MasterCraft Boat Holdings, Inc. reports record Q4 & Fiscal 2021 results

by MasterCraft Boat Holdings 3 Sep 2021 18:37 PDT

MasterCraft Boat Holdings, Inc. (NASDAQ: MCFT) have announced financial results for its fiscal 2021 fourth quarter and year ended June 30, 2021.

Fourth Quarter Highlights:

• Net sales increased to a record $155.5 million, up 204%.
• Gross margin expanded by 940 basis points to 23.9%.
• Net income was $16.5 million or $0.87 per diluted share.
• Diluted Adjusted Net Income per share, a non-GAAP measure, was $0.98.
• Adjusted EBITDA, a non-GAAP measure, increased to $27.0 million.
• Adjusted EBITDA margin, a non-GAAP measure, increased to 17.3%.

Full Year Highlights:

• Delivered the most profitable fiscal year in the Company's history.
• Net sales increased to a record $525.8 million, up 45%.
• Gross margin expanded by 390 basis points to 24.7%.
• Net income was $56.2 million or $2.96 per diluted share.
• Diluted Adjusted Net Income per share, a non-GAAP measure, was $3.31, up 147%.
• Adjusted EBITDA, a non-GAAP measure, increased to $92.8 million, up 109%.
• Adjusted EBITDA margin, a non-GAAP measure, expanded by 540 basis points to 17.6%.

Fred Brightbill, Chief Executive Officer and Chairman, commented, "Our businesses executed extremely well against our strategic priorities during fiscal year 2021 in a very challenging and dynamic environment. Our record-setting performance was driven by year-over-year unit increases at each of our segments, including the most wholesale units ever sold by the Company in a fourth quarter. To accelerate throughput and produce record-level units in arguably the most challenging supply-chain environment we've ever experienced in the boating industry is a clear demonstration of our disciplined execution, operational excellence, and the strength of our team. The credit goes to our more than 1,500 employees who continued to execute against our key strategic priorities in the face of adversity, and the strength of our market-leading brands."

Brightbill continued, "In fiscal year 2021 we ramped up production aggressively while expertly managing our supply chain to drive sustainable, accelerated organic growth. We will look to build on that success in fiscal year 2022 as we remain committed to making investments to further strengthen our competitive position, grow our categories, and deliver shareholder value guided by our long-term focus and strategic priorities."

Fourth Quarter Results

Net sales were a record $155.5 million for the fourth quarter, an increase of 204.4 percent from the prior-year period, which was heavily impacted by the Covid pandemic. The increase was primarily the result of record sales volumes.

Gross profit increased $29.8 million, or 402.8 percent, to a record $37.2 million compared to $7.4 million for the prior-year period. Gross margin increased 940 basis points to 23.9 percent from 14.5 percent in the prior-year period. The increase was primarily due to overhead absorption from higher sales volume, lower warranty costs, and lower dealer incentives on a percentage of sales basis. The increase was partially offset by higher material costs, costs to transition production of our Aviara brand to the Merritt Island, Florida facility and increased labor costs.

Operating expenses increased $4.4 million, or 44.5 percent, to $14.2 million for the fourth quarter 2021 compared to $9.8 million for the fourth quarter 2020. The increase was primarily driven by higher incentive compensation costs, additional investments related to product development and information technology, and higher selling and marketing costs in the fourth quarter 2021 compared to the prior-year period.

Loss on extinguishment of debt totaling $0.7 million was recognized upon refinancing the Company's debt in June 2021. This non-cash loss is comprised of unamortized debt issuance costs related to the previously existing credit facility.

Net income was $16.5 million for the fourth quarter, compared to Net loss of $2.8 million in the prior-year period. Diluted net income per share was $0.87, compared to Diluted net loss per share of $(0.15) for the fourth quarter 2020. Adjusted Net Income increased to $18.6 million for the fourth quarter, or $0.98 per diluted share, compared to an Adjusted Net Loss of $1.8 million, or $(0.10) per diluted share, in the prior-year period.

Adjusted EBITDA was $27.0 million for the fourth quarter, compared to $0.9 million in the prior-year period. Adjusted EBITDA margin was 17.3 percent for the fourth quarter, up from 1.8 percent for prior-year period, primarily due to higher sales volume.

See "Non-GAAP Measures" below for a reconciliation of Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income (Loss), and Adjusted Net Income (Loss) per share to the most directly comparable financial measures presented in accordance with GAAP.

