UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☑
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: December 29, 2024
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 001-37502
MASTERCRAFT BOAT HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware
06-1571747
(State or Other Jurisdiction
(I.R.S. Employer
of Incorporation or Organization)
Identification No.)
100 Cherokee Cove Drive, Vonore, TN 37885
(Address of Principal Executive Office) (Zip Code)
(423) 884-2221
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol(s)
Name of each exchange on which registered
Common Stock
MCFT
NASDAQ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☑ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No
As of February 1, 2025, there were 16,752,512 shares of the Registrant’s common stock, par value $0.01 per share, issued and outstanding.
TABLE OF CONTENTS
Page
PART I
FINANCIAL INFORMATION
Item 1.
Financial Statements
Unaudited Condensed Consolidated Statements of Operations
4
Unaudited Condensed Consolidated Balance Sheets
5
Unaudited Condensed Consolidated Statements of Equity
6
Unaudited Condensed Consolidated Statements of Cash Flows
7
Notes to Unaudited Condensed Consolidated Financial Statements
8
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
19
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
26
Item 4.
Controls and Procedures
PART II
OTHER INFORMATION
Legal Proceedings
27
Item 1A.
Risk Factors
Unregistered Sales of Securities and Use of Proceeds
Defaults Upon Senior Securities
Mine Safety Disclosures
Item 5.
Other Information
Item 6.
Exhibits, Financial Statement Schedules
28
SIGNATURES
29
2
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains certain “forward-looking statements” within the meaning of the federal securities laws. These forward-looking statements can generally be identified by the use of statements that include words such as “could,” “may,” “might,” “will,” “expect,” “likely,” “believe,” “continue,” “anticipate,” “estimate,” “intend,” “plan,” “project” and other similar words or phrases. Forward-looking statements involve estimates and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements.
The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on assumptions that we have made considering our industry experience and our perceptions of historical trends, current conditions, expected future developments and other important factors we believe are appropriate under the circumstances. As you read and consider this Quarterly Report on Form 10-Q, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties (many of which are beyond our control) and assumptions. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many important factors could affect our actual operating and financial performance and cause our performance to differ materially from the performance anticipated in the forward-looking statements, including but not limited to the following: changes in interest rates, general economic conditions, changes in trade priorities, policies and regulations (particularly as a result of the 2024 U.S. election), including the potential for increases or changes in duties, current and potentially new tariffs or quotas, demand for our products, persistent inflationary pressures, changes in consumer preferences, competition within our industry, our ability to maintain a reliable network of dealers, our ability to cooperate with our strategic partners, elevated inventories resulting in increased costs for dealers, our ability to manage our manufacturing levels and our fixed cost base, the successful introduction of our new products, the success of our strategic divestments, geopolitical conflicts, financial institution disruptions and the other important factors described under the caption “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024, filed with the Securities and Exchange Commission (“SEC”) on August 30, 2024 (our “2024 Annual Report”). Should one or more of these risks or uncertainties materialize, or should any of these assumptions prove incorrect, our actual operating and financial performance may vary in material respects from the performance projected in these forward-looking statements.
Further, any forward-looking statement speaks only as of the date on which it is made, and except as required by law, we undertake no obligation to update any forward-looking statement contained in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New important factors that could cause our business not to develop as we expect may emerge from time to time, and it is not possible for us to predict all of them.
3
MASTERCRAFT BOAT HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
Six Months Ended
December 29,
December 31,
(Dollar amounts in thousands, except per share data)
2024
2023
NET SALES
$
63,368
89,750
128,727
184,055
COST OF SALES
52,476
68,812
106,037
140,642
GROSS PROFIT
10,892
20,938
22,690
43,413
OPERATING EXPENSES:
Selling and marketing
2,824
2,500
5,698
5,584
General and administrative
7,432
7,225
14,902
15,601
Amortization of other intangible assets
450
900
912
Total operating expenses
10,706
10,175
21,500
22,097
OPERATING INCOME
186
10,763
1,190
21,316
OTHER INCOME (EXPENSE):
Interest expense
(182
)
(854
(1,169
(1,732
Interest income
697
1,415
1,889
2,766
INCOME BEFORE INCOME TAX EXPENSE
701
11,324
1,910
22,350
INCOME TAX EXPENSE
275
2,644
468
5,139
INCOME FROM CONTINUING OPERATIONS
426
8,680
1,442
17,211
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX (Note 3)
2,322
(2,794
(3,839
(5,130
NET INCOME (LOSS)
2,748
5,886
(2,397
12,081
INCOME (LOSS) PER SHARE:
Basic
Continuing operations
0.03
0.51
0.09
1.01
Discontinued operations
0.14
(0.16
(0.24
(0.30
Net income (loss)
0.17
0.35
(0.15
0.71
Diluted
1.00
(0.17
0.34
0.70
WEIGHTED AVERAGE SHARES USED FOR COMPUTATION OF:
Basic earnings per share
16,454,776
17,010,116
16,499,858
17,083,204
Diluted earnings per share
16,543,502
17,091,633
17,158,124
Notes to Unaudited Condensed Consolidated Financial Statements form an integral part of the condensed consolidated financial statements.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
June 30,
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
34,314
7,394
Short-term investments (Note 4)
28,548
78,846
Accounts receivable, net of allowance of $150 and $101, respectively
5,290
11,455
Income tax receivable
2,035
499
Inventories, net (Note 5)
36,988
36,972
Prepaid expenses and other current assets
4,554
8,686
Current assets associated with discontinued operations (Note 3)
—
11,222
Total current assets
111,729
155,074
Property, plant and equipment, net (Note 6)
52,841
52,314
Goodwill (Note 7)
28,493
Other intangible assets, net (Note 7)
32,750
33,650
Deferred income taxes
17,265
18,584
Other long-term assets
7,037
8,189
Non-current assets associated with discontinued operations (Note 3)
21,680
Total assets
250,115
317,984
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable
8,443
10,431
Accrued expenses and other current liabilities (Note 8)
52,176
55,068
Current portion of long-term debt, net of unamortized debt issuance costs (Note 9)
4,374
Current liabilities associated with discontinued operations (Note 3)
8,063
Total current liabilities
60,619
77,936
Long-term debt, net of unamortized debt issuance costs (Note 9)
