Mastercraft Boat Holdings Inc.

11/10/2026 | Press release | Distributed by Public on 11/10/2026 11:18

Quarterly Report for Quarter Ending October 4, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis should be read together with the unaudited condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q. In addition, the statements in this discussion and analysis regarding our expectations concerning the performance of our business, anticipated financial results, liquidity and the other non-historical statements are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in "Cautionary Note Regarding Forward-Looking Statements" above and in "Risk Factors" set forth in our 2026 Annual Report. Our actual results may differ materially from those contained in or implied by any forward-looking statements.

Certain statements in the following discussions are based on non-GAAP financial measures. A "non-GAAP financial measure" is a numerical measure of a registrant's historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with U.S. GAAP in the statements of operations, balance sheets or statements of cash flows of the issuer; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. Non-GAAP financial measures do not include operating and statistical measures. The Company includes non-GAAP financial measures in Management's Discussion and Analysis, as the Company's management believes that these measures and the information they provide are useful to users of the financial statements, including investors, because they permit users of the financial statements to view the Company's performance using the same tools that management utilizes and to better evaluate the Company's ongoing business performance. In order to better align the Company's reported results with the internal metrics used by the Company's management to evaluate business performance as well as to provide better comparisons to prior periods and peer data, non-GAAP measures exclude the impact of purchase accounting amortization related to business acquisitions.

Overview

The Company's results for all periods presented, as discussed in Management's Discussion and Analysis, are presented on a continuing operations basis, which consists of our Performance and Wake, Leisure, and Recreation and Sport Fishing segments.

Business Combination and Change in Fiscal Year-End

On May 15, 2026, the Company completed the merger with Marine Products, see Note 3 in Notes to Unaudited Condensed Consolidated Financial Statements. As a result, the Company recognized incremental net sales of $59.3 million within the Recreation and Sport Fishing segment during the first three months of the Transition Period compared to the first three months of fiscal 2026. Results for the three-month period ended October 4, 2026 were also impacted by acquisition and integration costs, including the change in fiscal year-end (as described below), associated with the Marine Products Transaction.

In connection with the merger, the Company announced a change in its fiscal year-end from June 30 to December 31, effective July 1, 2026, to conform to the fiscal year-end historically used by Marine Products. As a result, the Company expects to file a transition report on Form 10-KT covering the Transition Period. Thereafter, the Company's reporting periods will be based on its new December 31 fiscal year-end.

Segments

Beginning in the Transition Period, the Company changed the manner in which certain corporate expenses are allocated to its reportable segments. Prior-period segment information has been recast to conform to the current-period presentation. Certain corporate expenses previously included within segment operating expenses are now presented within Corporate expenses and other.

Results of Continuing Operations

Consolidated Results

The table below presents our consolidated results of operations for the three months ended:

October 4,

September 28,

%

2026

2025

Change

Change

(Dollar amounts in thousands)

Consolidated statements of operations:

NET SALES

$

154,139

$

69,002

$

85,137

123.4

%

COST OF SALES

121,681

53,606

68,075

127.0

%

GROSS PROFIT

32,458

15,396

17,062

110.8

%

OPERATING EXPENSES:

Selling and marketing

5,640

2,907

2,733

94.0

%

General and administrative

14,269

8,261

6,008

72.7

%

Amortization of other intangible assets

568

450

118

26.2

%

Total operating expenses

20,477

11,618

8,859

76.3

%

OPERATING INCOME

11,981

3,778

8,203

217.1

%

OTHER INCOME (EXPENSE):

Interest expense

(34

)

(1

)

(33

)

3300.0

%

Interest income

363

770

(407

)

(52.9

%)

INCOME BEFORE INCOME TAX EXPENSE

12,310

4,547

7,763

170.7

%

INCOME TAX EXPENSE

207

891

(684

)

(76.8

%)

INCOME FROM CONTINUING OPERATIONS

$

12,103

$

3,656

$

8,447

231.0

%

Additional financial and other data:

Unit sales volume:

