MasterCraft Boat (US:MCFT)2021-11-10 17:30Financial Data and Key Metrics Changes - The company achieved record net sales of $144 million for Q1 2022, an increase of $40.3 million or 38.8% compared to $103.7 million in the prior year [41] - Gross profit increased by $3.9 million to $30.1 million, driven by higher sales volume and price increases, despite higher material and labor costs [42] - Adjusted net income rose to a record $12.8 million or $0.67 per diluted share, compared to $10.9 million or $0.58 per diluted share in the prior year [46] - Adjusted EBITDA reached a record $19.4 million, with an adjusted EBITDA margin of 13.5%, down 290 basis points from the prior year [47] Business Line Data and Key Metrics Changes - MasterCraft brand net sales reached a first-quarter record of $92 million, with a 22% increase in year-over-year shipments [23] - Crest set a record for net sales, increasing by 82% year-over-year, primarily driven by a 58% increase in units [30] - Aviara's net sales increased by over 55%, driven by a 48% increase in units, despite production challenges [32] Market Data and Key Metrics Changes - Dealer inventories were estimated to be under inventoried by more than 2,500 units, with half of the shortfall attributed to MasterCraft [12] - Average dealer inventories across all brands were down approximately 30% compared to the first quarter of fiscal 2021 [12] - The proportion of new-to-boating consumers increased by more than 40% at MasterCraft compared to Q1 2021 [14] Company Strategy and Development Direction - The company is committed to aggressive long-term growth plans, pursuing targeted capital projects to ramp up production capacity by an additional 20% to 25% [19] - The strategic focus is on consumer experience, digital marketing, operational excellence, and human capital development [22] - The company plans to maintain a limited promotional environment, emphasizing superior product offerings rather than promotional pricing [22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about sustained consumer demand for boating, driven by demographic trends and lifestyle changes accelerated by the COVID pandemic [13] - The company anticipates that dealer inventories will not reach optimal levels until fiscal year 2024, providing confidence in wholesale growth visibility [17] - Management acknowledged supply chain disruptions as a significant constraint on production and unit shipments, impacting margins [10][29] Other Important Information - The company ended the quarter with nearly $86 million in total liquidity and reduced outstanding debt by nearly $9 million [48][49] - A new $50 million share repurchase program was authorized, with approximately $1.5 million spent during the quarter [50] - Full-year fiscal 2022 guidance was raised, expecting consolidated net sales growth in the 20% range and adjusted EBITDA margins in the 18% range [52] Q&A Session Summary Question: About preorders and retail presold units - Management indicated that the majority of orders scheduled are already retail sold, with an increasing percentage since the last quarter, providing confidence in the pipeline [59] Question: Managing dealer allocation process - The allocation process is based on dealer inventory levels and retail sold percentages, prioritizing consumer orders to ensure timely delivery [60][61] Question: Expectations for inventory normalization - Management is focused on building inventory during the off-season, contingent on supply chain behavior, with expectations to improve dealer inventory by next summer [76]