MCFT - Earnings call transcript Q4 2018 | MasterCraft Boat Holdings, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Q4, 2018 MCBC Holdings Incorporated Earnings Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, today’s conference is being recorded. I would like to turn the call over to Tim Oxley, Chief Financial Officer. begin. may you Sir,

Tim Oxley

and will Today’s our also future operator, webcast website is live listening. and be welcome, you, call everyone. being for Thank archived on

and Terry in MCBC call me Officer. is Joining Holdings’ today’s President Chief Executive McNew,

Terry, followed Our analysis by session. by will our the of agenda and growth Terry my strategies Then Q&A followed for overview financials. expectations includes strategic discuss a by the fiscal XXXX,

press participants of that is Before September the are contained statements. forward-looking we to subject the are release. begin, company call as we’d Statements statements facts in to statements, to The current XXXX. Safe remind only obligation update today, today’s like X, this that no disclaimer including Harbor historical and information assumes not any forward-looking in

conference non-GAAP or discuss this on operations. measures not of will we special exclude our call, include indicative ongoing items or that Additionally,

we For measure. GAAP each the non-GAAP comparable measure, most directly also provide

release our these fourth of includes Our reconciliation quarter results. fiscal GAAP earnings XXXX a to measures non-GAAP

Before the turning in listeners the to deck results Terry, financial I’ll like the With our summarizing our that, a Terry. would to there website. over is that turn call section slide of over Investors call to remind I

Terry McNew

us Thanks, to everyone Tim. today. thank I'd for also joining like

we As the net delivering income saw fourth year. ended for quarter today's you press record from release, both XXXX fiscal sales and and fiscal

activity inventory fiscal MasterCraft's history. for significantly the the improved enabled XXXX. inventory regard in to on drove with results. in June efficiency XXXX, us in unwavering continued levels largest our Moreover, Retail operational in retail stage in cash fiscal growth focus in strong management sales sets resulting and demand MasterCraft dealer Continued practices our retail throughout total to healthy our activity reduce dealer strengthened This debt. turns

we've locations year over output, in improve the financial calendar operational quality. and On fiscal margin. NauticStar improving We've both of quality leading our dealer begun Daily fiberglass the to financial product welcoming growth the and production side to category. In drive our made XX while expansion one up and executing development past our further improvements anniversary volume forward in new to NauticStar's of outboard safety share high management and strides dealer months, XXXX, excellence business, to the and MasterCraft also that leveraged is operational nearing XX family. industry building time, network added further the XXXX. nearly we're NauticStar the year on strengths and beginning we In additional since look market and strategies of we've

be XXX XTXX and in previously by product company introduction and the a for models. we recent of both and of model to at introductions forefront innovation released XTXX, our highlighted continue As the the performance our category, XStar

design to customized the X surf creates Surf a hull is that up surf motion, pounds and largest With science with to specific wake starting when engineers of with system new the and MasterCraft perfectly ballast X,XXX equipped XXX into MasterCraft sculpted put technology. that the Gen industry's

Storage rider’s minutes. was thoughtfully switchback instantly new and side-to-side up operationally with concert passengers FastFill to feet, new ballast boat’s on their the XXX XXX is and including the compartments Pickle that tanks. XXXX the more families options Fork interior. gear create have shifts three bow water. scenarios friends by customize owners XX filling the seating preference. under cubic storage and for features U-shaped ballast serve functions. tank XXX The XXX fun Ballast room wake-specific New create full, ballast to people, premium surf-friendly Once work and on from for has the designed that a the spacious debuts on new spectating The comfortable above the technologies layout speeds in towing reverse A speed feature, storage seating in allow to wake-specific considerable the to ballast System, and lounge transom XXX time and XXX optional the tanks An for the XXX’s at to configuration and more lounging.

setting it but the we wakeboarding, With performance. surfing was on bar surf iconic outdo the reliability XXX exceptional and durability, ourselves, experience, performance, providing to the the XStar tough delivered. an water for offers while the ultimate XXX in in wake The and

to Now over I’d financials. the back Tim turn call to like go our over to

Tim Oxley

million increase sales unit gross increase reduced compared primarily in inclusion compared to quarter increased to Gross to Terry. or favorable June Thanks retail by growth net perspective, $X.X margin XX.X% due or million, to quarter, product XX.X% the period. mix, $XX.X $XX.X the fourth NauticStar, XX.X% for the a which ago rose $XX.X profit year Mastercraft quarter. to net The activity. compared XX.X% and the earlier increased $XX.X due favorable XX.X% increases. our million for to gain the $XX.X costs quarter. unit fiscal Gross attributable mix increased fourth XXXX, volume, of NauticStar product million or year a lower to warranty which fourth to ended to for $XX.X rise From in sales or Mastercraft top-line million, The fourth The year profit. increase Mastercraft $X.X contributed contributed million was XX.X% XX, volume, million Mastercraft, to million price by and was and rebate of inclusion for this prior sales million sales a increased sales for the in million. $XX.X $XX.X

