Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Sep. 30, 2018 | Nov. 05, 2018 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2,019 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | Mastercraft Boat Holdings, Inc. | |
Entity Central Index Key | 1,638,290 | |
Current Fiscal Year End Date | --06-30 | |
Entity Current Reporting Status | Yes | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 18,721,420 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2018 | Oct. 01, 2017 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||
Net Sales | $ 93,641 | $ 65,049 |
COST OF SALES | 70,438 | 46,886 |
GROSS PROFIT | 23,203 | 18,163 |
OPERATING EXPENSES: | ||
Selling and marketing | 4,290 | 2,737 |
General and administrative | 6,772 | 4,335 |
Amortization of intangible assets | 530 | 27 |
Total operating expenses | 11,592 | 7,099 |
OPERATING INCOME | 11,611 | 11,064 |
OTHER EXPENSE: | ||
Interest expense | 920 | 491 |
INCOME BEFORE INCOME TAX EXPENSE | 10,691 | 10,573 |
INCOME TAX EXPENSE | 2,226 | 3,527 |
NET INCOME | $ 8,465 | $ 7,046 |
EARNINGS PER COMMON SHARE: | ||
Basic (in dollars per share) | $ 0.45 | $ 0.38 |
Diluted (in dollars per share) | $ 0.45 | $ 0.38 |
WEIGHTED AVERAGE SHARES USED FOR COMPUTATION OF: | ||
Basic earnings per share (in shares) | 18,646,039 | 18,615,100 |
Diluted earnings per share (in shares) | 18,768,764 | 18,686,626 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2018 | Jun. 30, 2018 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 6,093 | $ 7,909 |
Accounts receivable — net of allowances of $117 and $51, respectively | 9,310 | 5,515 |
Income tax receivable | 676 | |
Inventories, net | 21,729 | 20,467 |
Prepaid expenses and other current assets | 3,587 | 3,295 |
Total current assets | 41,395 | 37,186 |
Property, plant and equipment — net | 23,929 | 22,265 |
Intangible assets — net | 50,516 | 51,046 |
Goodwill | 65,792 | 65,792 |
Deferred debt issuance costs — net | 361 | 383 |
Other | 253 | 252 |
Total assets | 182,246 | 176,924 |
CURRENT LIABILITIES: | ||
Accounts payable | 18,609 | 17,266 |
Income tax payable | 705 | |
Accrued expenses and other current liabilities | 29,555 | 27,866 |
Current portion of long term debt, net of unamortized debt issuance costs | 5,521 | 5,069 |
Total current liabilities | 53,685 | 50,906 |
Long term debt, net of unamortized debt issuance costs | 68,084 | 70,087 |
Deferred income taxes | 205 | 1,427 |
Unrecognized tax positions | 2,097 | 1,982 |
Total liabilities | 124,071 | 124,402 |
COMMITMENTS AND CONTINGENCIES | ||
STOCKHOLDERS' EQUITY: | ||
Common stock, $.01 par value per share — authorized, 100,000,000 shares; issued and outstanding, 18,721,420 shares at September 30, 2018 and 18,682,338 shares at June 30, 2018 | 187 | 187 |
Additional paid-in capital | 114,331 | 114,052 |
Accumulated deficit | (56,343) | (61,717) |
Total stockholders' equity | 58,175 | 52,522 |
Total liabilities and stockholders' equity | $ 182,246 | $ 176,924 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2018 | Jun. 30, 2018 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Allowance for doubtful accounts | $ 117 | $ 51 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, authorized shares | 100,000,000 | 100,000,000 |
Common stock, issued shares | 18,721,420 | 18,682,338 |
Common stock, outstanding shares | 18,721,420 | 18,682,338 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - 3 months ended Sep. 30, 2018 - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total |
Balance, beginning at Jun. 30, 2018 | $ 187 | $ 114,052 | $ (61,717) | $ 52,522 |
Balance, beginning (in shares) at Jun. 30, 2018 | 18,682,338 | |||
Increase (decrease) in stockholders' equity | ||||
Equity-based compensation activity | 279 | 279 | ||
Equity-based compensation activity (shares) | 39,082 | |||
Net income | 8,465 | 8,465 | ||
Balance, ending at Sep. 30, 2018 | $ 187 | $ 114,331 | (56,343) | 58,175 |
Balance, ending (in shares) at Sep. 30, 2018 | 18,721,420 | |||
Increase (decrease) in stockholders' equity | ||||
Adoption of accounting standards (Note 1) | ASU 14-09 | $ (3,091) | $ (3,091) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2018 | Oct. 01, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 8,465 | $ 7,046 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 1,435 | 732 |
Inventory obsolescence reserve | 13 | 130 |
Amortization of deferred issuance costs | 127 | 87 |
Stock-based compensation | 384 | 264 |
Change in interest rate cap fair value | (2) | |
Unrecognized tax benefits | 115 | 288 |
Deferred income taxes | (284) | (592) |
Net provision for doubtful accounts | 66 | 30 |
Gain on disposal of fixed assets | (3) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (3,861) | (3,235) |
Inventories | (1,275) | (23) |
Prepaid expenses and other current assets | (290) | (186) |
Income taxes | (1,381) | 1,997 |
Other assets | (1) | |
Accounts payable | 2,199 | 4,670 |
Accrued expenses and other current liabilities | (2,340) | (1,042) |
Net cash provided by operating activities | 3,367 | 10,166 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Disposal of equipment | 3 | |
Purchases of property and equipment | (3,425) | (505) |
Net cash used in investing activities | (3,422) | (505) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Cash paid for withholding taxes on vested stock | (105) | (43) |
Principal payments on long-term debt | (1,656) | (976) |
Net cash used in financing activities | (1,761) | (1,019) |
NET CHANGE IN CASH AND CASH EQUIVALENTS | (1,816) | 8,642 |
CASH AND CASH EQUIVALENTS — BEGINNING OF PERIOD | 7,909 | 4,038 |
CASH AND CASH EQUIVALENTS — END OF PERIOD | 6,093 | 12,680 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||
Cash payments for interest | 1,025 | 373 |
Cash payments for income taxes | $ 3,775 | $ 1,831 |
ORGANIZATION AND NATURE OF BUSI
ORGANIZATION AND NATURE OF BUSINESS | 3 Months Ended |
Sep. 30, 2018 | |
ORGANIZATION AND NATURE OF BUSINESS | |
ORGANIZATION AND NATURE OF BUSINESS | 1. MasterCraft Boat Holdings, Inc. (the “Company”) was formed on January 28, 2000, as a Delaware holding company and operates primarily through its wholly owned subsidiaries, MasterCraft Boat Company, LLC; Nautic Star, LLC; NS Transport, LLC; MasterCraft Services, Inc.; MasterCraft Parts, Ltd.; and MasterCraft International Sales Administration, Inc. The Company and its subsidiaries collectively are referred to herein as the “Company”. The Company is a leading innovator, designer, manufacturer and marketer of premium recreational powerboats that operates in two reportable segments: MasterCraft and NauticStar. The Company also leases a parts warehouse in the United Kingdom to expedite service, primarily to MasterCraft dealers and customers in Europe. |
BASIS OF PRESENTATION AND SIGNI
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Sep. 30, 2018 | |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | 2. The Company’s fiscal year begins July 1 and ends June 30, with the interim quarterly reporting periods consisting of 13 weeks. Therefore, the quarter end will not always coincide with the date of the end of the calendar month. The information furnished in the condensed consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which are, in the opinion of management, necessary for a fair presentation of the results of operations and statements of financial position for the interim periods presented. 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 U.S. Securities and Exchange Commission (“SEC”) for financial information have been condensed or omitted pursuant to such rules and regulations. The June 30, 2018 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 Annual Report on Form 10-K for the fiscal year ended June 30, 2018. 