MasterCraft Boat (US:MCFT)2020-09-09 17:22Financial Data and Key Metrics Changes - For fiscal year 2020, net sales decreased by 22% to $363.1 million, adjusted EBITDA decreased by 44% to $44.3 million, and fully diluted adjusted net income per share declined nearly 52% to $1.34 per share, primarily due to COVID-19 disruptions [8][10] - In Q4, net sales were $51.1 million, a decrease of 58.4% compared to $122.8 million in the prior year period, driven by production losses from COVID-19 shutdowns [27] - Adjusted net loss for Q4 was $1.8 million or a loss of $0.10 per share, compared to adjusted net income of $16.1 million or $0.85 per share in the prior year [30] Business Line Data and Key Metrics Changes - The MasterCraft brand historically generates approximately 80% of its annual retail sales from existing boat owners, with a growing percentage of retail sales coming from new and returning customers since March 2020 [14][12] - Dealer inventories across all brands declined to historically low levels, with dealer inventory turns at historically high levels, indicating strong retail demand [15][16] Market Data and Key Metrics Changes - The recreational boating industry experienced a renaissance during the pandemic, with increased consumer interest leading to unprecedented retail demand across all brands [11][12] - As of the end of August, dealers were under-inventoried by more than 2,100 units, with nearly half of the shortfall attributed to MasterCraft [16] Company Strategy and Development Direction - The company is ramping up production across all facilities while ensuring high-quality parts are received on time, aiming to meet retail demand and improve dealer inventory levels [18][19] - A purchase agreement was made for a new manufacturing facility in Merritt Island, Florida, dedicated to the Aviara brand, which is expected to enhance capacity and vertical integration [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term prospects of the markets served and the brands owned, citing historically low dealer inventory levels and unprecedented retail demand as positive indicators [33][41] - For fiscal 2021, consolidated net sales are expected to grow in the mid-20% range year-over-year, with adjusted earnings per share growth in the low to mid-40% range [35][36] Other Important Information - The company has maintained strong cash management practices, ending the year with over $41 million in liquidity [32] - The company expects to incur moderate adjusted EBITDA losses for Aviara in fiscal 2021 due to production ramp-up costs [36] Q&A Session Summary Question: Inventory levels and variations across brands - Management confirmed that inventory levels were between 40% and 50% below average across the brands, with current levels much lower than that [43] Question: Update on Crest brand performance - The Crest brand has seen strong year-over-year retail performance, with inventory levels significantly improved [44] Question: Aviara's revenue and facility costs - Aviara generated approximately $10 million in revenue last year, with an estimated $14 million purchase cost for the new facility and an additional $4 million to $6 million for setup [48][49] Question: Fiscal 2021 guidance and profitability - Management explained that profitability would be lower than fiscal 2019 due to inventory levels and costs associated with the new facility and ramp-up [51][52] Question: Retail demand and inventory shortfall - Management indicated that the 2,100 unit inventory shortfall would take longer to fill, but they are comfortable with the guidance provided [61][62] Question: Capacity to meet demand - Management stated that there are no constraints on terminal capacity, as moving Aviara will free up significant capacity for MasterCraft [65] Question: Average Selling Price (ASP) growth expectations - ASP growth is expected to be low in fiscal 2021, influenced by the types of boats sold [66] Question: First-time boat buyers metrics - The company noted a doubling in new boaters, with a focus on delivering a positive experience to retain them [69] Question: Retail trends approaching Labor Day - Management acknowledged that retail demand is starting to normalize as the selling season winds down [75]