year general This as million added year million administrative the rose $X.X or million XX.X% quarter, quarter $X selling June earlier an and $X.X fourth On marketing million lower costs. a net Fourth of brand and sales both to in $X.X which net compared X.X% the increase and and new points basis to to increases compensation sales resulted XX mainly selling a of results for expense resulted front, million costs This an and a administrative $X.X XX% million the litigation expense expenses. by segment $X.X NauticStar, from percentage expenses. in from $X.X different XX, the prior decreased inclusion to compared period. X.X% period. higher for year in XXXX, to by startup period. for general administrative increase increases for increased marketing for significant and -- This favourable NauticStar, compared to of inclusion charge, expense or ended a for to settlement mainly the expense impact from million General the prior compared

non-GAAP for expected prior company’s annual diluted rate period. $X.XX tax fiscal year quarter costs, leverage comments the reduced bottom below Adjusted the totaled EBITDA XXXX to lower XX%. GAAP. pleased and driven XX.X% reconciliation fiscal $X.X XXXX. to the reduce forward tax EBITDA to to share call EBITDA, or adjusted of over annual quarter. in outlook. margin fourth times the million net Cuts million, activity in With average fourth is from $XX.X directly by fiscal I was half to income Turning the the the Act. share million $XX.X MasterCraft's Cuts income the per share and acquisition. of interest diluted approximately XX%. XX.X% In representing decline I’ll was look EBITDA margin debt turn the year a won’t cash The period. to in the measures for I in inclusion of estimated period, most the for results times and year-to-date Terry NauticStar EBITDA of See the measures, the enabled Adjusted flow $X.XX approximately $XX.X rate time weighted enactment the answer purchase with for almost This year today, compared of at I��ll down financial XXXX year of echo Jobs compares the of Tax effective of of the presented million adjusted will any to for $X.X for or very adjusted comparable accordance warranty adjusted line, NauticStar, borrowed details and million, effective Act, rebate and of versus fully the the fourth XX.X Tax retail Net using our earlier was completed from that, payments per reiterate but company’s was at back million during debt we’re performance be to of to NauticStar. rates Q&A. $XX.X happy time, and that the fully end count $XX on our million to million full $XX.X compared prior net to tax strong Adjusted our the million X.X quarter, discuss of questions Terry's net Due with adjusted to fiscal income income of year net X.X shares Jobs

Terry McNew

ability performance operationally delivered Thanks in on again Tim. we in new our to front, Financially, us fiscal product confidence development fiscal XXXX. the strong XXXX, which execute gives and in

our innovative capturing market through strategy of our of in acquisition. we margin dealer network, growth, ahead, expansion driving both the additional and from sustainable remain categories, strengthening development and new excellence through through Looking steadfast organically boating and driving adjacent profitable products, share operational

in XX, start-up in percentage Adjusted a fiscal associated nor in are teens. full EBITDA the to approximately is both and currently margins adjusted up $X.X with high MasterCraft, costs NauticStar brands growth For we range, guidance, XXXX mid-XX% year sales EPS in low expect net adjusted the June to be expected growth percentage be expected to market guidance of segment serves. the the completely teens. million for The the be new neither is in

in the coming share to this We’re excited more quarters. on

sales percentage is mid-XX% expected fiscal second XX% growth first EBITDA percentage be the quarter With the range, ending net range. to was NauticStar in our Recall, is high September, adjusted the expected to the in in last fiscal EPS mid-teens. year. margins during acquired Adjusted in quarter be with growth

it like would operator for I questions. Now to over to turn the

Operator

line of question And Instructions] comes first Kennison our the Baird. Craig of from [Operator

Your now line open. is

Craig Kennison

to ask the margin. impact and average afternoon good prices on year. great the on Hey, and congratulations selling Wanted about

what You had ASPs performance. extent to to growth Wonder what ASP sustainable? driven good is extent margin that’s your and extraordinarily by

Tim Oxley

of The launched XXX, the recent were size XStar, larger new including products XTXX. at in the kind that Mastercraft we

Mastercraft that for So and that's bit. so AUSPs remains is that, our that sustainable. think pushed strong do the And a I up demand

Craig Kennison

that rate? point a for fourth is in the the proxy So you next level good the reported a quarter growth dollar or as year maybe starting

Tim Oxley

it's say pretty proxy to for a next good year. point starting I'd the

Craig Kennison

at year, driving your margin And thinking for that? What's erosion EBITDA next strong your this then looking year. margin in you're some performance behind calling