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, 2018 and, in the opinion of management, reflect all adjustments considered necessary to present fairly the Company’s financial position as of September 30, 2018 and results of its operations, and its cash flows for the three months ended September 30, 2018 and October 1, 2017 and statement of shareholders’ equity for the three months ended September 30, 2018. All adjustments are of a normal recurring nature. Our interim operating results for the three months ended September 30, 2018 and October 1, 2017 are not necessarily indicative of the results to be expected in future operating quarters. With the exception of Accounting Standards Update (“ASU”) 2014-09 discussed below, there were no significant changes in or changes in the application of the Company’s critical accounting policies or estimation procedures for the three months ended September 30, 2018 as compared with the significant accounting policies described in the Company’s audited consolidated financial statements for the financial year ended June 30, 2018. Recently Adopted Accounting Standards — In May 2014, the Financial Accounting Standards Board (the “FASB”) and International Accounting Standards Board jointly issued Accounting Standards Update (“ASU”) 2014-09 , Revenue from Contracts with Customers (Topic 606) , which provides a principle-based accounting guidance for revenue recognition. ASU 2014-09, as amended, became effective for public companies for annual and interim periods beginning after December 15, 2017. Effective July 1, 2018, we adopted the new revenue standard using the modified retrospective transition approach by recognizing a cumulative adjustment to the opening balance of retained earnings. Due to the implementation of ASU 2014-09, the Company has changed the timing of when it records retail promotions and rebates. The cumulative effect of the changes made to the Company’s Condensed Consolidated Balance Sheets as of July 1, 2018 for the adoption of the new revenue standard was as follows: Balance as of Adjustments Balance as of June 30, 2018 Due to ASC 606 July 1, 2018 Accrued expenses and other current liabilities $ 27,866 $ 4,029 $ 31,895 Deferred income taxes 1,427 (938) 489 Accumulated deficit (61,717) (3,091) (64,808) The following table summarizes the impact of ASU 2014-09 on the Company's Condensed Consolidated Statement of Operations for the three months ended September 30, 2018: Balances without Statement of Operations As Reported Effect of Change adoption of ASC 606 Net sales $ 93,641 $ 517 $ 94,158 Income before income tax expense 10,691 517 11,208 Income tax expense 2,226 116 2,342 Net income 8,465 401 8,866 The following table summarizes the impact of ASU 2014-09 on the Company’s Condensed Consolidated Balance Sheet as of September 30, 2018: Balances without Balance Sheet As Reported Effect of Change adoption of ASC 606 Accrued expenses and other current liabilities $ 29,555 $ (4,385) $ 25,170 Income taxes 1,626 1,054 2,680 Accumulated deficit (56,343) 3,492 (52,851) Recently Issued Accounting Standards — In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement . This guidance modifies the disclosure requirements on fair value measurements in Topic 820 by removing disclosures regarding transfers between Level 1 and Level 2 of the fair value hierarchy, by modifying the measurement uncertainty disclosure, and by requiring additional disclosures for Level 3 fair value measurements, among others. The amendments are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company is currently evaluating the effect that the adoption of this new guidance is expected to have on our financial position or results of operations and related disclosures. In June 2018, the FASB issued ASU 2018-07 , Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting . This guidance provides clarity and reduces complexity when applying the guidance in Topic 718, Compensation—Stock Compensation to the term or condition of share-based payments to nonemployees. ASU 2018-07 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2018. The Company is currently evaluating the effect that the adoption of this new guidance is expected to have on our financial position or results of operations and related disclosures. This guidance will be adopted for the fiscal year beginning July 1, 2019. In January 2017, the FASB issued ASU 2017-04 , Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This guidance eliminates Step 2 from the goodwill impairment test. Instead, an entity should recognize an impairment charge for the amount by which the carrying value exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to that reporting unit. ASU 2017-04 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2019. The Company is currently evaluating the effect that the adoption of this new guidance is expected to have on its financial position or results of operations and related disclosures. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . This guidance establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. In July 2018, the FASB issued ASU 2018-11 providing for an additional transition method by allowing entities to initially apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings. The Company is currently evaluating the impact this new guidance is expected to have on its financial position or results of operations and related disclosures. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 3 Months Ended |
Sep. 30, 2018 | |
REVENUE RECOGNITION | |
REVENUE RECOGNITION | 3. The following table presents the Company’s revenue by major product categories for the three months ended September 30, 2018: MasterCraft NauticStar Total Major Product Categories Boats and trailers $ 72,376 $ 17,123 $ 89,499 Parts 3,581 280 3,861 Other revenue 277 4 281 Total $ 76,234 $ 17,407 $ 93,641 The Company recognizes revenue when obligations under the terms of a contract are satisfied and control over promised goods is transferred to a customer. For the majority of sales, this occurs when the product is released to the carrier responsible for transporting it to a customer. The Company typically receives payment within 5 days of shipment. Revenue is measured as the amount of consideration it expects to receive in exchange for a product. The consideration recognized represents the amount specified in a contract with a customer, net of estimated dealer and retail sales incentives we reasonably expect to pay. The estimated liability and reduction in revenue for sales incentives is recorded at the time of sale. We estimate the amount of sales incentives based on historical data for specific boat models adjusted for forecasted sales volume, product mix, customer behavior and assumptions concerning market conditions. Subsequent adjustments to incentive estimates are possible as facts and circumstances change over time. A contract liability is created when customers prepay for goods prior to the Company transferring those goods to the customer. The contract liability is reduced once control of the goods is transferred to the customer. The difference between the opening and closing balances of the Company's contract liabilities primarily results from the timing difference between the Company's performance and the point at which we receive pre-payment from the customer. The Company’s contract liabilities were $1,214 and $2,194 as of September 30, 2018 and June 30, 2018, respectively and are classified as “Accrued expenses and other current liabilities” in its Condensed Consolidated Balance Sheets. The Company has excluded sales and other taxes assessed by a governmental authority in connection with revenue-producing activities from the determination of the transaction price for all contracts. The Company has elected to account for shipping and handling costs associated with outbound freight after control over a product has transferred to a customer as a fulfillment cost that are included in cost of sales. As contracts are fulfilled within one year from the date of the contract, revenue adjustments for a potential financing component or the costs to obtain the contract are not made. The Company applied the practical expedient in ASU 2014-09 and has not disclosed information about remaining performance obligations that have original expected durations of 12 months or less. |
