The Donerail Group LP, an investment firm led by former activist hedge fund Starboard Value LP executive William Wyatt, is pushing Mastercraft Boat Holdings Inc. to explore a sale, people familiar with the matter said on Tuesday.
Donerail has amassed a stake of a little less than 5 percent in Mastercraft and has told the recreational powerboat manufacturer that it is not happy with its performance, according to Reuters.
Like most boatbuilders, Mastercraft has benefitted from people turning to the water during the pandemic; however, the 18 percent rise in its shares since Frederick Brightbill became its CEO last December is less than the 30 percent rally in the stock of larger peer Malibu Boats Inc. over the same period, Reuters said.
Donerail is calling for a sale process for Mastercraft that could draw interest from other industry players such as Brunswick Corp. and Malibu Boats, as well as private equity firms.
The sources requested anonymity because the discussions between Donerail and Mastercraft are confidential.
MasterCraft Boat Holdings Inc. ended the fourth quarter with higher demand across all its brands, with net sales of $51.1 million, a decrease of $71.1 million, or 58.4 percent, compared to the fourth quarter last year.
The decline was due to the loss of production during the Covid-19 shutdowns and supplier and workforce ramp-up.
Gross profit declined $24.1 million to $7.4 million, a 76.5 percent decline over the same period last year, and gross margins decreased 11.1 points to 14.5 percent for the fourth quarter, down from 25.6 percent last year. Dealer inventories were down 40 to 50 percent versus the end of fiscal 2019.