first quarter of fiscal 2026, projecting consolidated net sales, Adjusted EBITDA, and Adjusted Earnings per share Fiscal Year 2026 Guidance | Metric | Range | | :-------------------- | :-------------------- | | Consolidated Net Sales | $295 million - $310 million | | Adjusted EBITDA | $29 million - $34 million | | Adjusted Earnings per share | $1.15 - $1.40 | | Capital Expenditures | Approximately $9 million | Fiscal First Quarter 2026 Guidance | Metric | Amount | | :-------------------- | :------------- | | Consolidated Net Sales | Approximately $67 million | | Adjusted EBITDA | Approximately $4 million | | Adjusted Earnings per share | $0.16 | Company Information This section provides an overview of MasterCraft Boat Holdings, Inc., including its business description and conference call details About MasterCraft Boat Holdings, Inc. MasterCraft Boat Holdings, Inc. is a leading designer, manufacturer, and marketer of recreational powerboats, operating through its three brands: MasterCraft, Crest, and Balise - Headquartered in Vonore, Tenn., MasterCraft Boat Holdings, Inc. (NASDAQ: MCFT) is a leading innovator, designer, manufacturer and marketer of recreational powerboats[17] - The company operates through its three brands: MasterCraft, Crest, and Balise[17] Conference Call and Webcast Information MasterCraft Boat Holdings, Inc. hosted a live conference call and webcast on August 27, 2025, to discuss its fiscal fourth quarter and full year 2025 results, with replay available on the company's investor website - A live conference call and webcast was held on August 27, 2025, at 8:30 a.m. ET to discuss fiscal Q4 and full year 2025 results[16] - Participants could access the webcast via Investors.MasterCraft.com or register for telephone participation[16] - A replay of the conference call and webcast is archived on the Company's website[16] Forward-Looking Statements This section contains disclaimers regarding forward-looking statements, outlining inherent risks and uncertainties that could impact future results Disclaimer and Risk Factors This section includes standard forward-looking statements, which are subject to various risks, uncertainties, and important factors that could cause actual results to differ materially from projections - Forward-looking statements are identified by words like 'believes,' 'anticipates,' 'expects,' and similar expressions[19] - Statements are subject to risks, uncertainties, and important factors that could cause actual results to differ materially[20] - Key risk factors include changes in interest rates, general economic conditions, demand for products, inflationary pressures, competition, dealer network reliability, and new product introductions[20] - The company disclaims any obligation to update or supplement forward-looking statements[21] Non-GAAP Financial Measures This section defines the company's non-GAAP financial measures, explains their rationale and limitations, and provides reconciliations to GAAP Definition of Non-GAAP Measures This section defines the non-GAAP financial measures used by the company, including EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income per share, and Free Cash Flow, outlining the specific adjustments made to GAAP figures - EBITDA is defined as income from continuing operations before interest, income taxes, depreciation, and amortization[29] - Adjusted EBITDA further adjusts EBITDA for non-cash charges or items not indicative of core operations, such as share-based compensation and leadership transition costs[29] - Adjusted Net Income and Adjusted Net Income per share adjust income from continuing operations for similar non-cash or non-core items and reflect income tax expense at the estimated annual effective tax rate[30] - Free Cash Flow from continuing operations is defined as net cash flows from operating activities less purchases of property, plant, and equipment[31] Rationale and Limitations of Non-GAAP