MasterCraft ends year on high, but pulls back production for its three brands

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MasterCraft Boat Holdings today reported net sales of $122.8 million for its fourth quarter, up 28.7 percent from the same period a year ago. The company reported a net loss of $10.8 for the quarter, mostly due to a jump to $43.0 million in operating expenses, compared to $8.9 million a year ago. The operating-expense increase was because of a charge for its Nautic Star brand, which slowed down production and unit shipments, to match retail demand. Nautic Star had a $1.9 million drop in sales compared to a year ago.

The MasterCraft brand reported an 8.1 percent or $6.0 million increase to sales for the quarter, and the Crest brand, added $23.3 million to overall net sales for the group.

Terry McNew, president and CEO, told Trade Only Today that adverse weather in the last quarter resulted in decreased sales across its brands. “June, which is the most important retail month, was wet and rainy and cold. Then you add into that the tariffs and the psychology that goes into that,” said McNew. “We had a good July, but if you’ve missed June as an industry, you kind of have to reload the gun.”

McNew added that the company is looking at inventories each week at dealers across the three brands. “We've built a very flexible manufacturing process so we can adjust the mix every week to try to better match what is selling in the retail market,” he said.

The earnings statement noted that NauticStar “has continued to experience market-wide challenges that have impacted the business’s ability to grow at the rate that was originally estimated” after being acquired in 2017.

McNew said he remains “bullish” on the long-term prospects for NauticStar. “Our dealer pipeline at NauticStar ended the year at healthy levels given our prudent decision to pull back on wholesale production earlier in the year,” he said in the statement. “In the near-term, this market slowdown has delayed the initial growth projections developed at the time of the acquisition, but NauticStar remains a leading brand in the market it serves.”

Full-year sales were $466.6 million, up 40.2 percent compared to fiscal 2018. Net income for the year was $21.3 million.

MasterCraft Boat Holdings is forecasting a “low single-digit” percentage decline in 2020 sales compared to fiscal 2019, adjusted EBITDA margins to be down 50 to 100 basis points, and adjusted Earnings per Share to be down by a “high-single digit percent.” McNew said he remains “bullish” on the MasterCraft brands and their respective markets.

Despite fourth-quarter sales gains, adverse weather during the prime selling season resulted in a “significant decline in retail activity” and “eroded dealer sentiment” for its MasterCraft brand, said the statement. The company plans to decrease wholesale shipments for 2020. “We believe it’s prudent to hold back wholesale production to allow for healthy dealer pipelines at MasterCraft heading into the calendar 2020 selling season, in anticipation of continued growth in the overall performance sport segment,” said McNew.

Its Crest sales were also impacted by adverse weather and a decline in dealer sentiment. “Accordingly, we are tempering our wholesale production at Crest for fiscal 2020 to allow for healthy dealer pipeline levels entering the calendar 2020 selling season,” said McNew. “We are very optimistic on Crest and the pontoon segment overall and anticipate that the product development and operational initiatives we are driving will contribute to long-term market share and profitability gains.”

The company is expecting about $10 to $15 million in sales of its Aviara brand, which has already shipped to MarineMax dealers. 

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