Performance and Wake

457

377

80

21.2

%

Leisure

225

188

37

19.7

%

Recreation and Sport Fishing

569

-

569

-

Consolidated unit sales volume

1,251

565

686

121.4

%

Net sales:

Performance and Wake

$

81,704

$

58,145

$

23,559

40.5

%

Leisure

13,097

10,857

2,240

20.6

%

Recreation and Sport Fishing

59,338

-

59,338

-

Consolidated net sales

$

154,139

$

69,002

$

85,137

123.4

%

Net sales per unit:

Performance and Wake

$

179

$

154

$

25

16.2

%

Leisure

58

58

-

-

Recreation and Sport Fishing

104

-

104

-

Consolidated net sales per unit

123

122

1

0.8

%

Gross margin

21.1

%

22.3

%

(120) bps

Net sales increased $85.1 million during the first three months of the Transition Period, when compared with the same prior-year period. The increase was primarily a result of incremental net sales of $59.3 million generated in our Recreation and Sport Fishing segment as a result of the Marine Products Transaction, and higher unit volumes, favorable model mix, and increased prices in our Performance and Wake and Leisure segments.

Gross margin percentage decreased 120 basis points during the first three months of the Transition Period, when compared with the same prior-year period. The decrease primarily reflected the inclusion of our Marine Products business, partially offset by increased net sales, as discussed above, favorable cost absorption, and decreased warranty costs in our Performance and Wake and Leisure segments.

Operating expenses increased $8.9 million the first three months of the Transition Period, when compared with the same prior-year period, due to incremental costs incurred in our Recreation and Sport Fishing segment, as well as additional acquisition and integration costs, including the change in fiscal year-end related to the Marine Products Transaction, and increased selling and marketing costs.

Segment Results

Performance and Wake Segment

The following table sets forth Performance and Wake segment results for the three months ended:

October 4,

September 28,

%

(Dollar amounts in thousands)

2026

2025

Change

Change

Net sales

$

81,704

$

58,145

$

23,559

40.5

%

Operating income

20,270

10,226

10,044

98.2

%

Purchases of property, plant and equipment

2,046

2,493

(447

)

(17.9

%)

Unit sales volume

457

377

80

21.2

%

Net sales per unit

$

179

$

154

$

25

16.2

%

Net sales increased $23.6 million during the first three months of the Transition Period, when compared with the same prior-year period. The increase was driven by higher unit volumes, favorable model mix, and increased prices.

Operating income increased $10.0 million during the first three months of the Transition Period, when compared with the same prior-year period. The change was primarily the result of increased net sales, as discussed above, favorable cost absorption, and decreased warranty costs, partially offset by increased selling and marketing costs.

Leisure Segment

The following table sets forth Leisure segment results for the three months ended:

October 4,

September 28,

%

(Dollar amounts in thousands)

2026

2025

Change

Change

Net sales

$

13,097

$

10,857

$

2,240

20.6

%

Operating loss

(746

)

(1,690

)

944

(55.9

%)

Purchases of property, plant and equipment

14

587

(573

)

(97.6

%)

Unit sales volume

225

188

37

19.7

%

Net sales per unit

$

58

$

58

$

-

0.0

%

Net sales increased $2.2 million during the first three months of the Transition Period, when compared with the same prior-year period, primarily due to higher unit volumes.

Operating loss for the first three months of the Transition Period decreased $0.9 million, when compared with the same prior-year period, primarily due to increased net sales, as discussed above, and favorable cost absorption.

Recreation and Sport Fishing Segment

The following table sets forth Recreation and Sport Fishing segment results for the three months ended:

October 4,

September 28,

%

(Dollar amounts in thousands)

2026

2025

Change

Change

Net sales

$

59,338

$

-

$

59,338

-

Operating loss

(704

)

-

(704

)

-

Purchases of property, plant and equipment

1,268

-

1,268

-

Unit sales volume

569

-

569

-

Net sales per unit

$

104

$

-

$

104

-

As the segment was newly established in the fourth quarter of fiscal 2026 as a result of the Marine Products Transaction, there are no comparable prior-year results. For the three months ended October 4, 2026, the segment contributed net sales of $59.3 million and an

operating loss of $0.7 million to the Company's net sales and operating income, respectively. The operating loss included a $0.3 million inventory step-up charge and $0.5 million in Marine Products Transaction acquisition and integration costs.