44,887
Unrecognized tax positions
8,625
8,549
Other long-term liabilities
2,365
2,551
Long-term liabilities associated with discontinued operations (Note 3)
182
Total liabilities
71,609
134,105
COMMITMENTS AND CONTINGENCIES
EQUITY:
Common stock, $.01 par value per share — authorized, 100,000,000 shares; issued and outstanding, 16,773,544 shares at December 29, 2024 and 16,759,109 shares at June 30, 2024
167
Additional paid-in capital
56,916
59,892
Retained earnings
121,223
123,620
MasterCraft Boat Holdings, Inc. equity
178,306
183,679
Noncontrolling interest
200
Total equity
178,506
183,879
Total liabilities and equity
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
Additional Paid-in
Retained
MasterCraft Boat Holdings,
Noncontrolling
(Dollar amounts in thousands)
Shares
Amount
Capital
Earnings
Inc. Equity
Interest
Total
Balance at June 30, 2024
16,759,109
Share-based compensation activity
240,912
421
424
Repurchase and retirement of common stock
(183,629
(2
(3,509
(3,511
Net loss
(5,145
Balance at September 29, 2024
16,816,392
168
56,804
118,475
175,447
175,647
(3,255
(1
868
867
(39,593
(756
Net income
Balance at December 29, 2024
16,773,544
Balance at June 30, 2023
17,312,850
173
75,976
115,820
191,969
120
192,089
185,055
(683
(241,764
(5,783
(5,785
Capital contribution from noncontrolling interest
80
6,195
Balance at October 1, 2023
17,256,141
171
69,510
122,015
191,696
191,896
(8,117
1
9
(214,219
(4,458
(4,460
Balance at December 31, 2023
17,033,805
170
65,060
127,901
193,131
193,331
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
CASH FLOWS FROM OPERATING ACTIVITIES:
Loss from discontinued operations, net of tax
3,839
5,130
Income from continuing operations
Adjustments to reconcile income from continuing operations to net cash used in operating activities:
Depreciation and amortization
4,456
4,207
Share-based compensation
1,274
973
Unrecognized tax benefits
76
586
1,319
(341
Changes in certain operating assets and liabilities
4,331
276
Other, net
539
(562
Net cash provided by operating activities of continuing operations
13,437
Net cash used in operating activities of discontinued operations
(4,597
(3,657
Net cash provided by operating activities
8,840
18,693
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment
(4,594
(4,794
Purchases of investments
(67,237
Proceeds from investments
50,885
87,195
Net cash provided by investing activities of continuing operations
46,291
15,169
Net cash provided by (used in) investing activities of discontinued operations
25,992
(3,324
Net cash provided by investing activities
72,283
11,845
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt
(49,500
(2,250
Borrowings on revolving credit facility
49,500
Principal payments on revolving credit facility
(4,478
(10,173
(225
(1,686
Net cash used in financing activities of continuing operations
(54,203
(14,109
Net cash provided by (used in) financing activities of discontinued operations
Net cash used in financing activities
NET CHANGE IN CASH AND CASH EQUIVALENTS
26,920
16,429
CASH AND CASH EQUIVALENTS — BEGINNING OF PERIOD
19,817
CASH AND CASH EQUIVALENTS — END OF PERIOD
36,246
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash payments for interest, net of amounts capitalized
843
1,580
Cash payments for income taxes
205
8,116
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Activity related to sales-type lease
3,898
Capital expenditures in accounts payable and accrued expenses
122
449
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise noted, dollars in thousands, except per share data)
Basis of Presentation — The Company’s fiscal year begins July 1 and ends June 30, with the interim quarterly reporting periods consisting of 13 weeks. Therefore, the fiscal quarter end will not always coincide with the date of the end of a calendar month.
The accompanying unaudited condensed consolidated financial statements include the accounts of MasterCraft Boat Holdings, Inc. (“Holdings”) and its wholly owned subsidiaries. Holdings and its subsidiaries collectively are referred to herein as the “Company.” The unaudited condensed consolidated financial statements have been prepared on the same basis as the Company’s audited consolidated financial statements for the year ended June 30, 2024, and, in the opinion of management, reflect all adjustments considered necessary to present fairly the Company’s financial position as of December 29, 2024, its results of operations for the three and six months ended December 29, 2024 and December 31, 2023, its cash flows for the six months ended December 29, 2024 and December 31, 2023, and its statements of equity for the three and six months ended December 29, 2024 and December 31, 2023. All adjustments are of a normal, recurring nature. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the applicable rules and regulations of the SEC for financial information have been condensed or omitted pursuant to such rules and regulations. The June 30, 2024 condensed consolidated balance sheet data was derived from the audited financial statements but does not include all disclosures required by U.S. GAAP for complete financial statements. However, management believes that the disclosures in these condensed consolidated financial statements are adequate to make the information presented not misleading. These condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in our 2024 Annual Report on Form 10-K.
Due to the seasonality of the Company’s business, the interim results are not necessarily indicative of the results that may be expected for the remainder of the fiscal year.
There were no significant changes in, or changes to, the application of the Company’s significant or critical accounting policies or estimation procedures for the three and six months ended December 29, 2024, as compared with those described in the Company’s audited consolidated financial statements for the fiscal year ended June 30, 2024.
Discontinued Operations — On October 18, 2024, the Company completed the sale of its Aviara brand of luxury dayboats and certain related assets to a subsidiary of MarineMax, Inc. (the “Aviara Transaction”). The Company's sale of the business represents an exit from the luxury dayboat category, a strategic shift that has a significant effect on the Company's operations and financial results, and as such, qualifies for reporting as discontinued operations. Further, on December 23, 2024, the Company completed the sale of its Aviara manufacturing facility located in Merritt Island, Florida, to RMI Holdings, Inc. (the “Aviara Facility Sale”). The former Aviara and NauticStar businesses results for the periods presented are reflected in our condensed consolidated statements of operations and condensed consolidated statement of cash flows as discontinued operations. Additionally, the related assets and liabilities associated with discontinued operations are classified as discontinued operations in our condensed consolidated balance sheets for the prior-period presented (see Note 3).
Unless otherwise indicated, the financial disclosures and related information provided herein relate to our continuing operations, which exclude our former Aviara segment, and we have recast prior period amounts to reflect discontinued operations.
