MasterCraft Boat (MCFT) Q3 2025 Earnings Call May 07, 2025 08:30 AM ET Company Participants Scott Kent - VP - Finance & Incoming CFOBrad Nelson - CEO & DirectorTim Oxley - Vice President, Chief Financial Officer, Treasurer and SecretaryMartin Mitela - Senior Equity Research AssociateAdam Fox - Equity Research AssociateEric Wold - Executive Director, Equity Research Conference Call Participants Craig Kennison - Director of Research Operations & Senior Research AnalystAnna Glaessgen - Senior Research Analyst ...

Financial Data and Key Metrics Changes - For Q3 2025, net sales were $76 million, a decrease of $8 million or 10% from the prior year, primarily due to lower unit sales volume, partially offset by a favorable mix [16][17] - Gross margin was 20.8%, down from 23.3% in the prior year, attributed to lower cost absorption from production decreases [17] - Adjusted net income for the quarter was $5 million or $0.30 per diluted share, compared to $8.5 million or $0.50 per diluted share in the prior year [18] - Adjusted EBITDA was $7.5 million, down from $11.7 million in the prior year, with an adjusted EBITDA margin of 9.9% compared to 13.9% [19] Business Line Data and Key Metrics Changes - Within the MasterCraft segment, production of the premium X Star model ramped up, contributing positively to brand momentum [8][13] - The pontoon segment, including Crest and Valise brands, faced challenges with dealer inventories, leading to a 40% year-over-year unit reduction [15] Market Data and Key Metrics Changes - Dealer inventories across brands decreased by 30% over the last year, and more than 45% compared to pre-pandemic levels in fiscal 2019 [9] - The company anticipates a modest impact from tariffs on fiscal 2025 costs, while closely monitoring demand implications [10] Company Strategy and Development Direction - The company is focused on disciplined cost, cash, and pipeline management, with a strong emphasis on product development and dealer support [8][12] - Capital allocation priorities remain disciplined, with a solid balance sheet and no debt, allowing for share repurchase programs to return capital to shareholders [11][20] Management's Comments on Operating Environment and Future Outlook - Management acknowledged persistent macroeconomic headwinds and tariff uncertainty affecting the marine sector, leading to a revision of full-year guidance [9][21] - Despite challenges, management remains confident in achieving inventory reduction targets and is optimistic about the upcoming selling season [9][22] Other Important Information - Tim Oxley, the CFO, will retire in June, with Scott Kent set to succeed him, reflecting careful succession planning [5][6] - The X Star model received the National Marine Manufacturers Association Innovation Award, highlighting the company's focus on quality and innovation [12] Q&A Session Summary Question: Can we quantify the tariff impacts and potential price increases for model year '26? - Management indicated that the impact of tariffs is evolving and has not yet determined specific pricing effects, but expects some inflationary impact [26] Question: How is retail performing, and does the previous down 5% to 10% estimate change? - Management expects retail to trend closer to 10% down, with more clarity expected in June [28] Question: What is the direct and indirect exposure to tariffs? - Management has discussions with suppliers to understand costs and expects a modest impact in Q4, with ongoing monitoring [33][34] Question: What is the status of dealer network expansion? - Management reported progress in expanding the dealer network, particularly in Texas and Utah, which are key markets [36] Question: How is the dealer network's balance sheet performing? - Management expressed satisfaction with dealer health, noting no significant dealer failures despite the challenging environment [38] Question: What is the early response to the Belize product? - Management anticipates net sales around $10 million for fiscal '25, with positive dealer interest and response [42][45] Question: Any trends observed at retail in April and May? - Management noted that while retail momentum is not yet vibrant, there are signs of improvement, particularly with premium buyers [51][52]

Financial Performance - Q3 2025 - Net sales reached $76 million[18], a decrease of 10% compared to Q3 FY24[20] - Adjusted EBITDA amounted to $75 million[18], down from $117 million in Q3 FY24[20] - Adjusted diluted net income per share was $030[18], a decrease from $050 in Q3 FY24[20] Financial Performance - YTD Q3 2025 - YTD net sales totaled $2047 million[22], a 24% decrease from FY24[22] - YTD Adjusted EBITDA was $149 million[22], down from $386 million in FY24[22] - YTD Adjusted Diluted Net Income per Share was $053[22], down from $112 in FY24[22] Balance Sheet & Capital Allocation - The company maintains a strong financial position with approximately $67 million in cash and investments and no debt[18] - The company returned $5 million of capital YTD through a share repurchase program[18] - The company authorized a $50 million share repurchase program in July 2023, with approximately $30 million still available[26] Fiscal Year 2025 Guidance - The company refines fiscal 2025 guidance with net sales of approximately $275 million[18] - The company projects adjusted EBITDA of approximately $20 million[18] - The company anticipates adjusted earnings per share of approximately $071[18]

Core Insights - The upcoming earnings report for Malibu Boats (MBUU) is projected to show quarterly earnings of $0.67 per share, reflecting a 6.4% increase year over year, with revenues expected to reach $223.38 million, a 9.8% increase compared to the previous year [1]. Earnings Projections - Over the last 30 days, the consensus EPS estimate has been revised downward by 4.2%, indicating a collective reassessment by analysts of their initial forecasts [2]. - Changes in earnings projections are crucial for predicting investor reactions, as empirical studies have shown a strong correlation between earnings estimate trends and short-term stock price movements [3]. Analyst Estimates - Analysts estimate that revenue from the Saltwater Fishing segment will be $84.15 million, representing a 3.6% year-over-year increase [5]. - The forecast for 'Unit Volume by Segment - Malibu' is 472, up from 452 in the same quarter last year, while 'Unit Volume by Segment - Cobalt' is expected to reach 491, compared to 436 a year ago [5]. - The 'Net Sales per Unit - Total' is projected at $166,199.50, an increase from $160,299 in the previous year, with total unit volume expected to be 1,346, up from 1,269 [6]. - The estimated 'Unit Volume by Segment - Saltwater Fishing' is 383, slightly up from 381 in the same quarter last year [7]. Stock Performance - Over the past month, shares of Malibu Boats have increased by 12.4%, outperforming the Zacks S&P 500 composite, which rose by 11.5% [7]. - Currently, Malibu Boats holds a Zacks Rank 3 (Hold), suggesting that its performance may align with the overall market in the near future [7].

"I am proud of the strong foundation we have built over the years for this iconic brand, and happy to have found the right buyer for Alumacraft. The family-owned Bryton Marine Group has been in business for decades and we believe that their core values and culture will enable Alumacraft employees to unlock the full potential of the business. We sincerely thank the employees for their dedication, and wish them the very best in this next journey," said José Boisjoli, President and CEO of BRP. Bryton Marine Gr ...