Non-GAAP Measures

EBITDA, Adjusted EBITDA, EBITDA margin, and Adjusted EBITDA margin

We define EBITDA as income from continuing operations, before interest, income taxes, depreciation and amortization. We define Adjusted EBITDA as EBITDA further adjusted to eliminate certain non-cash charges or other items that we do not consider to be indicative of our core and/or ongoing operations. For the periods presented herein, the adjustments are for share-based compensation, senior leadership transition costs, Marine Products acquisition and integration costs, and inventory step-up. We define EBITDA margin and Adjusted EBITDA margin as EBITDA and Adjusted EBITDA, respectively, each expressed as a percentage of Net sales.

Adjusted Net Income and Adjusted Net Income per share

We define Adjusted Net Income as income from continuing operations, adjusted to eliminate certain non-cash charges or other items that we do not consider to be indicative of our core and/or ongoing operations and reflecting income tax expense on adjusted net income before income taxes at our estimated annual effective tax rate. We define Adjusted Net Income per Share as Adjusted Net Income divided by the weighted-average of basic and diluted shares outstanding. For the periods presented herein, these adjustments include other intangible asset amortization, share-based compensation, senior leadership transition costs, Marine Products acquisition and integration costs, and inventory step-up.

Free Cash Flow

We define Free Cash Flow from continuing operations as net cash flows from operating activities less purchases of property, plant, and equipment.

EBITDA, Adjusted EBITDA, EBITDA margin, Adjusted EBITDA margin, Adjusted Net Income, Adjusted Net Income per share, and Free Cash Flow, which we refer to collectively as the Non-GAAP Measures, are not measures of net income, operating income, or net operating cash flows as determined under accounting principles generally accepted in the United States, or U.S. GAAP. The Non-GAAP Measures are not measures of performance in accordance with U.S. GAAP and should not be considered as an alternative to net income, net income per share, or net operating cash flows determined in accordance with U.S. GAAP. Additionally, Adjusted EBITDA is not intended to be a measure of cash flow. We believe that the inclusion of the Non-GAAP Measures is appropriate to provide additional information to investors because securities analysts and investors use the Non-GAAP Measures to assess our operating performance across periods on a consistent basis and to evaluate the relative risk of an investment in our securities. We use Adjusted Net Income and Adjusted Net Income per share to facilitate a comparison of our operating performance on a consistent basis from period to period that, when viewed in combination with our results prepared in accordance with U.S. GAAP, provides a more complete understanding of factors and trends affecting our business than does U.S. GAAP measures alone. We believe Adjusted Net Income and Adjusted Net Income per share assists our Board, management, investors, and other users of the financial statements in comparing our net income on a consistent basis from period to period because it removes certain non-cash items and other items that we do not consider to be indicative of our core and/or ongoing operations and reflecting income tax expense on adjusted net income before income taxes at our estimated annual effective tax rate. The Non-GAAP Measures have limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Some of these limitations are:

•
Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and the Non-GAAP measures do not reflect any cash requirements for such replacements;
•
Certain Non-GAAP measures do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments;
•
Certain Non-GAAP measures do not reflect changes in, or cash requirements for, our working capital needs;
•
Certain Non-GAAP measures do not reflect our tax expense or any cash requirements to pay income taxes;
•
Certain Non-GAAP measures do not reflect interest expense, or the cash requirements necessary to service interest payments on our indebtedness; and
•
Certain Non-GAAP measures do not reflect the impact of earnings or charges resulting from matters we do not consider to be indicative of our core and/or ongoing operations, but may nonetheless have a material impact on our results of operations.

In addition, because not all companies use identical calculations, our presentation of the Non-GAAP Measures may not be comparable to similarly titled measures of other companies, including companies in our industry.