Reclassifications — Certain historical amounts have been reclassified in these condensed consolidated financial statements and the accompanying notes herewith to conform to the current presentation.
New Accounting Pronouncements Issued But Not Yet Adopted
Segment Reporting — Accounting Standard Update (“ASU”) No. 2023-07, Improvements to Reportable Segment Disclosures, requires incremental disclosures about an entity’s reportable segments but does not change the definition of a segment or the guidance for determining reportable segments. The new guidance requires disclosure of significant segment expenses that are (1) regularly provided to (or easily computed from information regularly provided to) the chief operating decision maker (“CODM”) and (2) included in the
reported measure of segment profit or loss. The new standard also allows companies to disclose multiple measures of segment profit or loss if those measures are used to assess performance and allocate resources. This update is effective for fiscal years beginning after December 31, 2023, or fiscal 2025 for the Company, and is effective for interim periods within fiscal years beginning after December 15, 2024, or fiscal 2026 for the Company, and should be adopted retrospectively unless impracticable. The Company is currently evaluating the impact, if any, that the adoption of this standard will have on financial disclosures.
Income Taxes — ASU No. 2023-09, Improvements to Income Tax Disclosures, requires entities to disclose in their rate reconciliation table additional categories of information about federal, state and foreign income taxes and provide more details about the reconciling items in some categories if items meet a quantitative threshold. Entities would have to provide qualitative disclosures about the new categories. The guidance will require all entities to disclose income taxes paid, net of refunds, disaggregated by federal (national), state and foreign taxes for annual periods and to disaggregate the information by jurisdiction based on a quantitative threshold. The guidance makes several other changes to the disclosure requirements. Entities are required to apply the guidance prospectively, with the option to apply it retrospectively. The guidance is effective for annual periods beginning after December 15, 2024, or fiscal 2026 for the Company. The Company is currently evaluating the impact, if any, that the adoption of this standard will have on financial disclosures.
Income Statement — ASU No. 2024-03, Reporting Comprehensive Income — Expense Disaggregation Disclosures, requires entities to provide disaggregated disclosures of certain categories of expenses on an annual and interim basis, including purchases of inventory, employee compensation, depreciation, and intangibles asset amortization for each income statement line item that contains those expenses. The guidance is effective for annual periods beginning after December 15, 2026, or fiscal 2028 for the Company, and is effective for interim periods within fiscal years beginning after December 15, 2027, or fiscal 2029 for the Company. The Company is currently evaluating the impact, if any, that the adoption of this standard will have on financial disclosures.
The following tables present the Company's revenue by major product category for each reportable segment:
Three Months Ended December 29, 2024
MasterCraft
Pontoon
Major Product Categories:
Boats and trailers
52,537
7,791
60,328
Parts
2,007
332
2,339
Other revenue
553
148
55,097
8,271
Six Months Ended December 29, 2024
102,760
16,983
119,743
6,030
839
6,869
1,840
2,115
110,630
18,097
Three Months Ended December 31, 2023
70,374
16,698
87,072
1,939
224
2,163
386
129
515
72,699
17,051
Six Months Ended December 31, 2023
140,198
34,816
175,014
7,130
477
7,607
1,207
227
1,434
148,535
35,520
Contract Liabilities
As of June 30, 2024, the Company had $4.1 million of contract liabilities associated with customer deposits and telematic services. During the six months ended December 29, 2024, $1.4 million was recognized as revenue. As of December 29, 2024, total contract liabilities associated with customer deposits and telematic services of $5.1 million were reported in Accrued expenses and other current liabilities and Other long-term liabilities on the condensed consolidated balance sheet, and $2.5 million is expected to be recognized as revenue during the remainder of the year ending June 30, 2025.
On October 18, 2024, the Company completed the Aviara Transaction. As part of the Aviara Transaction, MarineMax, Inc. (“MarineMax”) paid for select branding and operational assets, including Aviara's website, tooling, and inventory. MarineMax also assumed Aviara's customer care, warranty liability and administration. The amounts paid to the Company by MarineMax for ownership of the Aviara brand were offset by MarineMax’s assumption of warranty liability and administration accruals. Further, on December 23, 2024, the Company completed the Aviara Facility Sale for proceeds, net of closing costs, of $26.1 million. The transactions resulted in a $6.2 million gain on discontinued operations related to the Aviara Facility Sale, partially offset by a $4.3 million loss related to the Aviara Transaction.
As discussed in Note 1, the Company has reported results of operations for the Aviara segment as discontinued operations in the condensed consolidated statement of operations and the related assets and liabilities are classified as discontinued operations in our prior-period condensed consolidated balance sheets.
In fiscal 2023, we sold our NauticStar business. Pursuant to the terms of the purchase agreement, substantially all of the assets were sold and the purchaser assumed substantially all of the liabilities of NauticStar. The value of the assets and liabilities that were retained at the time of sale, which were primarily related to certain claims, is subject to change. Certain of these claims, which were reported in Accrued expenses and other current liabilities, have been settled or are expected to settle for higher amounts than previously estimated, with the related activity being recorded as discontinued operations.
The following table summarizes the operating results of discontinued operations for the following periods:
(106
9,731
7,200
19,680
1,133
11,862
11,286
22,750
GROSS LOSS
(1,239
(2,131
(4,086
(3,070
Selling, general and administrative
916
1,622
2,403
4,030
OPERATING LOSS
(2,155
(3,753
(6,489
(7,100
Gain on sale of discontinued operations
5,363
1,876
157
INCOME (LOSS) BEFORE INCOME TAX BENEFIT (EXPENSE)
3,208
(4,613
(6,943
INCOME TAX BENEFIT (EXPENSE)
(886
959
774
1,813
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX
10
The following table summarizes the assets and liabilities associated with discontinued operations:
Accounts receivable, net of allowance
3,927
Inventories, net
7,295
Total current assets classified as discontinued operations
NON-CURRENT ASSETS:
Property, plant and equipment, net
21,499
181
Total non-current assets classified as discontinued operations
1,747
Accrued expenses and other current liabilities
6,316
Total current liabilities classified as discontinued operations
LONG-TERM LIABILITIES:
Long-term leases
Total long-term liabilities classified as discontinued operations
During the second quarter of fiscal 2025, the Company sold certain investment securities prior to maturity to repay outstanding amounts under the revolving credit facility (see Note 9) and, as a result, reclassified its held-to-maturity securities to available-for-sale securities. The Company determined the amortized cost of available-for-sale securities as of December 29, 2024 approximate their fair value because of the short-term nature of the investments.
