Mastercraft Boat Holdings Inc.

05/07/2026 | Press release | Distributed by Public on 05/07/2026 10:55

Quarterly Report for Quarter Ending March 29, 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 2025 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 MasterCraft and Pontoon segments.

Marine Products Transaction

On February 5, 2026, the Company announced that it had entered into the Marine Products Transaction. The Marine Products Transaction is expected to close shortly after our special meeting of shareholders, scheduled May 12, 2026, subject to approval by both the Company's and Marine Products' shareholders and the satisfaction of other customary closing conditions.

Results of Operations

Despite recent geopolitical and macroeconomic uncertainty, the Company delivered increased net sales of $2.2 million and increased gross margin of 420 basis points for the third quarter of fiscal 2026, when compared with the same prior-year period. These increases were primarily driven by favorable model mix and option sales, increased prices, and decreased dealer incentives, while maintaining effective cost controls, partially offset by lower unit volumes.

Results of Continuing Operations

Consolidated Results

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

Three Months Ended

2026 vs. 2025

Nine Months Ended

2026 vs. 2025

March 29,

March 30,

%

March 29,

March 30,

%

2026

2025

Change

Change

2026

2025

Change

Change

(Dollar amounts in thousands)

Consolidated statements of operations:

NET SALES

$

78,206

$

75,960

$

2,246

3.0

%

$

218,967

$

204,687

$

14,280

7.0

%

COST OF SALES

58,664

60,195

(1,531

)

(2.5

%)

168,502

166,232

2,270

1.4

%

GROSS PROFIT

19,542

15,765

3,777

24.0

%

50,465

38,455

12,010

31.2

%

OPERATING EXPENSES:

Selling and marketing

3,360

2,845

515

18.1

%

9,649

8,543

1,106

12.9

%

General and administrative

17,030

8,356

8,674

103.8

%

34,267

23,258

11,009

47.3

%

Amortization of other intangible assets

450

450

-

-

1,350

1,350

-

-

Total operating expenses

20,840

11,651

9,189

78.9

%

45,266

33,151

12,115

36.5

%

OPERATING INCOME (LOSS)

(1,298

)

4,114

(5,412

)

(131.6

%)

5,199

5,304

(105

)

(2.0

%)

OTHER INCOME (EXPENSE):

Interest expense

(58

)

-

(58

)

-

(146

)

(1,169

)

1,023

(87.5

%)

Interest income

760

760

-

-

2,257

2,649

(392

)

(14.8

%)

Loss on extinguishment of debt

(71

)

-

(71

)

-

(71

)

-

(71

)

0.0

%

INCOME (LOSS) BEFORE INCOME TAX EXPENSE

(667

)

4,874

(5,541

)

(113.7

%)

7,239

6,784

455

6.7

%

INCOME TAX EXPENSE

49

1,053

(1,004

)

(95.3

%)

1,811

1,521

290

19.1

%

INCOME (LOSS) FROM CONTINUING OPERATIONS

$

(716

)

$

3,821

$

(4,537

)

(118.7

%)

$

5,428

$

5,263

$

165

3.1

%

Additional financial and other data:

Unit sales volume:

MasterCraft

409

422

(13

)

(3.1

%)

1,195

1,196

(1

)

(0.1

%)

Pontoon

162

197

(35

)

(17.8

%)

524

527

(3

)

(0.6

%)

Consolidated unit sales volume

571

619

(48

)

(7.8

%)

1,719

1,723

(4

)

(0.2

%)

Net sales:

MasterCraft

$

66,764

$

64,227

$

2,537

4.0

%

$

186,647

$

174,857

$

11,790

6.7

%

Pontoon

11,442

11,733

(291

)

(2.5

%)

32,320

29,830

2,490

8.3

%

Consolidated net sales

$

78,206

$

75,960

$

2,246

3.0

%

$

218,967

$

204,687

$

14,280

7.0

%

Net sales per unit:

MasterCraft

$

163

$

152

$

11

7.2

%

$

156

$

146

$

10

6.8

%

Pontoon

71

60

11

18.3

%

62

57

5

8.8

%

Consolidated net sales per unit

137

123

14

11.4

%

127

119

8

6.7

%

Gross margin

25.0

%

20.8

%

420 bps

23.0

%

18.8

%

420 bps

Net sales increased $2.2 million during the third quarter of fiscal 2026, when compared with the same prior-year period. The increase in net sales was driven by favorable model mix and option sales, increased prices, and decreased dealer incentives, partially offset by lower unit volumes.