Tim Oxley

dilutive to well though bit gross Yeah, for X And the margin. are we have quarters doing next NauticStar even they're year. they

driving the most the down. margin piece that's significant So

Craig Kennison

And quarter NauticStar channel, trends and of kind comment then with the last you and to relative finished year? inventory Helpful. also could on where Mastercraft, during retail then to respect for the

Terry McNew

up. Yeah, Craig, Mastercraft dealer and of were this is Terry. pipeline Inventory both turns, NauticStar

So into July well. that. That with as pleased we're activity August and very retail continues

The in retail actually is new Mastercraft up substantially were we continued And year-over-year especially product we're well. of improvement So in dealer QX. very seeing global at terms turns. selling in

Tim Oxley

some plan boat you brand I out? launch try fiscal or imagine desire as finally, but XXXX. terms in when some then to a what cadence not that revenue And point we in much us you've going disclosed you're of at to model we can and might some see new share to maybe tell the detail,

Terry McNew

that very be won't The product that opportunity. year calendar Yeah, marketing excited launch for about 'XX. until

we'll that is a withhold wide activity. is So a is It's product. It or type not space wide a it space. but details, product watersports Mastercraft specific the not centric

sharing be have year in specifically more the we 'XX. February probably will to call. launch with plan X a We on models And you calendar

those backs terms additional and of added now were doing in work we add work related to the cost, done the the engineering, we're products. to prep We've design launch for staff. of So

sales when We to We backs will continue in those be correct. should add XXXX commence. fiscal expect

Craig Kennison

Okay great. so much. you thank Well

Terry McNew

Craig. Thanks

Operator

our question next Joe Raymond Altobello of comes James. from And you. Thank

now is line open. Your

Joe Altobello

Thanks hey guys good afternoon.

that NauticStar said follow know you're And First lapping EBITDA question want the did on mid-XXs. nice guidance first You've some not for seen particularly I NauticStar the couple up I the include quarter of lapped last you've quarters also a But year. I that last growth. quarter you quarters guess EBITDA margin to include didn't

So I'd maybe expansion. or EBITDA say margin

pressure us help maybe that understand the tough putting what's the first just downward on So compare? quarter beyond

Terry McNew

sale us we have rules as will appose as done book to effective did we expected caused to fiscal you have when time discounts recognition the program for if of announce to previously. the The any are 'XX that revenue

that's those discounts so to timing will. And if change you going the of

in booked And that's be or pushing QX would QX. so discounts into normally that QX

Tim Oxley

in adjusted on as is mentioned so impact negatively mid-XXs, basis comments a full QX. of the margins in prepared year the Yeah but are Joe, timing our EBITDA I

a pretty on it's basis nominal. year-over-year So

Joe Altobello

do as have do guys Okay. to That's I then have you. produce talked up you helpful, thank you very to secondly boats? And that far have boats where capability ability to larger as today wanting you XX And expect guess about stand guess to capability? seats. to I the When produce

Terry McNew

product XX comment that growing. of above up NauticStar's of related is is market, it's to segment feet where below. So product a specifically XX% is the kind feet was NauticStar. that portfolio that size but bit, earlier call, and on larger It's And relates flat. that is XX

We have at up X ahead marketing about development few we will models over launch. currently. get next feet NauticStar But specifically. the those the I And years, of I introduce time, the models don't NauticStar. X in of want won't larger. the product at to are over XX talk to X

Joe Altobello

Okay, great.

the either one a in guys year, terms if from What tariff being for markets more Obviously do lot your about Canada dealers? it or Just tariffs you by those impact this EU. assuming be I direct or borne in you could. demand discussion on of costs of whether in for the

Terry McNew

the basis. think to tariffs going all, we a First are be temporary on of

know we of Second has Australia some thing it -- offsetting for U.S. have included been and guidance. in is particular, that the Europe. ourselves that's that support in And particular strong of is And we'll bit the our dealers. can are in But in to tariff so because correct. our support level in are softness,

Joe Altobello

Thank you guys. Okay, great.

Terry McNew

Thanks Joe.

Operator

line And the FBR. Riley Eric question of B. next from of Wold comes our

Your line open. is now

Eric Wold

in they're maybe Good guys. I great up afternoon. fiscal are Is launch is product with what's you initial introduction have guidance it cost associated around, included the one fiscal product for any Thank side? on not probably included you, new marketing assume Or there, but Two that 'XX revenue on and got me, 'XX? questions costs costs of brand kind about much and in talking in following all there the you've

Tim Oxley

continue 'XX of being have And the incurred No, are we on like for we'll of the X MasterCraft models years. side side, beginning last fiscal be particular new X the now. revenue new launch brand in MasterCraft NauticStar that will in the costs to just from

Eric Wold

are fiscal on ‘XX Okay. of around of terms per in And within the you of then production is on the boats of NauticStar what number terms side, in improving Kind where day? anticipated guidance that that?