The amortized cost, unrealized gains and losses, and fair value of available-for-sale securities at December 29, 2024 and June 30, 2024 are summarized in the following tables.
December 29, 2024
Gross
Amortized
Unrealized
Fair
Cost
Gains
Losses
Value
Available-for-sale securities:
Fixed income securities:
Corporate bonds
28,577
Total available-for-sale securities
June 30, 2024
Held-to-maturity securities:
(82
78,766
Total held-to-maturity securities
11
Inventories consisted of the following:
Raw materials and supplies
23,302
26,326
Work in process
5,062
4,039
Finished goods
11,617
8,707
Obsolescence reserve
(2,993
(2,100
Total inventories
Property, plant, and equipment, net consisted of the following:
Land and improvements
4,985
Buildings and improvements
34,094
34,040
Machinery and equipment
36,314
31,157
Furniture and fixtures
6,027
5,498
Construction in progress
10,348
10,295
Total property, plant, and equipment
91,768
85,975
Less accumulated depreciation
(38,927
(33,661
Property, plant, and equipment — net
The following table presents the carrying amounts of goodwill as of December 29, 2024 and June 30, 2024 for each of the Company's reportable segments.
Gross Amount
Accumulated Impairment Losses
36,238
(36,238
64,731
The following table presents the carrying amounts of Other intangible assets, net:
Accumulated Amortization / Impairment
Other intangible assets, net
Amortized intangible assets
Dealer networks
19,500
(12,750
6,750
(11,850
7,650
Software
245
(245
19,745
(12,995
(12,095
Unamortized intangible assets
Trade names
33,000
(7,000
26,000
Total other intangible assets
52,745
(19,995
(19,095
12
Amortization expense related to Other intangible assets, net for each of the three months ended December 29, 2024 and December 31, 2023, was $0.5 million, and for each of the six months ended December 29, 2024 and December 31, 2023, was $0.9 million. Estimated amortization expense for the fiscal year ending June 30, 2025 is $1.8 million.
Accrued expenses and other current liabilities consisted of the following:
Warranty
25,152
25,486
Dealer incentives
14,126
16,059
Compensation and related accruals
2,985
4,673
Contract liabilities
2,978
2,034
Inventory repurchase contingent obligation
1,496
1,657
Self-insurance
1,298
1,216
Liabilities retained associated with discontinued operations
713
309
Other
3,428
3,634
Total accrued expenses and other current liabilities
Accrued warranty liability activity was as follows for the six months ended:
Balance at the beginning of the period
28,689
Provisions
2,970
3,684
Payments made
(4,681
(7,203
Changes for pre-existing warranties
1,377
2,714
Balance at the end of the period
27,884
Long-term debt is as follows:
Term loan
Debt issuance costs on term loan
(239
Total debt
49,261
Less current portion of long-term debt
4,500
Less current portion of debt issuance costs on term loan
(126
Long-term debt, net of current portion
There were no amounts of long-term debt outstanding as of December 29, 2024.
In fiscal 2021, the Company entered into a credit agreement with a syndicate of certain financial institutions (the “Credit Agreement”) that provided the Company with a $160.0 million senior secured credit facility, consisting of a $60.0 million term loan (the “Term Loan”) and a $100.0 million revolving credit facility (the “Revolving Credit Facility”). The Credit Agreement is secured by a first priority security interest in substantially all of the Company's assets. Following the Fourth Amendment to the Credit Agreement (“Fourth Amendment”), as described below, all amounts under the Term Loan were repaid and the amended and restated Credit Agreement only provides the Company with the Revolving Credit Facility.
13
On September 27, 2024, the Company entered into the Fourth Amendment to obtain the necessary consents and waivers to the covenant restrictions related to the Aviara Transaction and the Aviara Facility Sale, as discussed in Note 3. In addition, the Fourth Amendment provides a waiver to the fixed charge ratio for certain periods. As a result of the fixed charge ratio waiver, the applicable margin on interest and the commitment fee for any unused portion of the Revolving Credit Facility for these periods is fixed at the maximum allowable rate (“Fourth Amendment Interest Terms”). Further, the Company may make restricted payments, including share repurchases under the Company's share repurchase program, in an aggregate amount not to exceed $5.0 million through March 31, 2025 (see Note 12).
The Credit Agreement, as amended, bears interest, at the Company’s option, at either the prime rate plus an applicable margin ranging from 0.25% to 1.00% or at an adjusted term benchmark rate plus an applicable margin ranging from 1.25% to 2.00%, in each case based on the Company’s net leverage ratio, subject to the Fourth Amendment Interest Terms. The Company is also required to pay a commitment fee for any unused portion of the Revolving Credit Facility ranging from 0.15% to 0.30% based on the Company’s net leverage ratio, subject to the Fourth Amendment Interest Terms. Effective prior to the Company's entry into the Fourth Amendment, during substantially all of the three months ended September 29, 2024, the applicable margin for loans accruing at the prime rate was 0.25% and the applicable margin for loans accruing interest at the benchmark rate was 1.25%. Following the Company’s entry into the Fourth Amendment and during the three months ended December 29, 2024, in compliance with the Fourth Amendment Interest Terms, the applicable margin for loans accruing interest at the prime rate was 1.00% and the applicable margin for loans accruing interest at the benchmark rate was 2.00%. During October 2024, prior to all drawn amounts being repaid as noted below, the Company’s all-in interest rate on amounts drawn on the Revolving Credit Facility was 6.96%.
The Credit Agreement will mature and all remaining amounts outstanding thereunder will be due and payable on June 28, 2026. As of December 29, 2024, the Company was in compliance with its financial covenants under the Credit Agreement.
Revolving Credit Facility
In conjunction with the Fourth Amendment, the Company drew $49.5 million on its Revolving Credit Facility. Drawn amounts were used to repay outstanding borrowings under the Term Loan. As of December 29, 2024, all amounts were repaid, and the Company had remaining availability of $100.0 million on the Revolving Credit Facility.
