MasterCraft Boat (MCFT) 29 Aug 242024 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the MasterCraft Boat Holdings, Inc. Fiscal Fourth Quarter and Full Year 2024 Earnings Conference Call. Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Tim Oxley, Chief Financial Officer.

Please go ahead, sir.

welcome, and operator, you, everyone. Thank joining Thank MasterCraft as discuss today Fourth you Quarter XXXX. for Fiscal for and we Performance us Full Year

will today's webcast our reminder, is for also and website a on be listening. As future archived call live being

morning's me Nelson, Chief is Executive With call Brad Officer. this on

open performance remarks Brad I call We discuss will the operational of our will before will quarter fourth financial overview an the begin Then provide then closing some and we with performance. questions. our from full for year.

Before contained the facts we'd including XX, statements, obligation like forward-looking are harbor of current the we no to begin, subject any historical today's in disclaimer August remind in only forward-looking statements and that statements. participants press XXXX. today, safe is assumes release. update information The Statements company this to that call to not as are

our this press Additionally, provide GAAP or release, indicative our items not conference of non-GAAP the reconciliation these which will that non-GAAP results deck measures we we Section ongoing each a include on comparable our includes to in discuss Investors GAAP exclude most To directly of today's a measure, our financial There's call, of non-GAAP operations. the measures summarizing also results. in slide website. measure also

otherwise As is made following unless the a on reminder, basis. commentary noted, a continuing operations

to I'll that, Brad. With the call over turn

for our navigate operational MasterCraft everyone. was headwinds morning, to expectations, Entering economic strategic execute ahead challenging to focus XXXX, results landscape. good and stakeholders. value continuing competitive priorities navigate our to and delivered a of Tim, and market generate you, a fiscal retail Thank and our while environment proactively latest highly our

plans. shareholders, initiatives capital production downward anticipation pressure action field and softness, around advancing of In inventory centered adjust the took consumer this on year, to and were put and dealer-centric optimizing levels, and to retail demand. conditions flow. Throughout cash efforts wholesale we profitability market destocking returning while early Our

based as slowdown has uncertainty, competitor a prudent which costs trends. with our throughout pressures field industry. to lingering economic low have the to disruptions facing. with to retail summer experienced across from Our the the driven fiscal inventories dealers are demand our proactive the proved we interest up In of retail dealer dealers, general our alleviate in was work from continued improved combined optimal with rates than consistent contributing majority This, near date we elevated XXXX, and approach carrying targeted network. Field recent marine the for approximately inventory be our but wholesale brands, customers to dealer season, XX% remain on end to caution progress We're by pleased range. of inventories higher selling

in incentivize We continue sell judicious manner. through a our dealers to to inventory

dealer primary these well positive market for efforts long-term a for our as Although wholesale rebalancing for inventory Pipeline short-term we remains the are recovery forward, move focus management conditions shipments, have implications health. positioning us ahead.

in structure cost our to optimize to other sustainable long-term and best direct us allows towards also our leadership initiatives extend profitable to focus we and determined issued business. to we this turn our I thorough strategic the After that would we XXXX, the exiting to a review Before plans, us position and would This brands. our of divestiture growth. to Crest long-term position the resources this earlier announcement Balise month discuss Aviara like relating of MasterCraft, business fiscal drive

the close transaction our the we of Cruisers rights to part to Aviara the We the first quarter. anticipate retail brand's exchange brand of a subsidiary asset are As during primary partner. transferring the of fiscal agreement, Yachts, MarineMax,

through Aviara work the will We discontinued and segment of with this quickly the for the The difficult, become involved committed Decisions We the who strong site have but operation. have supporting line fiscal operations. Aviara Florida blue-chip are we of that are are been them all down the as and employees winding we QX team Island, XXXX, our transition. fully to always of to financial at in operations facility a impact our reporting brand hard enabled marketing begin Merritt this results dedication our boating. sale. In of appreciate product begun contributions