Measures The company uses non-GAAP measures to provide additional information to investors for assessing operating performance and evaluating investment risk, as they offer a consistent basis for comparison across periods - Non-GAAP measures are used to provide additional information to investors, assess operating performance consistently, and evaluate investment risk[33] - Limitations include not reflecting cash requirements for asset replacement, capital expenditures, working capital, tax expense, or interest payments[36] - Non-GAAP measures may not be comparable to similarly titled measures of other companies[34] - The company does not provide forward-looking GAAP guidance due to the unpredictability of certain items[35] Reconciliation of Non-GAAP Measures to GAAP This section provides detailed reconciliations of the company's non-GAAP financial measures to their most directly comparable GAAP financial measures for the reported periods EBITDA and Adjusted EBITDA Reconciliation | (Dollars in thousands) | Q4 FY2025 | % of Net Sales | Q4 FY2024 | % of Net Sales | FY2025 | % of Net Sales | FY2024 | % of Net Sales | | :------------------------------------------------ | :-------- | :------------- | :-------- | :------------- | :------- | :------------- | :------- | :------------- | | Income from continuing operations | $5,452 | 6.9% | $305 | 0.6% | $10,715 | 3.8% | $23,243 | 7.2% | | Income tax expense (benefit) | 1,299 | | (70) | | 2,820 | | 6,730 | | | Interest expense | — | | 798 | | 1,169 | | 3,292 | | | Interest income | (823) | | (1,625) | | (3,472) | | (5,789) | | | Depreciation and amortization | 2,554 | | 2,063 | | 9,579 | | 8,375 | | | EBITDA | 8,482 | 10.7% | 1,471 | 2.7% | 20,811 | 7.3% | 35,851 | 11.1% | | Share-based compensation | 835 | | 66 | | 2,915 | | 2,602 | | | Senior leadership transition and organizational realignment costs | 211 | | 31 | | 659 | | 1,708 | | | Adjusted EBITDA | $9,528 | 12.0% | $1,568 | 2.9% | $24,385 | 8.6% | $40,161 | 12.5% | Adjusted Net Income Reconciliation | (Dollars in thousands, except per share data) | Q4 FY2025 | Q4 FY2024 | FY2025 | FY2024 | | :------------------------------------------------ | :-------- | :-------- | :------- | :------- | | Income from continuing operations | $5,452 | $305 | $10,715 | $23,243 | | Income tax expense | 1,299 | (70) | 2,820 | 6,730 | | Amortization of acquisition intangibles | 450 | 450 | 1,800 | 1,812 | | Share-based compensation | 835 | 66 | 2,915 | 2,602 | | Senior leadership transition and organizational realignment costs | 211 | 31 | 659 | 1,708 | | Adjusted Net Income before income taxes | 8,247 | 782 | 18,909 | 36,095 | | Adjusted income tax expense (20.0%) | 1,650 | 156 | 3,782 | 7,219 | | Adjusted Net Income | $6,597 | $626 | $15,127 | $28,876 | | Adjusted net income per common share (Basic) | $0.40 | $0.04 | $0.92 | $1.71 | | Adjusted net income per common share (Diluted) | $0.40 | $0.04 | $0.92 | $1.69 | Adjusted Net Income per Diluted Share Reconciliation | | Q4 FY225 | Q4 FY2024 | FY2025 | FY2024 | | :---------------------------------------------------------------- | :-------- | :-------- | :------- | :------- | | Income from continuing operations per diluted share | $0.33 | $0.02 | $0.65 | $1.36 | | Impact of adjustments: | | | | | | Income tax expense | 0.08 | — | 0.17 | 0.39 | | Amortization of acquisition intangibles | 0.03 | 0.03 | 0.11 | 0.11 | | Share-based compensation | 0.05 | — | 0.18 | 0.15 | | Senior leadership transition and organizational realignment costs | 0.01 | — | 0.04 | 0.10 | | Adjusted Net Income per diluted share before income taxes | 0.50 | 0.05 | 1.15 | 2.11 | | Impact of adjusted income tax expense on net income per diluted share before income taxes | (0.10) | (0.01) | (0.23) | (0.42) | | Adjusted Net Income per diluted share | $0.40 | $0.04 | $0.92 | $1.69 | Free Cash Flow Reconciliation | (Dollars in thousands) | FY2025 | FY2024 | | :------------------------------------------------ | :------- | :------- | | Net cash provided by operating activities of continuing operations | $38,222 | $12,200 | | Less: Purchases of property, plant and equipment | (9,198) | (10,525) | | Free cash flow | $29,024 | $1,675 | Consolidated Financial Statements This section presents the company's official consolidated financial statements, including statements of operations, balance sheets, and supplemental operating data Consolidated Statements of Operations The Consolidated Statements of Operations provide a detailed breakdown of the company's revenues, costs, and profitability for the three and twelve months ended June 30, 2025, compared to the prior year Consolidated Statements of Operations (Dollars in thousands) | Metric | Q4 FY2025 | Q4 FY2024 | FY2025 | FY2024 | | :------------------------------------ | :-------- | :-------- | :------- | :------- | | Net sales | $79,516 | $54,318 | $284,203 | $322,351 | | Cost of sales | 61,106 | 45,713 | 227,338 | 250,741 | | Gross profit | 18,410 | 8,605 | 56,865 | 71,610 | | Total operating expenses | 12,482 | 9,197 | 45,633 | 44,134 | | Operating income (loss) | 5,928 | (592) | 11,232 | 27,476 | | Income from continuing operations | 5,452 | 305 | 10,715 | 23,243 | | Net income (loss) | $5,697 | ($8,036) | $7,043 | $7,800 | | Diluted EPS (Continuing operations) | $0.33 | $0.02 | $0.65 | $1.36 | | Diluted EPS (Net income) | $0.35 | ($0.48) | $0.43 | $0.46 | Consolidated Balance Sheets The Consolidated Balance Sheets present the company's financial position as of June 30, 2025, and June 30, 2024, detailing assets, liabilities, and equity, highlighting changes in cash, investments, and debt structure Consolidated Balance Sheets (Dollars in thousands) | Metric | June 30, 2025 | June 30, 2024 | | :------------------------------------------------ | :------------ | :------------ | | ASSETS | | | | Cash and cash equivalents | $28,926 | $7,394 | | Short-term investments | 50,518 | 78,846 | | Total current assets | 121,213 | 155,074 | | Total assets | $259,948 | $317,984 | | LIABILITIES AND EQUITY | | | | Total current liabilities | 65,210 | 77,936 | | Long-term debt, net | — | 44,887 | | Total liabilities | 76,362 | 134,105 | | Total equity | 183,586 | 183,879 | | Total liabilities and equity | $259,948 | $317,984 | - The company ended FY2025 with no outstanding debt, compared to $44.887 million in long-term debt in FY2024[27] - Cash and cash equivalents increased significantly from $7.394 million in FY2024 to $28.926 million in FY2025[27] Supplemental Operating Data Supplemental operating data provides insights into unit sales volume, net sales by brand (MasterCraft and Pontoon), and net sales per unit for both the fourth quarter and full fiscal year 2025, compared to the prior year Unit Sales Volume | Brand | Q4 FY2025 | Q4 FY2024 | Q4 Change (%) | FY2025 | FY2024 | FY Change (%) | | :---------- | :-------- | :-------- | :------------ | :------- | :------- | :------------ | | MasterCraft | 352 | 302 | 16.6% | 1,548 | 1,755 | (11.8)% | | Pontoon | 218 | 216 | 0.9% | 745 | 1,241 | (40.0)% | | Consolidated | 570 | 518 | 10.0% | 2,293 | 2,996 | (23.5)% | Net Sales by Segment (Dollars in thousands) | Brand | Q4 FY2025 | Q4 FY2024 | Q4 Change (%) | FY2025 | FY2024 | FY Change (%) | | :---------- | :-------- | :-------- | :------------ | :------- | :------- | :------------ | | MasterCraft | $65,906 | $44,417 | 48.4% | $240,763 | $262,736 | (8.4)% | | Pontoon | 13,610 | 9,901 | 37.5% | 43,440 | 59,615 | (27.1)% | | Consolidated | $79,516 | $54,318 | 46.4% | $284,203 | $322,351 | (11.8)% | Net Sales per Unit | Brand | Q4 FY2025 | Q4 FY2024 | Q4 Change (%) | FY2025 | FY2024 | FY Change (%) | | :---------- | :-------- | :-------- | :------------ | :------- | :------- | :------------ | | MasterCraft | $187 | $147 | 27.2% | $156 | $150 | 4.0% | | Pontoon | $62 | $46 | 34.8% | $58 | $48 | 20.8% | | Consolidated | $140 | $105 | 33.3% | $124 | $108 | 14.8% |