The Company’s consolidated interim effective tax rate is based on a current estimate of the annual effective income tax rate adjusted to reflect the impact of discrete items. The differences between the Company’s effective tax rate and the statutory federal tax rate of 21.0% for the first half of fiscal 2025 primarily relate to changes in uncertain tax positions and inclusion of the state tax rate in the overall effective rate, partially offset by benefits of federal and state credits. During the three months ended December 29, 2024 and December 31, 2023, the Company’s effective tax rate was 39.2% and 23.3%, respectively, and for the six months ended December 29, 2024 and December 31, 2023, the Company’s effective tax rate was 24.5% and 23.0%, respectively. The Company’s effective tax rates for the three and six months ended December 29, 2024 are higher compared to the effective tax rate for the same prior year periods, primarily due to changes in uncertain tax positions, partially offset by an increased benefit of federal and state credits.
The following table presents the components of share-based compensation expense by award type.
Restricted stock awards
844
598
990
Performance stock units
(535
(17
Share-based compensation expense
63
14
Restricted Stock Awards
During the six months ended December 29, 2024, the Company granted 248,642 restricted stock awards (“RSAs”) to the Company’s non-executive directors, officers and certain other key employees. Generally, the shares of restricted stock granted during the six months ended December 29, 2024, vest pro-rata over two or three years for officers and certain other key employees and over one year for non-executive directors. The Company determined the fair value of the shares awarded by using the close price of our common stock as of the date of grant. The weighted average grant date fair value of RSAs granted in the six months ended December 29, 2024, was $17.57 per share.
The following table summarizes the status of nonvested RSAs as of December 29, 2024, and changes during the six months then ended.
Average
Nonvested
Grant-Date
Restricted
Fair Value
(per share)
Nonvested at June 30, 2024
104,372
21.76
Granted
248,642
17.57
Vested
(489
20.49
Forfeited
19.51
Nonvested at December 29, 2024
339,530
18.78
As of December 29, 2024, there was $4.9 million of total unrecognized compensation expense related to nonvested RSAs. The Company expects this expense to be recognized over a weighted average period of 1.8 years.
Performance Stock Units
Performance stock units (“PSUs”) are a form of long-term incentive compensation awarded to executive officers and certain other key employees designed to directly align the interests of employees to the interests of the Company’s shareholders, and to create long-term shareholder value. The awards will be earned based on the Company’s achievement of certain performance criteria over a three-year performance period. The performance period for the awards commences on July 1 of the fiscal year in which they were granted and continue for a three-year period, ending on June 30 of the applicable year. The probability of achieving the performance criteria is assessed quarterly. Following the determination of the Company’s achievement with respect to the performance criteria, the number of shares awarded is subject to further adjustment based on the application of a total shareholder return (“TSR”) modifier. The grant date fair value is determined based on both the probability assessment of the Company achieving the performance criteria and an estimate of the expected TSR modifier. The TSR modifier estimate is determined using a Monte Carlo Simulation model, which considers the likelihood of numerous possible outcomes of long-term market performance. Compensation expense related to existing nonvested PSUs is recognized ratably over the performance period.
PSUs awarded in fiscal 2025 have performance criteria set annually over the three-year performance period. This performance criteria is cumulative and is based upon the respective year’s performance compared to budget, which has not yet been established for future performance periods. Therefore, the compensation expense for these awards will not begin until all the key terms and conditions of these awards are known, which will be year three of the performance period.
The following table summarizes the status of nonvested PSUs as of December 29, 2024, and changes during the six months then ended.
Performance
Stock Units
139,910
23.62
(10,467
23.27
129,443
23.64
15
As of December 29, 2024, there was no unrecognized compensation expense related to nonvested PSUs.
Incentive Award Plan
On October 22, 2024, at the Company's annual meeting of shareholders, the Company's shareholders approved the Second Amended and Restated MasterCraft 2015 Incentive Award Plan (the “Restated Incentive Plan”), as described in the Company's Definitive Proxy Statement, filed with the SEC on September 23, 2024, to replace the Amended and Restated MCBC Holdings, Inc. 2015 Incentive Award Plan effective as of the date of shareholder approval. The Restated Incentive Plan authorizes an aggregate issuance of up to 1,198,175 shares of common stock, subject to adjustment, in the form of performance awards, restricted shares, restricted stock units, stock options, stock appreciation rights, and other share-based awards. The Company's employees, consultants, and non-employee directors, and employees, consultants, and non-employee directors of our affiliates are eligible to receive awards under the Restated Incentive Plan.
The following table sets forth the computation of the Company’s net income (loss) per share:
Income (loss) from discontinued operations, net of tax
Weighted average shares — basic
Dilutive effect of assumed restricted share awards/units
88,726
81,517
74,920
Weighted average outstanding shares — diluted
Basic income (loss) per share
Diluted income (loss) per share
For the three and six months ended December 31, 2023, an immaterial number of shares were excluded from the computation of diluted earnings per share as the effect would have been anti-dilutive.
Share Repurchase Program
On July 24, 2023, the Board of the Company authorized a share repurchase program under which the Company may repurchase up to $50.0 million of its outstanding shares of common stock. The authorization became effective upon the completion of the Company's previously existing $50.0 million stock repurchase authorization on August 9, 2023.
During the three months ended December 29, 2024 and December 31, 2023, the Company repurchased 39,593 shares and 214,219 shares of common stock for $0.7 million and $4.4 million, respectively, in cash, excluding related fees and expenses. During the six months ended December 29, 2024 and December 31, 2023, the Company repurchased 223,222 shares and 455,983 shares of common stock for $4.2 million and $10.2 million, respectively, in cash, excluding related fees and expenses. As of December 29, 2024, $31.2 million remained available under the program.
16
13.SEGMENT INFORMATION
Reportable Segments
During the fourth quarter of fiscal 2024, the Company changed the name of its “Crest” operating segment to “Pontoon.” The segment change had no impact on the composition of the Company's segments or on previously reported financial position, results of operations, cash flows, or segment operating results.
Operating segments are identified as components of an enterprise about which discrete financial information is available for evaluation by the CODM in making decisions on how to allocate resources and assess performance. For the three and six months ended December 29, 2024, the Company’s CODM regularly assessed the operating performance of the Company’s boat brands under two operating and reportable segments:
Each segment distributes its products through its own independent dealer network. Each segment also has its own management structure which is responsible for the operations of the segment and is directly accountable to the CODM for the operating performance of the segment, which is regularly assessed by the CODM who allocates resources based on that performance.