The following table presents a reconciliation of income from continuing operations as determined in accordance with U.S. GAAP to EBITDA, and Adjusted EBITDA, and income from continuing operations margin (expressed as a percentage of net sales) to EBITDA margin and Adjusted EBITDA margin (each expressed as a percentage of net sales) for the periods indicated:

October 4,

% of Net

September 28,

% of Net

(Dollar amounts in thousands)

2026

sales

2025

sales

Income from continuing operations

$

12,103

7.9%

$

3,656

5.3%

Income tax expense

207

891

Interest expense

34

1

Interest income

(363

)

(770

)

Depreciation and amortization

5,101

2,038

EBITDA

17,082

11.1%

5,816

8.4%

Share-based compensation

848

791

Senior leadership transition costs(a)

-

98

Marine Products acquisition and integration costs(b)

1,877

268

Inventory step-up(c)

256

-

Adjusted EBITDA

$

20,063

13.0%

$

6,973

10.1%

The following table presents a reconciliation of income from continuing operations as determined in accordance with U.S. GAAP to Adjusted Net Income for the periods indicated:

Three Months Ended

October 4,

September 28,

(Dollar amounts in thousands, except per share data)

2026

2025

Income from continuing operations

$

12,103

$

3,656

Income tax expense

207

891

Amortization of acquisition intangibles

568

450

Share-based compensation

848

791

Senior leadership transition costs(a)

-

98

Marine Products acquisition and integration costs(b)

1,877

268

Inventory step-up(c)

256

-

Adjusted Net Income before income taxes

15,859

6,154

Adjusted income tax expense(d)

3,647

1,416

Adjusted Net Income

$

12,212

$

4,738

Adjusted Net Income per share:

Basic

$

0.50

$

0.29

Diluted

$

0.50

$

0.29

Weighted average shares used for the computation of(e):

Basic Adjusted Net Income per share

24,279,593

16,177,634

Diluted Adjusted Net Income per share

24,316,251

16,255,397

The following table presents the reconciliation of income from continuing operations per diluted share to Adjusted Net Income per diluted share for the periods indicated:

Three Months Ended

October 4,

September 28,

2026

2025

Income from continuing operations per diluted share

$

0.50

$

0.22

Impact of adjustments:

Income tax expense

0.01

0.05

Amortization of acquisition intangibles

0.02

0.03

Share-based compensation

0.03

0.05

Senior leadership transition costs(a)

-

0.01

Marine Products acquisition and integration costs(b)

0.08

0.02

Inventory step-up(c)

0.01

-

Adjusted Net Income per diluted share before income taxes

0.65

0.38

Impact of adjusted income tax expense on net income per diluted share before income taxes(d)

(0.15

)

(0.09

)

Adjusted Net Income per diluted share

0.50

$

0.29

The following table presents a reconciliation of net cash flows by operating activities of continuing operations as determined in accordance with U.S. GAAP to Free Cash Flow for the periods presented:

Three Months Ended

October 4,

September 28,

2026

2025

Net cash provided by operating activities of continuing operations

$

6,236

$

(7,047

)

Less:

Purchases of property, plant and equipment

(3,328

)

(3,080

)

Free cash flow

$

2,908

$

(10,127

)

(a)
Represents amounts paid associated with the CFO transition.
(b)
Represents non-recurring acquisition and integration costs, including the change in fiscal year-end, related to the Marine Products Transaction.
(c)
Represents an inventory step-up charge related to the Marine Products Transaction.
(d)
For the Transition Period and for fiscal 2026, income tax expense reflects an income tax rate of 23.0%.
(e)
Represents the Weighted Average Shares used for the computation of Basic and Diluted earnings (loss) per share as presented on the Consolidated Statements of Operations to calculate Adjusted Net Income per basic and diluted share for all periods presented herein.

Liquidity and Capital Resources

Our primary liquidity and capital resource needs are to finance working capital, fund capital expenditures, service debt, fund potential acquisitions, and fund our share repurchase program. Our principal sources of liquidity are our cash balance, short-term investments, cash generated from operating activities, our revolving credit agreement and the refinancing and/or new issuance of long-term debt. We believe our cash balance, short-term investments, cash from operations, and our ability to borrow will be sufficient to provide for our liquidity and capital resource needs.