Fiscal 2021 Results

Net sales were a record $525.8 million for fiscal 2021, an increase of 44.8 percent from fiscal 2020, which was heavily impacted by the Covid pandemic. The increase was primarily the result of higher sales volumes, lower dealer incentives, and higher prices, partially offset by the impact of segment mix. When compared to fiscal year 2019, which was our previous record, net sales increased by $59.4 million or 12.7 percent.

Gross profit increased $54.6 million, or 72.5 percent, to a record $130.0 million compared to $75.4 million for the prior year. Gross margin increased 390 basis points to 24.7 percent in fiscal 2021 from 20.8 percent in fiscal 2020. The increase was primarily due to higher sales volume, lower dealer incentives, and higher prices. The increase was partially offset by costs to transition production of our Aviara brand to the Merritt Island, Florida facility and increased labor and material costs.

Operating expenses decreased $47.9 million, or 47.0 percent, to $54.0 million for fiscal 2021 compared to $101.9 million for fiscal 2020. The decrease was driven by goodwill and other intangible asset impairment charges of $56.4 million related to our NauticStar and Crest segments recorded in fiscal 2020. There were no impairment charges in fiscal 2021. In addition, the Company had lower selling and marketing costs in fiscal 2021 primarily due to the lack of in-person boat shows and the strength of organic retail demand. The decrease was partially offset by higher general and administrative expenses resulting from higher incentive compensation costs and additional investments related to product development and information technology. Despite our continued investment in product development and other areas of SG&A, for the full year, SG&A as a percentage of net sales was the lowest on record since we became a public company.

Loss on extinguishment of debt totaling $0.7 million was recognized upon refinancing the Company's debt. The non-cash loss is comprised of unamortized debt issuance costs related to the previously existing credit facility.

Net income was a record $56.2 million for fiscal 2021, or $2.96 per share compared to a net loss of $24.0 million, or ($1.28) per share, for fiscal 2020. Net loss for fiscal 2020 included goodwill and other intangible asset impairment charges of $56.4 million, or $(3.01) per diluted share. Adjusted Net Income increased to a record $62.8 million, or $3.31 per diluted share, compared to $25.1 million, or $1.34 per diluted share, in the prior-year period, or $2.82 per diluted share, in fiscal 2019.

Adjusted EBITDA was a record $92.8 million for fiscal 2021, compared to $44.3 million for fiscal 2020. Adjusted EBITDA margin was 17.6 percent for fiscal 2021, up from 12.2 percent for fiscal 2020, primarily due to higher sales volume. Compared to fiscal 2019, Adjusted EBITDA was up nearly 17 percent and Adjusted EBITDA margin was up more than 60 basis points.

See "Non-GAAP Measures" below for a reconciliation of Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted Net Income per share to the most directly comparable financial measures presented in accordance with GAAP.

Outlook

Concluded Brightbill, "Given the current environment of continuing robust retail demand coupled with historically low dealer inventory, executing on our value-enhancing strategy should provide us with an opportunity to deliver another record-breaking year for net sales and earnings. Importantly, we face significant, ongoing risks from supply chain disruptions and the impact of Covid. We remain laser-focused on mitigating these headwinds."

The Company's outlook is as follows:

• For full year fiscal 2022, consolidated net sales growth is expected to be up in the high-teens percent range, with Adjusted EBITDA margins flat year-over-year, and Adjusted Earnings per share growth up in the high-teens percent range year-over-year. Driven by growth-oriented projects, we expect capital expenditures to be between $25 million and $30 million for the full year.
• For fiscal first quarter 2022, consolidated net sales growth is expected to be up in the mid-30 percent range, with Adjusted EBITDA margins in the low-14 percent range, and Adjusted Earnings per share growth up in the low-20 percent range year-over-year.

Conference Call and Webcast Information

MasterCraft Boat Holdings, Inc. will host a live conference call and webcast to discuss fiscal fourth quarter 2021 results today, September 2, 2021, at 8:30 a.m. EDT. To access the call, dial (800) 219-6861 (domestic) or (574) 990-1024 (international) and provide the operator with the conference ID 1159212. Please dial in at least 10 minutes prior to the call. To access the live webcast, go to the investor section of the company's website, www.MasterCraft.com, on the day of the conference call and click on the webcast icon.

For an audio replay of the conference call, dial (855) 859-2056 (domestic) or (404) 537-3406 (international) and enter audience passcode 1159212. The audio replay will be available beginning at 11:30 a.m. EDT on Thursday, September 2, 2021, through 11:30 a.m. EDT on Thursday, September 16, 2021.