ACQUISITION
ACQUISITION | 3 Months Ended |
Sep. 30, 2018 | |
ACQUISITION | |
ACQUISITION | 4. On October 2, 2017, the Company completed its acquisition of NauticStar which unites two leading and complementary boat brands and adds to its product diversity. T he purchase price was $80,511 , including customary adjustments for the amount of working capital in the acquired business at the closing date. A portion of the purchase price was deposited into an escrow account in order to secure certain post-closing obligations of the former members of NauticStar. The Company accounted for the transaction using the acquisition method in accordance with ASC 805, Business Combinations . The total consideration has been allocated to the assets acquired and liabilities assumed based on estimates of their fair values as of the date of acquisition. The Company has recorded the tangible and intangible assets acquired and liabilities assumed based on their fair values as of October 2, 2017. The measurements of fair value were based upon estimates utilizing the assistance of third party valuation specialists. The following table summarizes the purchase price allocation based on the estimated fair values of the assets acquired and liabilities assumed of NauticStar at the acquisition date: Purchase Price: Cash paid, net of cash acquired $ 80,511 Recognized amounts of identifiable assets acquired and (liabilities assumed), at fair value: Accounts receivable $ 1,773 Inventories 6,358 Other current assets 94 Indemnification asset 166 Deferred income taxes 83 Property, plant and equipment 4,945 Identifiable intangible assets 36,000 Current liabilities (4,858) Unrecognized tax positions (249) Fair value of assets acquired and liabilities assumed 44,312 Goodwill 36,199 $ 80,511 Pro Forma Financial Information: The following unaudited pro forma consolidated results of operations for the three months ended October 1, 2017 assumes that the acquisition of NauticStar occurred as of July 1, 2017. The unaudited pro forma financial information combines historical results of MasterCraft and NauticStar, with adjustments for depreciation and amortization attributable to acquired tangible and intangible assets for the respective periods. Non-recurring pro forma adjustments associated with the fair value step up of inventory were included in the reported pro forma cost of sales and earnings. The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of fiscal year 2018 or the results that may occur in the future: Three Months Ended October 1, 2017 Net sales $ 83,118 Net income $ 6,495 Basic earnings per share $ 0.35 Diluted earnings per share $ 0.35 |
INVENTORIES
INVENTORIES | 3 Months Ended |
Sep. 30, 2018 | |
INVENTORIES | |
INVENTORIES | 5. Inventories consisted of the following: September 30, 2018 June 30, 2018 Raw materials and supplies $ 11,311 $ 9,587 Work in process 3,138 2,822 Finished goods 8,261 9,026 Obsolescence reserve (981) (968) Total inventories $ 21,729 $ 20,467 |
PREPAID EXPENSES AND OTHER CURR
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 3 Months Ended |
Sep. 30, 2018 | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 6. Prepaid expenses and other current assets consisted of the following: September 30, 2018 June 30, 2018 Prepaid photo shoot $ 747 $ 273 Insurance 637 974 Trade show deposits 204 111 Interest rate cap 527 525 Other 1,472 1,412 Total prepaid expenses and other current assets $ 3,587 $ 3,295 |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 3 Months Ended |
Sep. 30, 2018 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 7. Accrued expenses and other current liabilities consisted of the following: September 30, 2018 June 30, 2018 Warranty $ 13,454 $ 13,077 Self-insurance 749 703 Compensation and related accruals 2,076 2,995 Inventory repurchase contingent obligation 1,202 1,274 Interest 2,000 1,472 Dealer incentives 7,408 4,628 Other 2,666 3,717 Total accrued expenses and other current liabilities $ 29,555 $ 27,866 The following table provides a roll forward of the accrued warranty liability: Beginning balance - June 30, 2018 $ 13,077 Provisions 1,769 Payments made (2,249) Adjustments to preexisting warranties 857 Ending balance - September 30, 2018 $ 13,454 |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 3 Months Ended |
Sep. 30, 2018 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
GOODWILL AND OTHER INTANGIBLE ASSETS | 8. The carrying amounts of goodwill as of September 30, 2018 and June 30, 2018, by the Company’s reportable segments, were as follows: September 30, 2018 June 30, 2018 Goodwill attributable to MasterCraft $ 29,593 $ 29,593 Goodwill attributable to NauticStar 36,199 36,199 Total goodwill $ 65,792 $ 65,792 As of September 30, 2018, and June 30, 2018, details of the Company’s intangible assets other than goodwill were as follows: September 30, 2018 Gross Net Carrying Accumulated Carrying Amount Amortization Amount Dealer network $ 21,590 $ (3,074) $ 18,516 Total amortizable intangible assets 21,590 (3,074) 18,516 Trade names 32,000 — 32,000 Total intangible assets $ 53,590 $ (3,074) $ 50,516 June 30, 2018 Gross Net Carrying Accumulated Carrying Amount Amortization Amount Dealer network $ 21,590 $ (2,544) $ 19,046 Total amortizable intangible assets 21,590 (2,544) 19,046 Trade names 32,000 — 32,000 Total intangible assets $ 53,590 $ (2,544) $ 51,046 Amortization expense recognized on all amortizable intangibles was $530 and $27 for the three months ended September 30, 2018 and October 1, 2017, respectively. The estimated future amortization of definite-lived intangible assets is as follows: Fiscal years ending June 30, Remainder of 2019 $ 1,577 2020 2,107 2021 2,107 2022 2,107 2023 2,107 and thereafter 8,511 Total $ 18,516 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Sep. 30, 2018 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | 9. Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values: Level 1 — Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. Level 2 — Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3 — Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. When determining the fair value measurements for assets or liabilities required or permitted to be recorded at and/or marked to fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability. When possible, the Company looks to active and observable markets to price identical assets. When identical assets are not traded in active markets, the Company looks to market observable data for similar assets. The following tables summarize the basis used to measure certain financial assets and liabilities at fair value on a recurring basis in the consolidated balance sheets: September 30, 2018 Fair Value Measurements Using Level 1 Level 2 Level 3 Asset — interest rate cap $ — $ 527 $ — June 30, 2018 Fair Value Measurements Using Level 1 Level 2 Level 3 Asset — interest rate cap $ — $ 525 $ — The interest rate cap is valued utilizing pricing models taking into account inputs such as interest rates and notional amounts. In November 2017, the Company entered into an interest rate cap agreement with its existing lender to cap its London Interbank Offered Rate (“LIBOR”) at 2% for $34,594 of outstanding principal on its long-term debt. Fair value measurements for the Company’s interest rate cap are classified under Level 2 because such measurements are based on significant other observable inputs. There were no transfers of assets or liabilities between Level 1 and Level 2 during the three months ended September 30, 2018. |
LONG-TERM DEBT
LONG-TERM DEBT | 3 Months Ended |
Sep. 30, 2018 | |
LONG-TERM DEBT | |