Net sales increased $14.3 million during the first nine months of fiscal 2026, when compared with the same prior year period, due to favorable model mix and option sales, increased prices, and decreased dealer incentives.

Gross margin percentage increased 420 basis points during both the third quarter and first nine months of fiscal 2026, when compared with the same prior year periods. Higher margins were primarily the result of increased net sales, as discussed above, combined with effective cost controls.

Operating expenses increased $9.2 million and $12.1 million during the third quarter and first nine months of fiscal 2026, respectively, when compared with the same prior year periods, due to business development and consulting costs related to the Marine Products Transaction, increased selling and marketing costs, and ERP implementation costs.

Segment Results

MasterCraft Segment

The following table sets forth MasterCraft segment results for the three and nine months ended:

Three Months Ended

2026 vs. 2025

Nine Months Ended

2026 vs. 2025

March 29,

March 30,

%

March 29,

March 30,

%

(Dollar amounts in thousands)

2026

2025

Change

Change

2026

2025

Change

Change

Net sales

$

66,764

$

64,227

$

2,537

4.0

%

$

186,647

$

174,857

$

11,790

6.7

%

Operating income

277

5,792

(5,515

)

(95.2

%)

10,834

12,864

(2,030

)

(15.8

%)

Purchases of property, plant and equipment

836

1,778

(942

)

(53.0

%)

4,797

5,459

(662

)

(12.1

%)

Unit sales volume

409

422

(13

)

(3.1

%)

1,195

1,196

(1

)

(0.1

%)

Net sales per unit

$

163

$

152

$

11

7.2

%

$

156

$

146

$

10

6.8

%

Net sales increased $2.5 million and $11.8 million during the third quarter and first nine months of fiscal 2026, respectively, when compared with the same prior year periods. The increase was driven by favorable model mix and option sales, increased prices, and decreased dealer incentives, partially offset by lower unit volumes.

Operating income decreased $5.5 million and $2.0 million during third quarter and first nine months of fiscal 2026, respectively, when compared with the same prior year periods. The change was primarily the result of increased operating expenses, partially offset by increased net sales, as discussed above.

Pontoon Segment

The following table sets forth Pontoon segment results for the three and nine months ended:

Three Months Ended

2026 vs. 2025

Nine Months Ended

2026 vs. 2025

March 29,

March 30,

%

March 29,

March 30,

%

(Dollar amounts in thousands)

2026

2025

Change

Change

2026

2025

Change

Change

Net sales

$

11,442

$

11,733

$

(291

)

(2.5

%)

$

32,320

$

29,830

$

2,490

8.3

%

Operating loss

(1,575

)

(1,678

)

103

(6.1

%)

(5,635

)

(7,560

)

1,925

(25.5

%)

Purchases of property, plant and equipment

203

233

(30

)

(12.9

%)

949

1,147

(198

)

(17.3

%)

Unit sales volume

162

197

(35

)

(17.8

%)

524

527

(3

)

(0.6

%)

Net sales per unit

$

71

$

60

$

11

18.3

%

$

62

$

57

$

5

8.8

%

Net sales decreased $0.3 million during the third quarter of fiscal 2026, when compared with the same prior-year period, primarily due to lower unit volumes, partially offset by favorable option sales, increased prices, and decreased dealer incentives.

Net sales increased $2.5 million during the first nine months of fiscal 2026, when compared to the same prior-year period, primarily due to favorable option sales, increased prices, and decreased dealer incentives, partially offset by unfavorable model mix.