The Company files a consolidated income tax return and does not allocate income taxes and other corporate-level expenses, including interest, to operating segments. All material corporate costs are included in the MasterCraft segment.
Selected financial information for the Company’s reportable segments was as follows:
For the Three Months Ended December 29, 2024
Consolidated
Net sales
Operating income (loss)
3,379
(3,193
1,453
929
2,382
2,228
162
2,390
For the Six Months Ended December 29, 2024
7,072
(5,882
2,642
1,814
3,680
914
4,594
For the Three Months Ended December 31, 2023
Operating income
10,294
469
1,282
816
2,098
1,407
314
1,721
17
For the Six Months Ended December 31, 2023
20,584
732
2,583
1,624
3,616
1,178
4,794
The following table presents total assets for the Company’s reportable segments.
Assets:
199,794
233,088
50,321
51,994
Assets associated with discontinued operations
32,902
18
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion and analysis should be read together with the unaudited condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q. In addition, the statements in this discussion and analysis regarding our expectations concerning the performance of our business, anticipated financial results, liquidity and the other non-historical statements are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in “Cautionary Note Regarding Forward-Looking Statements” above and in “Risk Factors” set forth in our 2024 Annual Report. Our actual results may differ materially from those contained in or implied by any forward-looking statements.
Certain statements in the following discussions are based on non-GAAP financial measures. A “non-GAAP financial measure” is a numerical measure of a registrant’s historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with U.S. GAAP in the statements of operations, balance sheets or statements of cash flows of the issuer; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. Non-GAAP financial measures do not include operating and statistical measures. The Company includes non-GAAP financial measures in Management’s Discussion and Analysis, as the Company’s management believes that these measures and the information they provide are useful to users of the financial statements, including investors, because they permit users of the financial statements to view the Company’s performance using the same tools that management utilizes and to better evaluate the Company’s ongoing business performance. In order to better align the Company’s reported results with the internal metrics used by the Company's management to evaluate business performance as well as to provide better comparisons to prior periods and peer data, non-GAAP measures exclude the impact of purchase accounting amortization related to business acquisitions.
Discontinued Operations
On October 18, 2024, the Company completed the Aviara Transaction. Further, on December 23, 2024, the Company completed the Aviara Facility Sale. The Company's results for all periods presented, as discussed in Management's Discussion and Analysis, are presented on a continuing operations basis. Results related to our Aviara and NauticStar reporting units are reported as discontinued operations for all periods presented. See Notes 1 and 3 in Notes to the unaudited condensed consolidated financial statements for more information on discontinued operations.
Overview
As a result of economic and industry headwinds at the end of our key selling season, we adjusted our production levels at the outset of fiscal 2025 to allow for improvements in overall dealer inventory levels. These lower production levels resulted in decreased net sales and reduced gross margins compared to our fiscal 2024 results due to lower fixed cost absorption. As we navigate these headwinds facing our business, we remain committed to aligning our production levels with market demand while also maintaining operational flexibility.
Results of Continuing Operations
Consolidated Results
The table below presents our consolidated results of operations for the three and six months ended:
2025 vs. 2024
%
Change
Consolidated statements of operations:
(26,382
(29.4
%)
(55,328
(30.1
(16,336
(23.7
(34,605
(24.6
(10,046
(48.0
(20,723
(47.7
324
13.0
114
2.0
207
2.9
(699
(4.5
0.0
(12
(1.3
531
5.2
(597
(2.7
(10,577
(98.3
(20,126
(94.4
672
(78.7
563
(32.5
(718
(50.7
(877
(31.7
(10,623
(93.8
(20,440
(91.5
(2,369
(89.6
(4,671
(90.9
(8,254
(95.1
(15,769
(91.6
Additional financial and other data:
Unit sales volume:
400
491
(91
(18.5
985
(211
(21.4
153
365
(212
(58.1
330
727
(397
(54.6
Consolidated unit sales volume
856
(303
(35.4
1,104
1,712
(608
(35.5
Net sales:
(17,602
(24.2
(37,905
(25.5
(8,780
(51.5
(17,423
(49.1
Consolidated net sales
Net sales per unit:
138
(10
(6.8
143
151
(8
(5.3
54
47
14.9
55
49
12.2
Consolidated net sales per unit
115
105
9.5
117
108
8.3
Gross margin
17.2
23.3
(610) bps
17.6
23.6
(600) bps
Net sales decreased $26.4 million and $55.3 million during the second quarter and first half of fiscal 2025, respectively, when compared with the same prior-year period. The decrease in net sales was primarily driven by planned lower unit volumes and unfavorable model mix.
Gross margin percentage declined 610 and 600 basis points during the second quarter and first half of fiscal 2025, respectively, when compared with the same prior-year period. Lower margins were the result of unfavorable model mix and lower cost absorption due to decreased production volume.
20
Segment Results
MasterCraft Segment
The following table sets forth MasterCraft segment results for the three and six months ended:
(6,915
(67.2
(13,512
(65.6
821
58.4
64
1.8
Unit sales volume
Net sales per unit
Net sales decreased $17.6 million and $37.9 million during the second quarter and first half of fiscal 2025, respectively, when compared with the same prior-year period. The decrease was driven by lower unit volume and unfavorable model mix.
Operating income decreased $6.9 million and $13.5 million during second quarter and first half of fiscal 2025, respectively, when compared with the same prior-year period. The change was primarily the result of decreased net sales, as discussed above.
Pontoon Segment
The following table sets forth Pontoon segment results for the three and six months ended:
(3,662
(780.8
(6,614
(903.6
(152
(48.4
(264
(22.4
Net sales decreased $8.8 million and $17.4 million during the second quarter and first half of fiscal 2025, respectively, when compared to the same prior-year period, mainly due to lower unit volumes and increased dealer incentives.
Operating loss for the second quarter and first half of fiscal 2025 was $3.2 million and $5.9 million, respectively, compared to operating income of $0.5 million and $0.7 million in the same prior year periods, respectively. The change was primarily the result of decreased net sales, as discussed above.