LONG-TERM DEBT | 10. Long-term debt outstanding is as follows: September 30, 2018 June 30, 2018 Revolving credit facility $ — $ — Senior secured term loan 75,000 76,656 Debt issuance costs on term loan (1,395) (1,500) Total debt 73,605 75,156 Less current portion of long-term debt 5,921 5,475 Less current portion of debt issuance costs on term loan (400) (406) Long-term debt — less current portion $ 68,084 $ 70,087 On October 2, 2017, the Company entered into a Third Amended and Restated Credit and Guaranty Agreement with Fifth Third Bank, as the agent and letter of credit issuer, and the lenders party thereto (the “Third Amended Credit Agreement”). The Third Amended Credit Agreement replaced and paid off the Company’s Second Amended and Restated Credit Agreement, dated May 27, 2016. The Third Amended Credit Agreement provides the Company with a $145,000 senior secured credit facility, consisting of a $115,000 term loan (the “Third Term Loan”) and a $30,000 revolving credit facility (the “Revolving Credit Facility”). The Third Amended Credit Agreement bears interest, at the Company’s option, at either the prime rate plus an applicable margin ranging from 0.75% to 1.75% or at an adjusted LIBOR rate plus an applicable margin ranging from 1.75% to 2.75%, in each case based on the Company’s senior leverage ratio. Based on the Company’s current senior leverage ratio, the applicable margin for loans accruing interest at the prime rate is 1.00% and the applicable margin for loans accruing interest at LIBOR is 2.00%. The Third Term Loan will mature and all remaining amounts outstanding thereunder will be due and payable on October 2, 2022. During the three months ended September 30, 2018, the Company made voluntary payments on the Third Term Loan of $660 out of excess cash. As of September 30, 2018 and June 30, 2018, the Company’s unamortized deferred financing costs related to the Third Term Loan were $1,395 and $1,499, respectively. These costs are being amortized over the term of the Third Amended Credit Agreement. The Company was in compliance with all of its debt covenants under its Third Amended Credit Agreement. As of September 30, 2018, the Company had no borrowings outstanding on its Revolving Credit Facility. As of September 30, 2018 and June 30, 2018, the Company had net availability of $30,000. The Company’s unamortized deferred financing costs on its Revolving Credit Facility were $361 and $383 as of September 30, 2018 and June 30, 2018, respectively. On October 1, 2018, the Company entered into the Fourth Amended Credit Agreement (as defined herein). See Note 15. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Sep. 30, 2018 | |
INCOME TAXES | |
INCOME TAXES | 11. 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. During the three months ended September 30, 2018, the Company’s effective tax rate was 20.8%. The differences in the Company’s effective tax rate in comparable historical periods presented and the statutory federal tax rate of 21% primarily relate to a permanent benefit associated with the foreign derived intangible income deduction and the inclusion of the state tax rate in the overall effective rate. The Company’s consolidated interim effective tax rate for the three months ended September 30, 2018 is lower compared the 33.4% effective tax rate for the three months ended October 1, 2017, primarily due to the enactment of the Tax Cuts and Jobs Act. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
Sep. 30, 2018 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | 12. The following table sets forth the computation of the Company’s earnings per share: Three Months Ended September 30, 2018 October 1, 2017 Net income $ 8,465 $ 7,046 Weighted average common shares — basic 18,646,039 18,615,100 Dilutive effect of assumed exercises of stock options 52,353 30,943 Dilutive effect of assumed restricted share awards\units 70,372 40,583 Weighted average outstanding shares — diluted 18,768,764 18,686,626 Basic earnings per share $ 0.45 $ 0.38 Diluted earnings per share $ 0.45 $ 0.38 For the three months ended September 30, 2018 and October 1, 2017, there were no anti-dilutive weighted average shares to be excluded from the computation of diluted earnings per share. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended |
Sep. 30, 2018 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | 13. During fiscal year ended June 30, 2015 the Company adopted the Amended and Restated MCBC Holdings, Inc. 2015 Incentive Award Plan (“2015 Plan”) in order to facilitate the grant of cash and equity incentives to non-employee directors, employees, and consultants of the Company and certain of its affiliates and to enable the Company and certain of its affiliates to obtain and retain the services of these individuals, which is essential to our long-term success. In July 2015, the Board amended and restated the Company’s 2015 Plan which became effective just prior to the closing of the Company’s initial public offering to increase the shares available for issuance under the 2015 Plan. In July 2018, the Company granted to certain employees 31,207 shares of restricted stock awards (“RSAs”) under the 2015 Plan. The grant date fair value of these awards was $830, which is based on the market value of the Company’s common stock on the grant date. The RSAs will vest in three equal annual installments. In addition, the Company granted 12,414 RSAs under the 2015 Plan to certain non-employee directors for their annual equity award at a per share fair value of $26.59. In August 2018, the Company granted 262 of RSAs to certain employees under the 2015 Plan at a per share fair value of $25.27. In August 2018, the Company granted 33,082 performance stock units (“PSUs”) under its 2015 Plan to certain employees. The grant date fair value of these awards was $1,040, which is based on long-term market performance targets using a Monte Carlo Simulation model, which considers the likelihood of all possible outcomes and determines the number of shares expected to vest under each simulation and the expected stock price at that level. The awards will be earned based upon the Company’s attainment of certain performance criteria over a three-year period. The performance period for the awards is a three-year period commencing July 1, 2018 and ending June 30, 2021. Following the determination of the Company’s achievement with respect to the performance criteria, the amount of shares awarded will be subject to adjustment based upon the application of a total shareholder return (“TSR”) modifier. During the three months ended September 30, 2018 and October 1, 2017, the Company recognized $384 and $264, respectively in stock-based compensation expense. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 3 Months Ended |
Sep. 30, 2018 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | 14. The Company designs, manufactures, and markets recreational premium performance sport boats and outboard boats and has two operating and reportable segments: MasterCraft and NauticStar. The Company’s segments are defined by management’s reporting structure, product brands, and distribution channels. The MasterCraft product brand consists of recreational performance boats primarily used for water skiing, wakeboarding, wake surfing, and general recreational boating. The Company distributes the MasterCraft product brand through its dealer network. The NauticStar product brand consists of outboard boats primarily used for salt water fishing, and general recreational boating. The Company distributes the NauticStar product brand through its dealer network. The Company’s chief operating decision maker (“CODM”) regularly reviews the operating performance of each product brand including measures of performance based on income from operations. The Company considers each of the product brands to be an operating segment and has further concluded that presenting disaggregated information of these two operating segments provides meaningful information as certain economic characteristics are dissimilar as well as the characteristics of the customer base served. Management evaluates performance based on business segment operating income. The Company files a consolidated income tax return and does not allocate income taxes and other corporate level expenses including interest to operating segments. The following tables present financial information for the Company’s reportable segments for the three months ended September 30, 2018, and the Company’s financial position at September 30, 2018 and June 30, 2018, respectively. All amounts for the three months ended October 1, 2017 pertain exclusively to the MasterCraft segment. Three Months Ended September 30, 2018 MasterCraft NauticStar Consolidated Net sales $ 76,234 $ 17,407 $ 93,641 Cost of sales 55,023 15,415 70,438 Operating income 11,530 81 11,611 Depreciation and amortization 805 630 1,435 As of September 30, 2018 As of June 30, 2018 Assets MasterCraft $ 95,357 $ 89,058 NauticStar 86,889 87,866 Total Assets (a) $ 182,246 $ 176,924 (a) Total assets as of September 30, 2018 and as of June 30, 2018 include goodwill of $29,593 and $36,199 related to MasterCraft and NauticStar, respectively. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Sep. 30, 2018 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 15. Crest Acquisition On October 1, 2018, the Company completed t he acquisition of Crest Marine LLC (“Crest”) for t he aggregate purchase price of approximately $80,000 (the “Acquisition”) . The aggregate purchase price is subject to certain customary adjustments for the amount of working capital in the business at the closing date. A portion of the purchase price was deposited into escrow accounts in order to secure certain post-closing obligations of the existing members. Due to the timing of the acquisition, the Company has not completed the valuation of assets acquired or liabilities assumed. Fourth Amended and Restated Credit Agreement On October 1, 2018, the Company and its wholly-owned subsidiaries (the “Borrowers”) entered into a Fourth Amended and Restated Credit and Guaranty Agreement by and among the Borrowers, the Company, as a guarantor, Fifth Third Bank, as the agent and letter of credit issuer, and the lenders party thereto (the “Fourth Amended Credit Agreement”). The Fourth Amended Credit Agreement provides the Company with a $190,000 senior secured credit facility, consisting of a $75,000 term loan, a $80,000 term loan (the “Fourth Term Loans”) and a $35,000 revolving credit facility. The Fourth Amended Credit Agreement bears interest, at the Company’s option, at either the prime rate plus an applicable margin ranging from 0.5% to 1.50% or at an adjusted LIBOR plus an applicable margin ranging from 1.5% to 2.50%, in each case based on the Company’s senior leverage ratio. Based on the Company’s current net leverage ratio, the applicable margin for loans accruing interest at the prime rate is 1.00% and the applicable margin for loans accruing interest at LIBOR is 2.00%. In connection with the Fourth Amended Credit Agreement, the Company paid $8 08 of related fees. The Fourth Term Loans will mature and all remaining amounts outstanding thereunder will be due and payable on October 1, 2023. |
BASIS OF PRESENTATION AND SIG_2
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Sep. 30, 2018 | |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | |
Fiscal Period | The Company’s fiscal year begins July 1 and ends June 30, with the interim quarterly reporting periods consisting of 13 weeks. Therefore, the quarter end will not always coincide with the date of the end of the calendar month. |
Principles of Consolidation | The information furnished in the condensed consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which are, in the opinion of management, necessary for a fair presentation of the results of operations and statements of financial position for the interim periods presented. 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 U.S. Securities and Exchange Commission (“SEC”) for financial information have been condensed or omitted pursuant to such rules and regulations. The June 30, 2018 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 Annual Report on Form 10-K for the fiscal year ended June 30, 2018. |
Basis of Accounting | 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, 2018 and, in the opinion of management, reflect all adjustments considered necessary to present fairly the Company’s financial position as of September 30, 2018 and results of its operations, and its cash flows for the three months ended September 30, 2018 and October 1, 2017 and statement of shareholders’ equity for the three months ended September 30, 2018. All adjustments are of a normal recurring nature. Our interim operating results for the three months ended September 30, 2018 and October 1, 2017 are not necessarily indicative of the results to be expected in future operating quarters. |
New Accounting Pronouncements Issued, Adopted and Not Yet Adopted | Recently Adopted Accounting Standards — In May 2014, the Financial Accounting Standards Board (the “FASB”) and International Accounting Standards Board jointly issued Accounting Standards Update (“ASU”) 2014-09 , Revenue from Contracts with Customers (Topic 606) , which provides a principle-based accounting guidance for revenue recognition. ASU 2014-09, as amended, became effective for public companies for annual and interim periods beginning after December 15, 2017. Effective July 1, 2018, we adopted the new revenue standard using the modified retrospective transition approach by recognizing a cumulative adjustment to the opening balance of retained earnings. Due to the implementation of ASU 2014-09, the Company has changed the timing of when it records retail promotions and rebates. The cumulative effect of the changes made to the Company’s Condensed Consolidated Balance Sheets as of July 1, 2018 for the adoption of the new revenue standard was as follows: Balance as of Adjustments Balance as of June 30, 2018 Due to ASC 606 July 1, 2018 Accrued expenses and other current liabilities $ 27,866 $ 4,029 $ 31,895 Deferred income taxes 1,427 (938) 489 Accumulated deficit (61,717) (3,091) (64,808) The following table summarizes the impact of ASU 2014-09 on the Company's Condensed Consolidated Statement of Operations for the three months ended September 30, 2018: Balances without Statement of Operations As Reported Effect of Change adoption of ASC 606 Net sales $ 93,641 $ 517 $ 94,158 Income before income tax expense 10,691 517 11,208 Income tax expense 2,226 116 2,342 Net income 8,465 401 8,866 The following table summarizes the impact of ASU 2014-09 on the Company’s Condensed Consolidated Balance Sheet as of September 30, 2018: Balances without Balance Sheet As Reported Effect of Change adoption of ASC 606 Accrued expenses and other current liabilities $ 29,555 $ (4,385) $ 25,170 Income taxes 1,626 1,054 2,680 Accumulated deficit (56,343) 3,492 (52,851) Recently Issued Accounting Standards — In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement . This guidance modifies the disclosure requirements on fair value measurements in Topic 820 by removing disclosures regarding transfers between Level 1 and Level 2 of the fair value hierarchy, by modifying the measurement uncertainty disclosure, and by requiring additional disclosures for Level 3 fair value measurements, among others. The amendments are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company is currently evaluating the effect that the adoption of this new guidance is expected to have on our financial position or results of operations and related disclosures. In June 2018, the FASB issued ASU 2018-07 , Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting . This guidance provides clarity and reduces complexity when applying the guidance in Topic 718, Compensation—Stock Compensation to the term or condition of share-based payments to nonemployees. ASU 2018-07 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2018. The Company is currently evaluating the effect that the adoption of this new guidance is expected to have on our financial position or results of operations and related disclosures. This guidance will be adopted for the fiscal year beginning July 1, 2019. In January 2017, the FASB issued ASU 2017-04 , Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This guidance eliminates Step 2 from the goodwill impairment test. Instead, an entity should recognize an impairment charge for the amount by which the carrying value exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to that reporting unit. ASU 2017-04 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2019. The Company is currently evaluating the effect that the adoption of this new guidance is expected to have on its financial position or results of operations and related disclosures. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . This guidance establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. In July 2018, the FASB issued ASU 2018-11 providing for an additional transition method by allowing entities to initially apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings. The Company is currently evaluating the impact this new guidance is expected to have on its financial position or results of operations and related disclosures. |