team. and the dealer XX an As will our cross-collaborative experienced network. products our and expensive Balise. will sold turn onboarded has be is we the -- premium locations minimal are encouraged be base focus and pontoon to allow Balise X. next year, MasterCraft year capital brand segment. we resilient This to a us of markets. launch will date, new experienced in facility pontoon teams, dealers response in brand, an our Crest of existing The to with lineup the Balise investment being reach and brings by Through diverse requiring Crest's pontoon segment team market through the already our manufactured in profitable and These affluent Michigan, To accretive for customer dealers efforts new XX in incremental leveraging largely margins at

will in provide more on We this later call. brand details the

healthy As all prioritize continue will distribution we a fiscal brands. XXXX, across enter network to we

to while the opportunities industry capitalize on dealer credit Our first will plan half carrying ship we fiscal to support destocking to this take compared the To in initiatives. healthy and and taken will of investment aligns key measures our the higher the rightsized with the to to And half. with current cautious challenging production XXXX ordering them to trend to with plans, the XXXX. in structure, a also measures schedule number have benefit dealers, of we closely of elevated economic combined maintaining as environment. The industry patterns align We in long-term the and dealer balance appreciate cost continue our the second dealer necessary a availability. rebalance fiscal growth headwinds, continued work sentiment we ahead. Due we of our and our production in boats with other inventories consequently, OEMs costs, expect

strong This is being portfolio XXXX. fiscal while flow proactive notable, bottom of or expect free the near of particularly refined cycle. our we cash brands generate at control, in cost the positive and Given to

to we the product This flexibility free brand have to by innovation Supported growth and development. and flow focused balance cash strong continue fund includes our sheet long-term generation, initiatives. and

uncertainty we environment, the selective marine disciplined M&A. will near-term to a take in and approach Given

to sheet resilient balance for future, and share investing addition we maintain repurchase maintain continue a our the to funding In will flexibility program. also the

million million, financial dilutive and from impact volume Turning to Despite XXXX to declining fiscal environment. our in due of of full $XXX lower a $XX adjusted primarily Aviara, EBITDA. we year million challenging net sales year's with the sales we of results, $XXX decline last record market net the of concluded generated

adjusted we of free cash Excluding flow $XX EBITDA and million positive the during generated year. Aviara,

also Our maintaining navigate proactively to growth allows profitability in ability and current through the continue efforts, execution optimize as conditions cycle. us adjust This initiatives. we to provides control long-term position with to our cost investments us a through to financial market planning strong while

Series with Let latest range delivering some now more XT, stern Ilmor X.XL and exhaust engine allowing dashes has of XT new maneuverability. The underwater and the new me our standard High enhancements and is a now powerful, coupled has option, XXXX been software and GDI fuel-efficient reliable, Output upgrade briefly The thruster NXT quieter X features by new upgraded developments review now which received on maximum and brands. includes well experience. our across Series a XT the year MasterCraft's received of lineup, model and dealers.

our comfort, performance, year and on delivers in product lineup. our lineup that is technology. will product the top diverse an premium preparing launch exciting reliability Our a With quality superior innovation, renewed industry-leading team enhance unmatched and for later focus

lineup to includes and Turning both features new luxury model all-new which model Crest also our brands. redesigned interior, featuring pontoon high-performance redesigned year X a helm, color and updated classic The models, lineup an The exterior. Balise a redesigned segment, Caribbean a tritoon styling. product includes and and a refreshed new options interior model includes XXXX all streamlined an superior the Crest's portfolio. new

received tritoon have an extended and boating upgrades, experience. rear performance and Our improved deck comes that standard all-around better handling an including

models our industry's brand quarter. on-water the the offer and features, fiscal and our dealers relaxation. standard and luxury in most style features The offer high-end models finishes, For as fourth innovative Balise, Balise entertainment that and refined targeted Both luxurious shipping as brand, pontoon the across high-tech well Horizon in comfort. our detail models country markets Helix differentiated to prioritize

well come options next are boats equipped, standard upgradable to Although available level. the to take model each

Tim? upgrade and confident The discussion dealers an both market Tim, been now ability who the have to over tube commentary in-water offer The power the bimini innovative lighting. dual-raised on of encouraging, year in innovative and Helix to industry's the will the cooler, and additional gas-assist provide lighting the models both model, of from pontoon for detailed and ultra-premium Both results. helms. to call integrated segment. I'll premium financial brands our response first and a this turn we're future underwater consumers an tower,