Cash and cash equivalents totaled $41.9 million as of October 4, 2026, a decrease of $2.0 million from $43.9 million as of June 30, 2026. As of October 4, 2026, and June 30, 2026, we had no long-term debt outstanding and $75.0 million available borrowing capacity under the Revolving Credit Facility.

On July 24, 2023, the Board of the Company authorized a share repurchase program under which the Company may repurchase up to $50 million of its outstanding shares of common stock. During the three months ended October 4, 2026, the Company repurchased 217,616 shares of common stock for $4.8 million in cash, excluding related fees and expenses.

The following table and discussion below relate to our cash flows from continuing operations from operating, investing, and financing activities:

Three Months Ended

October 4,

September 28,

(Dollar amounts in thousands)

2026

2025

Total cash provided by (used in):

Operating activities

$

6,236

$

(7,047

)

Investing activities

(3,328

)

12,012

Financing activities

(4,877

)

(2,341

)

Net change in cash and cash equivalents from continuing operations

$

(1,969

)

$

2,624

Three Months Ended October 4, 2026 Cash Flows from Continuing Operations

Net cash provided by operating activities for the three months ended October 4, 2026 was $6.2 million, primarily due to net income, partially offset by working capital usage. Working capital is defined as accounts receivable, income tax receivable, inventories, and prepaid expenses and other current assets net of accounts payable, income tax payable, and accrued expenses and other current liabilities as presented in the condensed consolidated balance sheets. Working capital usage primarily consisted of increases in accounts receivable and inventories and a decrease in accrued expenses and other current liabilities, partially offset by an increase in accounts payable and a decrease in prepaid expenses and other current assets. Accounts receivable increased due to timing of sales at the end of the period compared to the end of the prior-year period. Inventories increased due to increased raw materials costs and timing of shipments at the end of the period compared to the prior-year period. Accrued expenses and other current liabilities decreased primarily due to payment of variable compensation and decreased dealer incentives, partially offset by an increase in customer deposits. Accounts payable increased due to timing of purchases at the end of the period compared to the prior-year period. Prepaid and other current assets decreased due to amortization of insurance premiums.

Net cash used in investing activities was $3.3 million, which included $3.3 million in capital expenditures. Our capital spending was primarily focused on tooling, building improvements, machinery and equipment, and information technology.

Net cash used in financing activities was $4.9 million, primarily due to share repurchases totaling $4.8 million, excluding related fees and expenses.

Three Months Ended September 28, 2025 Cash Flows from Continuing Operations

Net cash used in operating activities for the three months ended September 28, 2025, was $7.0 million, primarily due to working capital usage, partially offset by net income. Working capital usage primarily consisted of a decrease in accrued expenses and other current liabilities, an increase in accounts receivable, inventories, and prepaid expenses and other current assets, partially offset by an increase in accounts payable. Accrued expenses and other current liabilities decreased due to payment of dealer incentives and variable compensation. Accounts receivable increased due to timing of sales and collections at the end of the period compared to the end of the prior-year period. Inventories increased due to timing of raw material purchases and production at the end of the period compared to the end of the prior-year period. Prepaid expenses and other current assets increased due to increased payments for future expenses. Accounts payable increased due to timing of purchases at the end of the period compared to the prior-year period.

Net cash provided by investing activities was $12.0 million, which included $15.1 million of net proceeds in available-for-sale securities, partially offset by $3.1 million in capital expenditures. Our capital spending was primarily focused on tooling, information technology, and machinery and equipment.

Net cash used in financing activities was $2.3 million, primarily due to share repurchases totaling $2.3 million, excluding related fees and expenses.

Off Balance Sheet Arrangements

The Company did not have any off balance sheet financing arrangements as of October 4, 2026.

Critical Accounting Estimates

As of October 4, 2026, there were no significant changes in or changes to the application of our critical accounting policies or estimation procedures from those presented in our 2026 Annual Report.

Mastercraft Boat Holdings Inc. published this content on November 10, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on November 10, 2026 at 17:18 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]