BASIS OF PRESENTATION AND SIG_3
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Sep. 30, 2018 | |
ASU 14-09 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Summary of cumulative effect of the changes made to the Company’s Consolidated Balance Sheets and Statement of Operations | The cumulative effect of the changes made to the Company’s Condensed Consolidated Balance Sheets as of July 1, 2018 for the adoption of the new revenue standard was as follows: Balance as of Adjustments Balance as of June 30, 2018 Due to ASC 606 July 1, 2018 Accrued expenses and other current liabilities $ 27,866 $ 4,029 $ 31,895 Deferred income taxes 1,427 (938) 489 Accumulated deficit (61,717) (3,091) (64,808) The following table summarizes the impact of ASU 2014-09 on the Company's Condensed Consolidated Statement of Operations for the three months ended September 30, 2018: Balances without Statement of Operations As Reported Effect of Change adoption of ASC 606 Net sales $ 93,641 $ 517 $ 94,158 Income before income tax expense 10,691 517 11,208 Income tax expense 2,226 116 2,342 Net income 8,465 401 8,866 The following table summarizes the impact of ASU 2014-09 on the Company’s Condensed Consolidated Balance Sheet as of September 30, 2018: Balances without Balance Sheet As Reported Effect of Change adoption of ASC 606 Accrued expenses and other current liabilities $ 29,555 $ (4,385) $ 25,170 Income taxes 1,626 1,054 2,680 Accumulated deficit (56,343) 3,492 (52,851) |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 3 Months Ended |
Sep. 30, 2018 | |
REVENUE RECOGNITION | |
Summary of revenues by categories | MasterCraft NauticStar Total Major Product Categories Boats and trailers $ 72,376 $ 17,123 $ 89,499 Parts 3,581 280 3,861 Other revenue 277 4 281 Total $ 76,234 $ 17,407 $ 93,641 |
ACQUISITION (Tables)
ACQUISITION (Tables) | 3 Months Ended |
Sep. 30, 2018 | |
ACQUISITION | |
Schedule of purchase price allocation based on the estimated fair values of assets acquired and liabilities assumed as of the acquisition date | Purchase Price: Cash paid, net of cash acquired $ 80,511 Recognized amounts of identifiable assets acquired and (liabilities assumed), at fair value: Accounts receivable $ 1,773 Inventories 6,358 Other current assets 94 Indemnification asset 166 Deferred income taxes 83 Property, plant and equipment 4,945 Identifiable intangible assets 36,000 Current liabilities (4,858) Unrecognized tax positions (249) Fair value of assets acquired and liabilities assumed 44,312 Goodwill 36,199 $ 80,511 |
Schedule of pro forma financial information | Three Months Ended October 1, 2017 Net sales $ 83,118 Net income $ 6,495 Basic earnings per share $ 0.35 Diluted earnings per share $ 0.35 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 3 Months Ended |
Sep. 30, 2018 | |
INVENTORIES | |
Schedule of inventories | September 30, 2018 June 30, 2018 Raw materials and supplies $ 11,311 $ 9,587 Work in process 3,138 2,822 Finished goods 8,261 9,026 Obsolescence reserve (981) (968) Total inventories $ 21,729 $ 20,467 |
PREPAID EXPENSES AND OTHER CU_2
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) | 3 Months Ended |
Sep. 30, 2018 | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | |
Schedule of prepaid expenses and other current assets | September 30, 2018 June 30, 2018 Prepaid photo shoot $ 747 $ 273 Insurance 637 974 Trade show deposits 204 111 Interest rate cap 527 525 Other 1,472 1,412 Total prepaid expenses and other current assets $ 3,587 $ 3,295 |
ACCRUED EXPENSES AND OTHER CU_2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 3 Months Ended |
Sep. 30, 2018 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
Schedule of accrued expenses and other current liabilities | September 30, 2018 June 30, 2018 Warranty $ 13,454 $ 13,077 Self-insurance 749 703 Compensation and related accruals 2,076 2,995 Inventory repurchase contingent obligation 1,202 1,274 Interest 2,000 1,472 Dealer incentives 7,408 4,628 Other 2,666 3,717 Total accrued expenses and other current liabilities $ 29,555 $ 27,866 |
Schedule of roll forward of the accrued warranty liability | Beginning balance - June 30, 2018 $ 13,077 Provisions 1,769 Payments made (2,249) Adjustments to preexisting warranties 857 Ending balance - September 30, 2018 $ 13,454 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Sep. 30, 2018 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
Schedule of carrying amounts of goodwill | September 30, 2018 June 30, 2018 Goodwill attributable to MasterCraft $ 29,593 $ 29,593 Goodwill attributable to NauticStar 36,199 36,199 Total goodwill $ 65,792 $ 65,792 |
Schedule of intangible assets other than goodwill | September 30, 2018 Gross Net Carrying Accumulated Carrying Amount Amortization Amount Dealer network $ 21,590 $ (3,074) $ 18,516 Total amortizable intangible assets 21,590 (3,074) 18,516 Trade names 32,000 — 32,000 Total intangible assets $ 53,590 $ (3,074) $ 50,516 June 30, 2018 Gross Net Carrying Accumulated Carrying Amount Amortization Amount Dealer network $ 21,590 $ (2,544) $ 19,046 Total amortizable intangible assets 21,590 (2,544) 19,046 Trade names 32,000 — 32,000 Total intangible assets $ 53,590 $ (2,544) $ 51,046 |
Schedule of estimated amortization expense | Fiscal years ending June 30, Remainder of 2019 $ 1,577 2020 2,107 2021 2,107 2022 2,107 2023 2,107 and thereafter 8,511 Total $ 18,516 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Sep. 30, 2018 | |
FAIR VALUE MEASUREMENTS | |
Assets measured at fair value on a recurring basis | September 30, 2018 Fair Value Measurements Using Level 1 Level 2 Level 3 Asset — interest rate cap $ — $ 527 $ — June 30, 2018 Fair Value Measurements Using Level 1 Level 2 Level 3 Asset — interest rate cap $ — $ 525 $ — |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 3 Months Ended |
Sep. 30, 2018 | |
LONG-TERM DEBT | |
Schedule of long-term debt outstanding | September 30, 2018 June 30, 2018 Revolving credit facility $ — $ — Senior secured term loan 75,000 76,656 Debt issuance costs on term loan (1,395) (1,500) Total debt 73,605 75,156 Less current portion of long-term debt 5,921 5,475 Less current portion of debt issuance costs on term loan (400) (406) Long-term debt — less current portion $ 68,084 $ 70,087 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Sep. 30, 2018 | |
EARNINGS PER SHARE | |
Factors used in the earnings per share computation | Three Months Ended September 30, 2018 October 1, 2017 Net income $ 8,465 $ 7,046 Weighted average common shares — basic 18,646,039 18,615,100 Dilutive effect of assumed exercises of stock options 52,353 30,943 Dilutive effect of assumed restricted share awards\units 70,372 40,583 Weighted average outstanding shares — diluted 18,768,764 18,686,626 Basic earnings per share $ 0.45 $ 0.38 Diluted earnings per share $ 0.45 $ 0.38 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 3 Months Ended |
Sep. 30, 2018 | |
SEGMENT INFORMATION | |