Operating loss for the third quarter of fiscal 2026 decreased $0.1 million, when compared with the same prior-year period, due to effective cost controls, partially offset by decreased net sales, as discussed above.

Operating loss for the first nine months of fiscal 2026 decreased $1.9 million, when compared with the same prior-year periods, due to increased net sales, as discussed above, and effective cost controls.

Non-GAAP Measures

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

We define EBITDA as income (loss) 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 and organizational realignment costs, ERP implementation costs, and business development and consulting costs. 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 (loss) 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 basic and diluted shares outstanding. For the periods presented herein, these adjustments include other intangible asset amortization, share-based compensation, senior leadership transition and organizational realignment costs, ERP implementation costs, and business development and consulting costs.

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 (loss), operating income (loss), 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 (loss), net income (loss) 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 (loss) 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 (loss) from continuing operations as determined in accordance with U.S. GAAP to EBITDA, and Adjusted EBITDA, and income (loss) 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:

Three Months Ended

Nine Months Ended

March 29,

% of Net

March 30,

% of Net

March 29,

% of Net

March 30,

% of Net

(Dollar amounts in thousands)

2026

sales

2025

sales

2026

sales

2025

sales

Income (loss) from continuing operations

$

(716

)

-0.9%

$

3,821

5.0%

$

5,428

2.5%

$

5,263

2.6%

Income tax expense

49

1,053

1,811

1,521

Interest expense

58

-

146

1,169

Interest income

(760

)

(760

)

(2,257

)

(2,649

)

Depreciation and amortization

2,482

2,569

6,960

7,024

EBITDA

1,113

1.4%

6,683

8.8%

12,088

5.5%

12,328

6.0%

Share-based compensation

894

805

2,688

2,080

Senior leadership transition and organizational realignment costs(a)

-

-

196

448

ERP implementation costs(b)

291

-

784

-

Business development and consulting costs(c)

8,425

-

9,394

-

Adjusted EBITDA

$

10,723

13.7%

$

7,488

9.9%

$

25,150

11.5%

$

14,856

7.3%

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

Three Months Ended

Nine Months Ended

March 29,

March 30,

March 29,

March 30,

(Dollar amounts in thousands, except per share data)

2026

2025

2026

2025

Income (loss) from continuing operations

$

(716

)

$

3,821

$

5,428

$

5,263

Income tax expense

49

1,053

1,811

1,521

Amortization of acquisition intangibles

450

450

1,350

1,350

Share-based compensation

894

805

2,688

2,080

Senior leadership transition and organizational realignment costs(a)

-

-

196

448

ERP implementation costs(b)

291

-

784

-

Business development and consulting costs(c)

8,425

-

9,394

-

Adjusted Net Income before income taxes

9,393

6,129

21,651

10,662

Adjusted income tax expense(d)

2,160

1,103

4,980

1,919

Adjusted Net Income

$

7,233

$

5,026

$

16,671

$

8,743

Adjusted Net Income per share:

Basic

$

0.45

$

0.31

$

1.03

$

0.53

Diluted

$

0.45

$

0.30

$

1.03

$

0.53

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

Basic Adjusted Net Income per share

16,136,132

16,414,340

16,147,425

16,471,352

Diluted Adjusted Net Income per share

16,136,132

16,540,345

16,263,844

16,554,235

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

Three Months Ended

Nine Months Ended

March 29,

March 30,

March 29,

March 30,

2026

2025

2026

2025

Income (loss) from continuing operations per diluted share

$

(0.04

)

$

0.23

$

0.33

$

0.32

Impact of adjustments:

Income tax expense

-

0.06

0.11

0.09

Amortization of acquisition intangibles

0.03

0.03

0.08

0.08

Share-based compensation

0.06

0.05

0.17

0.13

Senior leadership transition and organizational realignment costs(a)

-

-

0.01

0.03

ERP implementation costs(b)

0.02

-

0.05

-

Business development and consulting costs(c)

0.52

-

0.58

-

Adjusted Net Income per diluted share before income taxes

0.59

0.37

1.33

0.65

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

(0.14

)

(0.07

)