Tim Oxley

Yes.

if I went we So and in December May, XX day about remember X then in went and XX to February, to up in in our in we in calls and mentioned again count back a from that you and again the senior institution almost an that very industry XX, this count. our at quality we’ve we We’ve about held excited on have the And of year qualified very Mastercraft. focusing team, January is got veterans. systems good new management completing entirely

probably So we’ve processes. executed to the environmental health quality and safety, the XX% housekeeping XX% and of

on their now guidance to is them our hold So NauticStar count. at

all some For into in until won’t ’XX. the But one now first that’s fiscal we’ll probably But be make be they count increases baked guidance. QX. will our throughout

Eric Wold

of you you day think, ‘XX do Where boat per [ph]? in can fiscal terms end Okay. year at

Tim Oxley

right wholesale Well, we now, Mastercraft retail. adjust always on just, we do we as in based to,

both stuff will into never the just we So dealers.

day up its because We units per have right too get I we mix, as dollars. depending on plan focused on a wouldn’t now mix

to highly year. dollars increase get But are count. boat to focused on certainly quarters going don’t too four the our got we’ve So

Terry McNew

we’re so not about guidance when we and fiscal talk specific ‘XX. Yeah brand providing

mind. So just keep in that

Eric Wold

Perfect, next guys. understand week. Thanks, you it. See

Operator

Instructions] from SunTrust. [Operator our next line Swartz And the Michael question of of comes

Your line open. is now

Michael Swartz

good guys. afternoon Hey,

Terry McNew

Hey Mike.

Tim Oxley

Hey Mike.

Michael Swartz

for slowdown. the Hey, implied and in which question, September wanted follow strength pretty Joe quarter in then I asked June show just guidance about to just margin a the on gross the think the quarter marked up

the between first just 'XX we there you think put wondering that it. the there should quarter timing issue way in a I quarter fourth of of I'm I for that be practices mean -- or So 'XX is of discounts, accounting and a there the maybe change rebates you Tim thinking mentioned was had about? much how is

Tim Oxley

the booking rateably. We're sell time boat is. several Think going you there Every estimated like your Yes, of it the book incurred warranty be a to it book over years. that's you expense. next warranty you

does guidance. in QX. we're would doing revenue have And been recognition QX that into what is so more that new pushes And rebates into of ordinarily it the QX and now the with now retail recognized that

year. this look versus QX So number it's last year at pretty you significant when a

Terry McNew

Yeah, it's timing most of Mike. issue the

Michael Swartz

is what just no. Yeah, to maybe what's quarter the I first third looking at understand. mean is to way any that from or quantify I there -- fourth was the kind the into of and fourth trying of first that's push how quarter the into quarter quarter?

Tim Oxley

revenue X.X think is this I a recognition. when point associated at with QX -- I on versus point to discounts QX, a look year X probably last of

Michael Swartz

us you. give but I just how 'XX, you've for be got helpful. know parameters brand That's up NauticStar, been And Okay, there you around brand? know of to giving I guidance fiscal maybe production we some not could should Mastercraft about then you're your the relative ramping specific thinking kind

Terry McNew

don't again we Yeah, mix changes. because guidance the give unit

thing think biggest X for understand year. from us that the four revenue to it's I is now So just of of quarters the last instead

mix I digits. bit in that the is from drive double going in But a the up a dollars probably Mastercraft bit. teens to up units. and We high a rolling think up up will single digit low-double in higher going be to the are see certainly be their we probably standpoint than units XX to think are the

Michael Swartz

And that Mastercraft was the brand? for

Terry McNew

Yeah.

Tim Oxley

last important we that our emphasize don't we focus I the core October. not of we fact lose And know that is One Mike this enough, that the did products. thing of acquisition did

but well as help able journey, focus on we're company, and if them So Mastercraft will, our half not their pay acquire only on continuous almost down that we you maintaining start well. improvement this to the debt did

So important note. that's to I think

Michael Swartz

Okay, lot guys. thanks a

Terry McNew

Mike. thanks right, All

Operator

Chief the turn And remarks. call questions Officer no further I now to I'm to back would time. closing McNew, Terry for like showing Executive this at

Terry McNew

the joining are once first well everyone beyond. updating again. thanks XXXX fiscal to again quarter progress for and We in organization, and November. do Across positioned this to on afternoon. Thank we you, for forward look And us operator. you our Appreciate it. Thanks results

Operator

participating today's great gentlemen, and conference. you may for does disconnect. Everyone all and you in thank This day. a Ladies have the program conclude

MasterCraft Boat (MCFT) 6 Sep 182018 Q4 Earnings call transcript