Schedule of operating information for reportable segments | All amounts for the three months ended October 1, 2017 pertain exclusively to the MasterCraft segment. Three Months Ended September 30, 2018 MasterCraft NauticStar Consolidated Net sales $ 76,234 $ 17,407 $ 93,641 Cost of sales 55,023 15,415 70,438 Operating income 11,530 81 11,611 Depreciation and amortization 805 630 1,435 As of September 30, 2018 As of June 30, 2018 Assets MasterCraft $ 95,357 $ 89,058 NauticStar 86,889 87,866 Total Assets (a) $ 182,246 $ 176,924 Total assets as of September 30, 2018 and as of June 30, 2018 include goodwill of $29,593 and $36,199 related to MasterCraft and NauticStar, respectively. |
ORGANIZATION AND NATURE OF BU_2
ORGANIZATION AND NATURE OF BUSINESS (Details) | 3 Months Ended |
Sep. 30, 2018segment | |
ORGANIZATION AND NATURE OF BUSINESS | |
Number of reportable segments | 2 |
BASIS OF PRESENTATION AND SIG_4
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - Interim Quarterly Reporting Periods (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Sep. 30, 2018 | Jul. 02, 2018 | Jul. 01, 2018 | Jun. 30, 2018 | |
Estimated Cumulative Effect | ||||
Interim quarterly reporting periods | 91 days | |||
Cumulative effect of the changes | ||||
Accrued expenses and other current liabilities | $ 29,555 | $ 31,895 | $ 27,866 | |
Deferred income taxes | 205 | 489 | 1,427 | |
Accumulated deficit | (56,343) | $ (64,808) | $ (61,717) | |
Adjustments Due to ASC 606 | ||||
Cumulative effect of the changes | ||||
Accrued expenses and other current liabilities | (4,385) | $ 4,029 | ||
Deferred income taxes | (938) | |||
Accumulated deficit | $ 3,492 | $ (3,091) |
BASIS OF PRESENTATION AND SIG_5
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - Impact of ASU (Details) - USD ($) $ in Thousands | 3 Months Ended | ||||
Sep. 30, 2018 | Oct. 01, 2017 | Jul. 02, 2018 | Jul. 01, 2018 | Jun. 30, 2018 | |
Statement of Operations | |||||
Net Sales | $ 93,641 | $ 65,049 | |||
Cost of sales | 70,438 | 46,886 | |||
Income before income tax expense | 10,691 | 10,573 | |||
Income tax expense | 2,226 | 3,527 | |||
Net income | 8,465 | $ 7,046 | |||
Balance Sheet | |||||
Accrued expenses and other current liabilities | 29,555 | $ 31,895 | $ 27,866 | ||
Income taxes | 1,626 | ||||
Accumulated deficit | (56,343) | $ (64,808) | $ (61,717) | ||
Adjustments Due to ASC 606 | |||||
Statement of Operations | |||||
Net Sales | 517 | ||||
Income before income tax expense | 517 | ||||
Income tax expense | 116 | ||||
Net income | 401 | ||||
Balance Sheet | |||||
Accrued expenses and other current liabilities | (4,385) | $ 4,029 | |||
Income taxes | 1,054 | ||||
Accumulated deficit | 3,492 | $ (3,091) | |||
Balances without adoption of ASC 606 | |||||
Statement of Operations | |||||
Net Sales | 94,158 | ||||
Income before income tax expense | 11,208 | ||||
Income tax expense | 2,342 | ||||
Net income | 8,866 | ||||
Balance Sheet | |||||
Accrued expenses and other current liabilities | 25,170 | ||||
Income taxes | 2,680 | ||||
Accumulated deficit | $ (52,851) |
REVENUE RECOGNITION (Details)
REVENUE RECOGNITION (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Sep. 30, 2018 | Oct. 01, 2017 | Jun. 30, 2018 | |
Revenue by Categories | |||
Revenue | $ 93,641 | $ 65,049 | |
Revenue practical expedients | |||
Revenue, Practical Expedient, Financing Component | true | ||
Revenue, Practical Expedient, Initial Application and Transition, Nondisclosure of Transaction Price Allocation to Remaining Performance Obligation | true | ||
Accrued Expenses and Other Current Liabilities | |||
Contract liabilities | |||
Customer contract liabilities | $ 1,214 | $ 2,194 | |
MasterCraft | |||
Revenue by Categories | |||
Revenue | 76,234 | ||
NauticStar | |||
Revenue by Categories | |||
Revenue | 17,407 | ||
Boats and trailers | |||
Revenue by Categories | |||
Revenue | 89,499 | ||
Boats and trailers | MasterCraft | |||
Revenue by Categories | |||
Revenue | 72,376 | ||
Boats and trailers | NauticStar | |||
Revenue by Categories | |||
Revenue | 17,123 | ||
Parts | |||
Revenue by Categories | |||
Revenue | 3,861 | ||
Parts | MasterCraft | |||
Revenue by Categories | |||
Revenue | 3,581 | ||
Parts | NauticStar | |||
Revenue by Categories | |||
Revenue | 280 | ||
Other | |||
Revenue by Categories | |||
Revenue | 281 | ||
Other | MasterCraft | |||
Revenue by Categories | |||
Revenue | 277 | ||
Other | NauticStar | |||
Revenue by Categories | |||
Revenue | $ 4 |
ACQUISITION - Purchase Price Al
ACQUISITION - Purchase Price Allocation (Details) $ in Thousands | Oct. 02, 2017USD ($)item | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) |
Acquisition | |||
Number of boat brands | item | 2 | ||
Recognized amounts of identifiable assets acquired and (liabilities assumed), at fair value: | |||
Goodwill | $ 65,792 | $ 65,792 | |
NauticStar | |||
Purchase Price: | |||
Cash paid, net of cash acquired | $ 80,511 | ||
Recognized amounts of identifiable assets acquired and (liabilities assumed), at fair value: | |||
Accounts receivable | 1,773 | ||
Inventories | 6,358 | ||
Other current assets | 94 | ||
Indemnification asset | 166 | ||
Deferred income taxes | 83 | ||
Property, plant and equipment | 4,945 | ||
Identifiable intangible assets | 36,000 | ||
Current liabilities | (4,858) | ||
Unrecognized tax positions | (249) | ||
Fair value of assets acquired and liabilities assumed | 44,312 | ||
Goodwill | 36,199 | ||
Total purchase price allocation | $ 80,511 |
ACQUISITION - Pro Forma Informa
ACQUISITION - Pro Forma Information (Details) $ / shares in Units, $ in Thousands | 3 Months Ended |
Oct. 01, 2017USD ($)$ / shares | |
Pro Forma financial information | |
Net sales | $ | $ 83,118 |
Net income | $ | $ 6,495 |
Basic earnings per share | $ / shares | $ 0.35 |
Diluted earnings per share | $ / shares | $ 0.35 |
INVENTORIES - Components (Detai
INVENTORIES - Components (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Jun. 30, 2018 |
INVENTORIES | ||
Raw materials and supplies | $ 11,311 | $ 9,587 |
Work in process | 3,138 | 2,822 |
Finished goods | 8,261 | 9,026 |
Obsolescence reserve | (981) | (968) |
Total inventories | $ 21,729 | $ 20,467 |
PREPAID EXPENSES AND OTHER CU_3
PREPAID EXPENSES AND OTHER CURRENT ASSETS - Components (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Jun. 30, 2018 |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | ||
Prepaid photo shoot | $ 747 | $ 273 |
Insurance | 637 | 974 |
Trade show deposits | 204 | 111 |
Interest rate cap | 527 | 525 |
Other | 1,472 | 1,412 |
Total prepaid expenses and other current assets | $ 3,587 | $ 3,295 |
ACCRUED EXPENSES AND OTHER CU_3
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES - Components (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Jul. 02, 2018 | Jun. 30, 2018 |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |||
Warranty | $ 13,454 | $ 13,077 | |
Self-insurance | 749 | 703 | |
Compensation and related accruals | 2,076 | 2,995 | |
Inventory repurchase contingent obligation | 1,202 | 1,274 | |
Interest | 2,000 | 1,472 | |
Dealer incentives | 7,408 | 4,628 | |
Other | 2,666 | 3,717 | |
Total accrued expenses and other current liabilities | $ 29,555 | $ 31,895 | $ 27,866 |
ACCRUED EXPENSES AND OTHER CU_4
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES - Warranty Liability (Details) $ in Thousands | 3 Months Ended |
Sep. 30, 2018USD ($) | |
Roll forward of the accrued warranty liability | |
Beginning balance | $ 13,077 |
Provisions | 1,769 |
Payments made | (2,249) |
Adjustments to preexisting warranties | 857 |
Ending balance | $ 13,454 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS - Goodwill (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Jun. 30, 2018 |
Goodwill | ||
Goodwill | $ 65,792 | $ 65,792 |
MasterCraft | ||
Goodwill | ||
Goodwill | 29,593 | 29,593 |
NauticStar | ||
Goodwill | ||
Goodwill | $ 36,199 | $ 36,199 |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLE ASSETS - Intangible Assets Other Than Goodwill (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Jun. 30, 2018 |
Amortizable intangible assets | ||
Gross Carrying Amount | $ 21,590 | $ 21,590 |
Accumulated Amortization | (3,074) | (2,544) |
Total | 18,516 | 19,046 |
Indefinite-lived intangible assets | ||