(0.30

)

(0.12

)

Adjusted Net Income per diluted share

0.45

$

0.30

1.03

$

0.53

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:

Nine Months Ended

March 29,

March 30,

2026

2025

Net cash used in operating activities of continuing operations

$

13,387

$

18,457

Less:

Purchases of property, plant and equipment

(5,746

)

(6,606

)

Free cash flow

$

7,641

$

11,851

(a)
Represents amounts paid for legal fees and recruiting costs associated with the CEO and CFO transitions, as well as non-recurring severance costs incurred as part of the Company's strategic organizational realignment undertaken in connection with the transitions.
(b)
Represents consulting costs incurred in connection with the ERP system implementation.
(c)
Represents non-recurring third-party business development and consulting costs and debt extinguishment costs related to the Marine Products Transaction.
(d)
For fiscal 2026 and 2025, income tax expense reflects an income tax rate of 23.0% and 20.0%, respectively.
(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 $75.4 million as of March 29, 2026, an increase of $46.5 million from $28.9 million as of June 30, 2025. Short-term investments totaled $9.2 million as of March 29, 2026, a decrease of $41.3 million from $50.5 million as of June 30, 2025. As of March 29, 2026, and June 30, 2025, we had no long-term debt outstanding and $75.0 million and $100.0 million, respectively, 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 nine months ended March 29, 2026, the Company repurchased 116,370 shares of common stock for $2.3 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:

Nine Months Ended

March 29,

March 30,

(Dollar amounts in thousands)

2026

2025

Total cash provided by (used in):

Operating activities

$

13,387

$

18,457

Investing activities

35,826

34,960

Financing activities

(2,889

)

(54,988

)

Net change in cash and cash equivalents from continuing operations

$

46,324

$

(1,571

)

Nine Months Ended March 29, 2026 Cash Flows from Continuing Operations

Net cash provided by operating activities for the nine months ended March 29, 2026 was $13.4 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 an increase in accounts receivable, inventories, and prepaid expenses and other current assets, partially offset by an increase in accounts payable. 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 timing of raw material purchases compared to the end of the prior-year period, along with a subsequent increase in production. Prepaid and other current assets increased due to payment of annual general insurance premiums. Accounts payable increased due to timing of professional fee payments related to the Marine Products Transaction, timing of insurance related payments, and timing of purchases at the end of the period compared to the prior-year period.

Net cash provided by investing activities was $35.8 million, which included $41.6 million of net proceeds in available-for-sale securities, partially offset by $5.7 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 $2.9 million, primarily due to share repurchases totaling $2.3 million, excluding related fees and expenses.

Nine Months Ended March 30, 2025 Cash Flows from Continuing Operations

Net cash provided by operating activities for the nine months ended March 30, 2025 was $18.5 million, primarily due to net income and favorable changes to working capital. Favorable changes in working capital primarily consisted of an increase in accounts payables and a decrease in accounts receivable. Partially offsetting favorable changes in working capital was an increase in inventories. Accounts payables increased due to increased production compared to the prior-year period. Accounts receivable decreased due to timing of sales at the end of the period compared to the end of the prior-year period. Inventories increased due to higher value on finished goods and timing of sales at the end of the period compared to the end of the prior-year period.

Net cash provided by investing activities was $35.0 million, which included $41.6 million of proceeds in available-for-sale securities, partially offset by $6.6 million in capital expenditures. Our capital spending was primarily focused on information technology, tooling, and machinery and equipment.

Net cash used in financing activities was $55.0 million, which included share repurchases totaling $5.0 million, excluding related fees and expenses, and $49.5 million used to repay outstanding borrowings of the Company's previous term loan. Drawn amounts on the Revolving Credit Facility were fully repaid as of March 30, 2025.

Off Balance Sheet Arrangements

The Company did not have any off balance sheet financing arrangements as of March 29, 2026.

Critical Accounting Estimates

As of March 29, 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 2025 Annual Report.

Mastercraft Boat Holdings Inc. published this content on May 07, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on May 07, 2026 at 16:56 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]