Non-GAAP Measures
EBITDA, Adjusted EBITDA, EBITDA margin, and Adjusted EBITDA margin
We define EBITDA as income from continuing operations, before interest, income taxes, depreciation and amortization. We define Adjusted EBITDA as EBITDA further adjusted to eliminate certain non-cash charges or other items that we do not consider to be indicative of our core and/or ongoing operations. For the periods presented herein, the adjustments are for share-based compensation, and CEO transition and organizational realignment costs. We define EBITDA margin and Adjusted EBITDA margin as EBITDA and Adjusted EBITDA, respectively, each expressed as a percentage of Net sales.
21
Adjusted Net Income and Adjusted Net Income per share
We define Adjusted Net Income and Adjusted Net Income per share as income from continuing operations, adjusted to eliminate certain non-cash charges or other items that we do not consider to be indicative of our core and/or ongoing operations and reflecting income tax expense on adjusted net income before income taxes at our estimated annual effective tax rate. For the periods presented herein, these adjustments include other intangible asset amortization, share-based compensation, and CEO transition and organizational realignment costs.
EBITDA, Adjusted EBITDA, EBITDA margin, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted Net Income per share, which we refer to collectively as the Non-GAAP Measures, are not measures of net income or operating income as determined under accounting principles generally accepted in the United States, or U.S. GAAP. The Non-GAAP Measures are not measures of performance in accordance with U.S. GAAP and should not be considered as an alternative to net income, net income per share, or operating cash flows determined in accordance with U.S. GAAP. Additionally, Adjusted EBITDA is not intended to be a measure of cash flow. We believe that the inclusion of the Non-GAAP Measures is appropriate to provide additional information to investors because securities analysts and investors use the Non-GAAP Measures to assess our operating performance across periods on a consistent basis and to evaluate the relative risk of an investment in our securities. We use Adjusted Net Income and Adjusted Net Income per share to facilitate a comparison of our operating performance on a consistent basis from period to period that, when viewed in combination with our results prepared in accordance with U.S. GAAP, provides a more complete understanding of factors and trends affecting our business than does U.S. GAAP measures alone. We believe Adjusted Net Income and Adjusted Net Income per share assists our Board, management, investors, and other users of the financial statements in comparing our net income on a consistent basis from period to period because it removes certain non-cash items and other items that we do not consider to be indicative of our core and/or ongoing operations and reflecting income tax expense on adjusted net income before income taxes at our estimated annual effective tax rate. The Non-GAAP Measures have limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Some of these limitations are:
In addition, because not all companies use identical calculations, our presentation of the Non-GAAP Measures may not be comparable to similarly titled measures of other companies, including companies in our industry.
22
The following table presents a reconciliation of income from continuing operations as determined in accordance with U.S. GAAP to EBITDA, and Adjusted EBITDA, and income from continuing operations margin (expressed as a percentage of net sales) to EBITDA margin and Adjusted EBITDA margin (each expressed as a percentage of net sales) for the periods indicated:
% of Net
sales
0.7%
9.7%
1.1%
9.4%
Income tax expense
854
1,169
1,732
(697
(1,415
(1,889
(2,766
EBITDA
2,568
4.1%
12,861
14.3%
5,646
4.4%
25,523
13.9%
CEO transition and organizational realignment costs(a)
448
436
Adjusted EBITDA
3,526
5.6%
12,924
14.4%
7,368
5.7%
26,932
14.6%
The following table presents a reconciliation of income from continuing operations as determined in accordance with U.S. GAAP to Adjusted Net Income for the periods indicated:
Amortization of acquisition intangibles
Adjusted Net Income before income taxes
2,109
11,837
4,532
24,671
Adjusted income tax expense(b)
422
2,368
906
4,934
Adjusted Net Income
1,687
9,469
3,626
19,737
Adjusted Net Income per share:
0.10
0.56
0.22
1.16
0.55
1.15
Weighted average shares used for the computation of(c):
Basic Adjusted Net Income per share
Diluted Adjusted Net Income per share
23
The following table presents the reconciliation of income from continuing operations per diluted share to Adjusted Net Income per diluted share for the periods indicated:
Income from continuing operations per diluted share
Impact of adjustments:
0.02
0.16
0.30
0.06
0.05
0.08
Adjusted Net Income per diluted share before income taxes
0.13
0.29
1.44
Impact of adjusted income tax expense on net income per diluted share before income taxes(b)
(0.03
(0.07
(0.29
Adjusted Net Income per diluted share
Liquidity and Capital Resources
Our primary liquidity and capital resource needs are to finance working capital, fund capital expenditures, service our debt, fund potential acquisitions, and fund our share repurchase program. Our principal sources of liquidity are our cash balance, available-for-sale securities, cash generated from operating activities, our revolving credit agreement and the refinancing and/or new issuance of long-term debt. We believe our cash balance, available-for-sale securities, cash from operations, and our ability to borrow will be sufficient to provide for our liquidity and capital resource needs.
Cash and cash equivalents totaled $34.3 million as of December 29, 2024, an increase of $26.9 million from $7.4 million as of June 30, 2024. The increase includes $26.1 million in net proceeds from the Aviara Facility Sale. Refer to Note 3 — Discontinued Operations in the Notes to the unaudited condensed consolidated financial statements for further details. Available-for-sale securities totaled $28.5 million as of December 29, 2024, a decrease of $50.3 million from $78.8 million as of June 30, 2024. Proceeds from Available-for-sale securities were used to repay outstanding amounts under the Revolving Credit Facility. Refer to Note 4 — Short-term investments in the Notes to the unaudited condensed consolidated financial statements for further details. Total debt as of June 30, 2024, was $49.3 million, with no amounts outstanding as of December 29, 2024.
As of December 29, 2024, we had no amounts outstanding under the Revolving Credit Facility, leaving $100.0 million of available borrowing capacity. Refer to Note 9 — Long-Term Debt in the Notes to unaudited condensed consolidated financial statements for further details.
On July 24, 2023, the Board of the Company authorized a share repurchase program under which the Company may repurchase up to $50 million of its outstanding shares of common stock. The authorization became effective upon the completion of the Company's previously existing $50 million stock repurchase authorization.
During the six months ended December 29, 2024, the Company repurchased 223,222 shares of common stock for $4.2 million in cash, excluding related fees and expenses under both plans.
