MasterCraft aims to ‘right-size’ dealer inventory

MasterCraft Boat Holdings, Inc. announced financial results for its fiscal 2020 second quarter ended Dec. 29, 2019.

Net Sales for the second quarter were $99.6 million, a decrease of $21.9 million, or 18%, compared to $121.5 million for the prior-year period. The company said the decrease was primarily due to a reduction in unit sales volumes across each of reportable segments to allow dealers to right-size pipeline inventory levels after the weather-impacted summer selling season and continuing softness in the saltwater category. MasterCraft also said the decrease was partially offset by the addition of the new Aviara brand.           

“MasterCraft delivered results slightly ahead of our expectations for the fiscal second quarter as we continued to make progress across a number of our operational focus areas, including efficiently managing our production around the GM strike, further right-sizing our dealer inventory, executing operational excellence initiatives and advancing the start-up of our new Aviara brand,” Fred Brightbill, chief executive officer said. “The combination of wholesale production decreases across our segments and strategic retail rebates, in what is the slowest retail quarter of the year, resulted in dealer pipeline right-sizing in-line with our plan. We believe the actions we are taking, coupled with our diverse portfolio of brands and commitment to delivering differentiated, best in class products and experiences for our customers, position us well in the current environment and set us up for renewed growth in fiscal 2021.”

Brightbill went on to explain his excitement to lead the company as CEO.

“As part of my transition to the permanent CEO role, I spent time collecting valuable feedback from our customers, dealers, employees, business partners, and investors to hear directly from them about their perspectives on MasterCraft’s strengths and future opportunities,” Brightbill said. “With these insights and following a thorough top-to-bottom evaluation of the business, we have implemented a new strategic growth plan with a relentless focus on improving the customer experience, expanding brand awareness, further advancing operational excellence and developing a customer-focused culture, all at minimal incremental cost to the company.”

Gross profit decreased $5.9 million, or 21.9% to $21.1 million compared to $27.1 million for the prior-year period, which the company said was principally driven by the lower unit sales volumes for each reportable segment.

Operating expenses decreased $1.5 million, or 12.5%, to $10.8 million for the second quarter compared to $12.4 million for the prior-year period. The decrease was primarily due to a reduction in transaction expenses attributable to the Crest acquisition in fiscal 2019, and a reduction in compensation expenses.

Net Income for the second quarter was $6.9 million, or $0.37 per share, reflecting a decrease of $0.17 or 31.5%, compared to $10.2 million, or $0.54 per share, for the prior-year period. Adjusted Net Income of $8.2 million, or 0.43 per share, on a fully diluted, weighted average share count of 18.9 million shares, was computed using the company’s estimated annual effective tax rate of approximately 23%. This compares to Adjusted Net Income of $12.1 million, or 0.64 per fully diluted share, in the prior-year period.

“As we look to the second half of the year, we continue to be pleased by the retail momentum we experienced in the first half of the year, early boat show results and the successful roll-out of our new Aviara brand,” Brightbill said. “Aviara’s strong retail performance to-date reinforces our bullish prospects for the brand this year and beyond. While we are encouraged by the improved industry retail trends to-date, and the progress we see across all our brands, visibility will remain limited until we are further into the retail selling season. Longer-term, we are confident in the strength of our brands and believe the new strategy we are implementing will unlock opportunities to drive profitable growth and increased value creation.”