Trade names | 32,000 | 32,000 |
Total intangible assets | ||
Gross Carrying Amount | 53,590 | 53,590 |
Net Carrying Amount | 50,516 | 51,046 |
Dealer network | ||
Amortizable intangible assets | ||
Gross Carrying Amount | 21,590 | 21,590 |
Accumulated Amortization | (3,074) | (2,544) |
Total | $ 18,516 | $ 19,046 |
GOODWILL AND OTHER INTANGIBLE_5
GOODWILL AND OTHER INTANGIBLE ASSETS - Future Amortization (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Sep. 30, 2018 | Oct. 01, 2017 | Jun. 30, 2018 | |
Finite-lived intangible assets | |||
Amortization of intangible assets | $ 530 | $ 27 | |
Estimated amortization expense | |||
Remainder of 2019 | 1,577 | ||
2,020 | 2,107 | ||
2,021 | 2,107 | ||
2,022 | 2,107 | ||
2,023 | 2,107 | ||
and thereafter | 8,511 | ||
Total | $ 18,516 | $ 19,046 |
FAIR VALUE MEASUREMENTS - Asset
FAIR VALUE MEASUREMENTS - Assets and Liabilities at Fair Value (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Jun. 30, 2018 | Nov. 26, 2017 |
Assets and liabilities measured at fair value | |||
Asset | $ 527 | $ 525 | |
Recurring | |||
Assets and liabilities measured at fair value | |||
Transfers of assets between Level 1 and Level 2 | 0 | ||
Transfers of liabilities between Level 1 and Level 2 | 0 | ||
Interest rate cap | |||
Assets and liabilities measured at fair value | |||
Outstanding principal of long-term debt | $ 34,594 | ||
Interest rate cap | LIBOR | |||
Assets and liabilities measured at fair value | |||
Interest rate cap | 2.00% | ||
Level 2 | Interest rate cap | Recurring | |||
Assets and liabilities measured at fair value | |||
Asset | $ 527 | $ 525 |
LONG-TERM DEBT - Components (De
LONG-TERM DEBT - Components (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Jun. 30, 2018 |
Long-term debt | ||
Long-term debt, net of unamortized debt issuance costs | $ 73,605 | $ 75,156 |
Less current portion of long-term debt | 5,921 | 5,475 |
Long-term debt - less current portion | 68,084 | 70,087 |
Senior Secured Term Loan | ||
Long-term debt | ||
Long-term debt | 75,000 | 76,656 |
Debt issuance costs on term loan | (1,395) | (1,500) |
Less current portion of debt issuance costs on term loan | $ (400) | $ (406) |
LONG-TERM DEBT - Senior Secured
LONG-TERM DEBT - Senior Secured Credit Facility (Details) - USD ($) $ in Thousands | Oct. 02, 2017 | Sep. 30, 2018 | Jun. 30, 2018 |
Long-term debt | |||
Unamortized deferred financing costs | $ 361 | $ 383 | |
Third Amended Credit Agreement | |||
Long-term debt | |||
Maximum borrowing capacity | $ 145,000 | ||
Total unamortized deferred financing costs | 1,395 | 1,499 | |
Third Amended Credit Agreement | Senior Secured Term Loan | |||
Long-term debt | |||
Loan commitment | 115,000 | ||
Voluntary payments | 660 | ||
Third Amended Credit Agreement | Revolving credit facility | |||
Long-term debt | |||
Maximum borrowing capacity | $ 30,000 | ||
Outstanding borrowings | 0 | ||
Net availability under facility | $ 30,000 | $ 30,000 | |
Third Amended Credit Agreement | Prime Rate | |||
Long-term debt | |||
Effective interest rate | 1.00% | ||
Third Amended Credit Agreement | Prime Rate | Minimum | |||
Long-term debt | |||
Variable margin rate | 0.75% | ||
Third Amended Credit Agreement | Prime Rate | Maximum | |||
Long-term debt | |||
Variable margin rate | 1.75% | ||
Third Amended Credit Agreement | LIBOR | |||
Long-term debt | |||
Effective interest rate | 2.00% | ||
Third Amended Credit Agreement | LIBOR | Minimum | |||
Long-term debt | |||
Variable margin rate | 1.75% | ||
Third Amended Credit Agreement | LIBOR | Maximum | |||
Long-term debt | |||
Variable margin rate | 2.75% |
INCOME TAXES (Details)
INCOME TAXES (Details) | 3 Months Ended | |
Sep. 30, 2018 | Oct. 01, 2017 | |
INCOME TAXES | ||
Effective tax rate | 20.80% | 33.40% |
Statutory income tax rate | 21.00% |
EARNINGS PER SHARE - Factors (D
EARNINGS PER SHARE - Factors (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Sep. 30, 2018 | Oct. 01, 2017 | |
Factors used in the earnings per share computation | ||
Net income | $ 8,465 | $ 7,046 |
Weighted average common shares - basic | 18,646,039 | 18,615,100 |
Weighted average outstanding shares - diluted | 18,768,764 | 18,686,626 |
Basic earnings per share (in dollars per share) | $ 0.45 | $ 0.38 |
Diluted earnings per share (in dollars per share) | $ 0.45 | $ 0.38 |
Stock options | ||
Factors used in the earnings per share computation | ||
Dilutive effect of assumed exercises of stock options and restricted share awards\units | 52,353 | 30,943 |
Restricted stock awards | ||
Factors used in the earnings per share computation | ||
Dilutive effect of assumed exercises of stock options and restricted share awards\units | 70,372 | 40,583 |
EARNINGS PER SHARE - Anti-dilut
EARNINGS PER SHARE - Anti-dilutive Securities (Details) - shares | 3 Months Ended | |
Sep. 30, 2018 | Oct. 01, 2017 | |
Other disclosures | ||
Anti-dilutive securities excluded from computation of earning per share | 0 | 0 |
STOCK-BASED COMPENSATION - RSAs
STOCK-BASED COMPENSATION - RSAs and PSUs (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Aug. 26, 2018 | Jul. 29, 2018 | Sep. 30, 2018 | Oct. 01, 2017 | |
Stock-Based Compensation | ||||
Stock-based compensation | $ 384 | $ 264 | ||
Certain employees | Restricted stock awards | 2015 Plan | ||||
Stock-Based Compensation | ||||
Granted | 262 | 31,207 | ||
Grant date fair value | $ 830 | |||
Grant date market price | $ 25.27 | |||
Vesting period (in years) | 3 years | |||
Certain employees | Performance stock units | 2015 Plan | ||||
Stock-Based Compensation | ||||
Granted | 33,082 | |||
Grant date fair value | $ 1,040 | |||
Vesting period (in years) | 3 years | |||
Non-employee directors | Restricted stock awards | 2015 Plan | ||||
Stock-Based Compensation | ||||
Granted | 12,414 | |||
Grant date market price | $ 26.59 |
SEGMENT INFORMATION - Operating
SEGMENT INFORMATION - Operating Information (Details) $ in Thousands | 3 Months Ended | ||
Sep. 30, 2018USD ($)segment | Oct. 01, 2017USD ($) | Jun. 30, 2018USD ($) | |
Segment reporting information | |||
Number of operating segments | segment | 2 | ||
Number of reportable segments | segment | 2 | ||
Net Sales | $ 93,641 | $ 65,049 | |
Cost of sales | 70,438 | 46,886 | |
Operating income | 11,611 | 11,064 | |
Depreciation and amortization | 1,435 | $ 732 | |
Assets | 182,246 | $ 176,924 | |
Goodwill | 65,792 | 65,792 | |
MasterCraft | |||
Segment reporting information | |||
Net Sales | 76,234 | ||
Cost of sales | 55,023 | ||
Operating income | 11,530 | ||
Depreciation and amortization | 805 | ||
Assets | 95,357 | 89,058 | |
Goodwill | 29,593 | 29,593 | |
NauticStar | |||
Segment reporting information | |||
Net Sales | 17,407 | ||
Cost of sales | 15,415 | ||
Operating income | 81 | ||
Depreciation and amortization | 630 | ||
Assets | 86,889 | 87,866 | |
Goodwill | $ 36,199 | $ 36,199 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Subsequent Event $ in Thousands | Oct. 01, 2018USD ($) |
Fourth Amended Credit Agreement | |
Subsequent Events | |
Maximum borrowing capacity | $ 190,000 |
Debt related fees | $ 808 |
Fourth Amended Credit Agreement | Prime Rate | |
Subsequent Events | |
Accruing interest rate | 1.00% |
Fourth Amended Credit Agreement | Prime Rate | Minimum | |
Subsequent Events | |
Basis spread | 0.50% |
Fourth Amended Credit Agreement | Prime Rate | Maximum | |
Subsequent Events | |
Basis spread | 1.50% |
Fourth Amended Credit Agreement | LIBOR | |
Subsequent Events | |
Accruing interest rate | 2.00% |
Fourth Amended Credit Agreement | LIBOR | Minimum | |
Subsequent Events | |
Basis spread | 1.50% |
Fourth Amended Credit Agreement | LIBOR | Maximum | |
Subsequent Events | |
Basis spread | 2.50% |
Fourth Amended Credit Agreement | Term Loan One | |
Subsequent Events | |
Loan commitment | $ 75,000 |
Fourth Amended Credit Agreement | Term Loan Two | |
Subsequent Events | |
Loan commitment | 80,000 |
Fourth Amended Credit Agreement | Revolving credit facility | |
Subsequent Events | |
Maximum borrowing capacity | 35,000 |
Crest Marine | |
Subsequent Events | |
Purchase price | $ 80,000 |