24
The following table and discussion below relate to our cash flows from continuing operations from operating, investing, and financing activities:
Total cash provided by (used in):
Operating activities
Investing activities
Financing activities
Net change in cash and cash equivalents from continuing operations
5,525
23,410
Six Months Ended December 29, 2024 Cash Flows from Continuing Operations
Net cash provided by operating activities for the six months ended December 29, 2024 was $13.4 million, primarily due to net income and favorable changes to working capital. Working capital is defined as accounts receivable, income tax receivable, inventories, and prepaid expenses and other current assets net of accounts payable, income tax payable, and accrued expenses and other current liabilities as presented in the condensed consolidated balance sheets. Favorable changes in working capital primarily consisted of decreases in accounts receivable and prepaid expenses and other current assets. Partially offsetting favorable changes in working capital were decreases in accrued expenses and other current liabilities and in accounts payables. Accounts receivable decreased due to timing of sales at the end of the period compared to the end of the prior-year period. Prepaid and other current assets decreased due to amortization of insurance premiums. Accrued expenses and other current liabilities decreased due to payment of dealer incentives and variable compensation. Accounts payables decreased due to timing associated with the holiday season.
Net cash provided by investing activities was $46.3 million, which included $50.9 million of proceeds in available-for-sale securities, partially offset by $4.6 million in capital expenditures. Our capital spending was primarily focused on tooling, information technology, and machinery and equipment.
Net cash used in financing activities was $54.2 million, which included share repurchases totaling $4.2 million and $49.5 million used to repay outstanding borrowings of the Term Loan. Drawn amounts on the Revolving Credit Facility were fully repaid as of December 29, 2024.
Six Months Ended December 31, 2023 Cash Flows from Continuing Operations
Net cash provided by operating activities for the six months ended December 31, 2023 was $22.4 million, primarily due to net income. Working capital had a net nominal effect on cash provided by operating activities. Favorable working capital changes consisted of decreases in inventories and accounts receivables, partially offset by increases in accounts payable, accrued expenses and other current liabilities, and income tax payable. Inventories decreased as we continue to rebalance inventory levels to align with lower production levels, partially offset by increased materials costs from inflation. Accounts receivables decreased primarily as a result of timing of collections and lower sales at the end of the period compared to the end of the prior-year period. Accounts payable decreased as a result of decreased production levels as well as timing associated with the holiday season. Accrued expenses and other current liabilities decreased due to payment of dealer incentives and lower compensation related accruals, partially offset by an increase in contract liabilities. Income tax payable decreased due to the timing of payments.
Net cash provided by investing activities was $15.2 million, due to net changes in available-for-sale securities of $20.0 million, partially offset by $4.8 million of capital expenditures. Our capital spending was mainly focused on facility enhancements, information technology, and tooling.
Net cash used in financing activities was $14.1 million, which included net payments of $2.3 million on long-term debt and $10.2 million of share repurchases.
Off Balance Sheet Arrangements
The Company did not have any off balance sheet financing arrangements as of December 29, 2024.
25
Critical Accounting Estimates
As of December 29, 2024, there were no significant changes in or changes to the application of our critical accounting policies or estimation procedures from those presented in our 2024 Annual Report.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Refer to our 2024 Annual Report for discussion of the Company’s market risk. There have been no material changes in market risk from those disclosed therein.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) (of the Exchange Act) that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
As of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures. Based upon this evaluation, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of December 29, 2024.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting during the quarter ended December 29, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 1A. RISK FACTORS.
During the six months ended December 29, 2024, there have been no material changes to the risk factors disclosed in “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024.
ITEM 2. UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS.
On July 24, 2023, the Board of the Company authorized a share repurchase program under which the Company may repurchase up to $50.0 million of its outstanding shares of common stock. The authorization became effective upon the completion of the Company's previously existing $50.0 million stock repurchase authorization.
During the first six months of fiscal 2025, we repurchased approximately $4.2 million of our common stock, including approximately $0.7 million during the three months ended December 29, 2024, excluding related fees and expenses. As of December 29, 2024, the remaining authorization under the new program was approximately $31.2 million.
During the three months ended December 29, 2024, the Company repurchased the following shares of common stock:
Period
Total Number of Shares Purchased
Average Price Paid Per Share(a)(b)
Total Number of Shares Purchased as part of Publicly Announced Program
Approximate Dollar Value of Shares that May Yet be Purchased Under the Plan (dollars in thousands)
September 30, 2024 - October 27, 2024
12,128
16.86
31,699
October 28, 2024 - November 24, 2024
11,579
18.96
31,479
November 25, 2024 - December 29, 2024
15,886
20.43
31,155
39,593
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
ITEM 4. MINE SAFETY DISCLOSURES.
ITEM 5. OTHER INFORMATION.
During the three months ended December 29, 2024, none of our directors or “officers” (as defined in Rule 16a-1(f) under the Exchange Act) adopted, modified or terminated “Rule 10b5-1 trading arrangements” or “non-Rule 10b5-1 trading arrangements” (each as defined in Item 408 of Regulation S-K).
ITEM 6.EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
Incorporated by Reference
ExhibitNo.
Description
Form
File No.
Exhibit
Filing Date
FiledHerewith
3.1
Amended and Restated Certificate of Incorporation of MCBC Holdings, Inc.
10-K
001-37502
9/18/15
3.2
Certificate of Amendment to Amended and Restated Certificate of Incorporation of MasterCraft Boat Holdings, Inc.
10-Q
11/9/18
3.3
8-K
10/25/19
3.4
Fourth Amended and Restated By-laws of MasterCraft Boat Holdings, Inc.
31.1
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
*
31.2
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32.1
Section 1350 Certification of Chief Executive Officer
**
32.2
Section 1350 Certification of Chief Financial Officer
101.INS
Inline XBRL Instance Document
101.SCH
Inline XBRL Taxonomy Extension Schema With Embedded Linkbases Document
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
* Filed herewith.
** Furnished herewith.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
(Registrant)
Date:
February 6, 2025
By:
/s/ BRADLEY M. NELSON
Bradley M. Nelson
Chief Executive Officer (Principal Executive Officer) and Director
/s/ TIMOTHY M. OXLEY
Timothy M. Oxley
Chief Financial Officer (Principal Financial and Accounting Officer),
Treasurer and Secretary