Thanks, Brad.

year top million, incentives, dealer $XXX.X of the increase This the volume offset an to line. in decrease for on was unit and Focusing from year. Net decrease the $XXX.X higher prior due were primarily XX% million partially lower or fiscal sales sales by prices. a

Aviara $X.X increase decrease gross increase to our incentives, $XX.X of absorption prices. Operating of when the This year. expenses. million partially an to XX.X% higher margins $X.X lower offset to due were the partially volume administrative in year, million were result was compared for lower business by and impairment year, of offset cost the higher the was general planned a year million related prior margin the For compared from noncash XX.X%. expenses dealer prior the lower the to The unit by predominantly was and and

prudently operating impairment, noncash the manage Excluding decreased during we year the cost. as expenses

$XX adjusted This for compared of line. the year calculated prior Adjusted $XXX.X of $X.XX the the the estimated the for bottom share, of per rate net XX%. million was was income $XX.X to Turning year, XX%. prior million effective year. to million an calculated net adjusted using rate annual compares tax tax for or diluted $XX.X Adjusted income or to the using for million EBITDA, EBITDA year $X.XX

Adjusted compared year. X% XX.X% EBITDA margin prior the in to was

us short-term ended of well than $XX with Our million investments. and the we year as more balance sheet positions cash

investments net cash $XX short-term capital and no prioritize million. financial to We growth by initiatives We have shareholders. our strength ample debt maintain funding debt to nearly our and exceeded and liquidity as returning key

full of million program we million During nearly we shares the our income June our XXXX, to million per These $XX shares. program in $XX.X XXX,XXX allocated repurchase more XXXX. on $XX to of we end approximately common XXXX, July X.X repurchase repurchase our cumulative in Since benefit share XX% net stock. million provided initiating spent adjusted of year, approximately the than At million than fiscal had more to authorized a repurchases $XX our share. year remaining

our to only. for continuing operations turning of which consist expectations Now fiscal XXXX,

for finance market range of developed potential have We wide scenarios.

is approach as Our assumption of selling of sales being the guidance unit market exit retail between cautious uncertainties X% reflects summer and season. This indicative down an XX%. we

Our disruptions. with are prices due considers competitive to that at liquidation dealers sold guidance also our competing those dealer being certain

consolidated and per share. fiscal sales $XX between For between net be $X.XX million with $X.XX million, expect per and $XXX adjusted $XX to $XXX earnings we and million million EBITDA year adjusted between share and XXXX,

be We the expect summer half year. to more as of capital be out have for dealer wholesale the second the expenditures typical dichotomy this we pronounced is compared to It of This season. million prioritize in coming our us year selling health to for approximately first $XX half. shipments will the more year fiscal

per XXXX, remarks. consolidated earnings first share EBITDA is for now approximately and turn with to closing approximately of call to approximately expected $X.XX. I'll million $X sales fiscal back adjusted be the of quarter of his Brad million adjusted $XX For the net

dealer the against Despite well during fiscal and Tim. the headwinds our strategic and industry the faced executed reduce uncertain inventories. quarter environment priorities XXXX, year Thanks, and macroeconomic we fourth

disciplined to continue We a capital approach exercise to allocation.

our For repurchase past we share years, nearly cash million $XX our have excess program. returned shareholders to through the X of

strategic Our us with financial our the to strong balance pursue sheet flexibility provides initiatives. growth

Balise the and and of innovation. of MasterCraft launch to enhancements commitment product Crest our at are brand The examples forward

we scenarios. we to look forward range of demand XXXX, As retail developed business a have fiscal potential plans for

for positioning ahead. are to proactively on lies adjust changes With business business emphasis us a market well demand. highly strong that upswing the pipeline allows management, Our in the variable we to model

flexibility dynamic for navigate positioned capital well the this open may maintaining we environment, return the we long-term you portfolio to opportunities of brands now As line and shareholders. Operator, to leverage our are questions. to drive strong growth while

from with first Our Joseph Raymond question comes James. Altobello Instructions] [Operator

bit the lower at is trying understand bit We're Is do environment This looking to the that volume a was the I promotional on better. is guide you deleverage? little for at margin. Or Martin anticipate from to a coming little worse? that and going looking the Joe. get EBITDA largely

absorption. overhead at bonuses It's as a deleveraging from primarily the fund volume is There lower we additional from G&A expenses XXX%.

