MasterCraft said today that it has acquired NauticStar LLC, a manufacturer and distributor of 18- to 28-foot bay boats, deck boats and offshore center consoles, for about $79.8 million.
The acquisition gives MasterCraft a presence in saltwater fishing and outboard propulsion.
Founded in 2002, Amory, Miss.-based NauticStar is privately owned and operated. The company has more than 15 years of boat-manufacturing experience and a 200,000-square-foot manufacturing facility.
NauticStar sells its boats in the United States through a network of about 70 dealers.
In 2016 the company generated about $63.7 million in net sales and is expected to approach $80 million in net sales this year.
“We are very excited to welcome NauticStar to the MasterCraft family,” MasterCraft president and CEO Terry McNew said in a statement. “NauticStar is a well-respected, expertly built and uniquely positioned brand. The company’s outboard bay, deck and offshore center console boats provide MasterCraft with additional product diversity. They also provide MasterCraft a presence in saltwater fishing, as well as outboard propulsion, two of the fastest-growing segments in the broader boating industry.”
“Additionally, NauticStar’s year-over-year unit growth is among the strongest in the 18- to 28-foot category and demand domestically currently exceeds supply,” McNew said. “We look forward to leveraging our industry-leading strengths in operational excellence and financial management to further improve NauticStar’s output, quality and margin as we continue their rapid growth.”
MasterCraft’s acquisition of NauticStar was completed as a simultaneous sign and close. NauticStar will maintain its current headquarters and manufacturing facility in Mississippi, about 300 miles southwest of MasterCraft.
The transaction is expected to be accretive to MasterCraft’s earnings per share in fiscal 2018.
“MasterCraft is an iconic brand known for quality, performance and innovation,” NauticStar owner and founder Phillip Faulkner said. “Our entire organization is excited to join their team and leverage their experience and operational know-how to further grow NauticStar. This is a great opportunity for all of our employees, as well as customers and dealer partners.”
“As a combined organization, we have the resources and experience to greatly expand NauticStar’s distribution both domestically and internationally after satisfying the demand from the existing dealer network,” McNew said. “We look forward to working together to deliver profitable and sustainable market share growth and driving efficiency in every area of our business.”
B Riley senior analyst Eric Wold issued a report immediately after the announcement reiterating the strength of the growing saltwater fishing and outboard segments.
“After passing on the Cobalt Boats acquisition earlier in the year — as it did not provide an entry into a growing segment or meet management's financial hurdles — we believe the company's improved balance sheet and strong cash conversion trends (with solid working capital controls) would enable a reasonably sized transaction,” Wold wrote.
“Furthermore, with $63.7 million in sales during the 2016 calendar year and expectations for as much as $80 million in sales during fiscal year 2018, clearly this acquisition will have a meaningfully positive impact on MasterCraft's presence in the overall boating industry, given our current fiscal years 2017 and 2018 net sales estimates of $246 million and $262 million,” Wold wrote.
Though NauticStar has its own manufacturing facility, Wold believes the combination will allow MasterCraft to boost output from NauticStar’s facility, and it creates the possibility for MasterCraft to bring some manufacturing of NauticStar’s boats into MasterCraft’s facility in Vonore, Tenn.