both we of So have headwinds. those

you just ex for would the the adjusted to sort and understand believe $XX EPS comments, year? And in guide, million. better EBITDA mind you I of the your said it. providing Got Aviara prepared

For for fiscal effect XXXX, -- that is correct, Aviara. of the $XX without million

the you would adjusted And have EPS?

don't front of sorry. I have in me, that

[Operator Instructions] Our with Crum Drew next question Stifel. comes from

you again, trend then how guidance, scenarios in terms a demand. you that your And I on assuming have as out laid What range Just progresses? year follow-up. a of are assuming are you the or retail of

a to customers. off a ahead as reaching We're Tommys But retail decent bit continues the to our expectations. little inventory of start, hands be of

that expect a be headwind dealers. for significant our We to

Got it.

just progresses? you So the things as Tim, tell? expect Or early year it's to would better get too to

tell. to We're to I but too a off is think start, it's good it early. really early

Okay.

big then go picture maybe ahead, Brad. And enough. Okay. Fair -- more

hopeful of for our the that. We to of And that, to incentive with is in going their all primarily that to rebound, help an to at protracted this marine course, point, course, going from the is season, positioned perspective add through selling improve. going winter. environment to well remain retail work in just recession Drew, we're dealers and to some we're through that the participation, with continue balance to

Got it.

NauticStar Okay. at brands initially, X this moved the has but seem then from that more maybe work promising, it's And big picture, least now out. and Aviara, on didn't company but

approach new the through organically part its of strategy? So based portfolio brands, an acquisitions, And so, management? if whether experiences, on is still to is refining the those it's important company adding or

the a relative to after on forward-looking Aviara decision other decision strategic that's careful review. with we thorough a obviously, Drew, made ventures, Yes.

issues. to We never to due with much pretty stomached unit. primarily profitable a As quite It was challenged business able there dedicated to you that some cost start-up was know losses absorb truly that -- volume to time. volume that due for in facility be was

here. remind is underway not there in our to big forward, close differences Let that are brand some yet. fiscal like deal But too, you which me We launch do is QX just to it Balise, closed expect a in compared going Aviara.

fact, Balise the being In pontoon that where the produce we some experienced by manufactured Crest just team. in our would opposite. facility with it's I is you existing ways, currently same in remind side side

capacity open There's that in factory.

highlight, of with exclusive going to new retailer. helps us strong Aviara, it retailer, A day producing product but things in I actually the is one utilization Balise network So a with units. other on dealers, line incremental was couple dealer and those to markets we whereas largely largely strong would new that the exciting an had dealer with it

more much about we're channel it's that. So strategy, and diverse really excited

a accretive to segment. the from perspective, margin it's So

circumstances expect well, scenario in profitable As from different it Aviara. one, we year to be and very

with Our next question comes Baird. from Condon Kevin

finish retail think you XXXX? inventory fiscal the that I the on is outlook, XX% to fiscal target Is that and that you a when have think I call, year-over-year. finished lower mentioned 'XX there true? with you And might you your guess, similar guidance about

we Yes. in 'XX, and end the range. at on being fiscal lower And year XXX speaking it that X,XXX planning of units the were was the down between and raw of numbers,

has soft. So 'XX, destocking we significant did but have market in been the

destocking So same we anticipate between X,XXX in 'XX, of in and kind probably also range boats. XXX that

that between is and And MasterCraft Crest.

Correct. numbers. as we And the those probably Crest more little look weighted a towards at

I mean now. ramping that through still the I destock? -- there. that all pontoon Does in there Is But think that's overall to Balise you're you impact segment up way segment the of any to expect guess would

on to destocking mind will Crest in units Balise. as significantly AUSP the and higher Keep Balise are so opposed Yes. the be

does are question-and-answer there As questions, this no the conclude session. further

great Everyone, disconnect. day. have now a may You