MasterCraft Boat Holdings (MCFT) Q4 2026 earnings call transcript

I will now hand the conference over to Alec Harmon, Senior Director Strategy and Investor Relations. Please go ahead. Thank you, Rebecca, and welcome everyone. Thank you for joining us today. This week discuss the Fiscal Fourth Quarter and Full Year 2026 Performance of Mastercraft Boat Holdings. As a reminder, today's call is being webcast live and will also be archived on our website for future listening.

With me on this morning's call is Brad Nelson, Chief Executive Officer and Scott Kent, Chief Financial Officer. Brad will begin with an overview of our operational performance. After that, Scott will discuss our financial performance. Brad will then offer some closing remarks before we open the call for questions. Before we begin, we would like to remind participants that the information contained in this call is current only as of today, September 10, 2026. The company assumes no obligation to update any statements, including forward-looking statements.

Statements that are not historical facts are forward-looking statements and subject to the safe harbor disclaimer in today's press release.

Additionally, on this conference call, we will discuss non-GAP measures that include or exclude items not indicative of our ongoing operations. For each non-GAP measure, we will also provide the most directly comparable GAP measure in today's press release, which will include a reconciliation of these non-GAP measures to our GAP results.

Before turning to our results, I would like to provide some important context for the quarter and year. On May 15, we completed our combination with Marine Products Corporation, welcoming the Chaperel and Robolo Brands to the Mastercraft Boat Holdings or MCBH family. As a result, our fourth quarter and full-year results include a partial six-week contribution from these brands.

To help frame the underlying performance of our business and for comparative purposes, we will speak to our full-year results on both a total, combined company basis, and on a legacy basis.

In connection with the combination, we have also re-aligned our reportable segments. Our former Mastercraft segment is now our performance and wake segment. Our former pontoon segment is now our leisure segment, and the newly combined Chaperel and Robolo Brands are reported within our recreation and sports fishing segment.

As a reminder, unless otherwise noted, the following commentaries made on a continuing operations basis and all references to specific quarters and periods will be on a fiscal basis. Because we are changing to a December fiscal year end, today's outlook will cover the six-month transition period from July 2026 through December 2026, which Scott will discuss in greater detail later in the call.

With that, I will turn the call over to Brad.

Thank you, Alec, and good morning, everyone. Fiscal 2026 was a defining year for Mastercraft while holding strong execution across our legacy business for all results to significantly outperform expectations, despite a challenging macroeconomic and retail environment. We grew net sales, expanded and adjusted even to nearly 80%. A margin improvement of more than 500 basis points year to year, and completed the transformational combination with Chaperel and Robolo.

These results reflect the durability of our foundation and our discipline execution against the priorities we established at the beginning of the years, which were. Aligning production with demand, strengthening dealer health, improving operational efficiency, and delivering differentiated innovation that resonates with dealers and consumers. Those actions positioned us to outperform the broader market while building an even stronger foundation for the future.

On a legacy basis, fiscal 2026 net sales were 315.6 million and adjusted even was 43.8 million. These results exceeded the increased guidance we issued last quarter and demonstrate the earnings power of our legacy business and a challenging market.

The Mastercraft brand was at the center of that success. Strong retail performance and successful rule out of the next generation X series drove favorable premium mix, strengthened brand momentum, and improved profitability.

This more than offset lower industry volumes and served as a primary driver of growth across our business, including the initial contribution from Chaperel and Robolo. Total company net sales were 348.9 million, 22.8% year-to-year, and adjusted even was 45.6 million of 87.1% year-to-year.

Turning to the fourth quarter, our performance was particularly encouraging, given the difficult prior year comparison, which benefited from the launch of the ultra premium X star. Against that backdrop, our legacy business delivered 21.5% year-to-year net sales growth and expanded adjusted even to margin 730 basis points to 19.3% from 12.0% in the prior year period.

These results reflect the strength of Mastercraft's premium product portfolio, continued momentum across the lineup, healthy dealer inventories, and disciplined cost management.

Including the six-week contribution from Chaperel and Robolo, total company fourth quarter net sales were 129.9 million, 63.4% year-to-year. And adjusted even though was 20.5 million of 114.9% year-over year.

The new recreation and sport fishing segment contributed 33.3 million of revenue and 1.8 million of adjusted even during the abbreviated six-week window of ownership.

We do not believe the segment's initial reported profitability is representative of this underlying earnings power for long-term potential. Scott will provide additional detail on these items shortly.

On a consolidated basis, the key reason for our outperformance was discipline channel management. Dean Rennell will remain the significant competitive advantage for MCBH. Field inventory in our legacy business finished the year down approximately 30% year-to-year with terms, improving the better than pre-pandemic levels.

Chaperel and Robolo also ended the year with lower inventory levels and higher terms. The broader retail environment remained mixed throughout the year. Premium and core customers remained relatively resilient while value-oriented customers faced pressure from higher interest rates, inflation, and broader economic uncertainty. Even in that environment, our differentiated products disciplined execution and strong dealer health enabled us to outperform the water market.

Mastercraft's retail performance is a clear example of that dynamic. Entering the year, we've studied category retail to decline 5% to 10% with the market finishing slightly lower than our estimated range.

We significantly outperformed that expectation with Mastercraft retail finishing up low single digits and outperforming both the ski-way category and the broader powerball market. In our recreation sport fishing segment, Robolo was another standout performer delivering retail growth in the high single digits and continuing to benefit from strong product momentum within the attractive sport fishing category. Together, Mastercraft and Robolo helped MCBH outperform a broader powerball industry that declined mid to high single digits.

Looking ahead, we continue to plan prudently and currently expect retail market demand to be down approximately 5% to 10% for the next six months following current calendar year-to-day trends.

As we evaluate conditions across the portfolio, retail dynamics remain challenged across marine categories, especially within the entry-level pontoon and runabout markets.

Consistent with our discipline approach to channel management, we continue to expect to align wholesale production with retail demand. That assumption is incorporated into the guidance Scott will discuss later in the call.

Alongside pipeline management and deeper health, differentiating innovation continues to be one of our most important competitive advantages. Within Mastercraft, the X-Series continue to gain momentum throughout the year with the reintroduction of the X-23 alongside the X-22 and X-24 and building on the success of the X-Star. The work signal response has been outstanding.

The X-Series throw significant revenue and profitability growth throughout both the fourth quarter and full year. And we believe this product expansion has further strengthened our leadership position in the premium ski wave category.

Within leisure, we improve segment profitability this year through discipline cost management and operational efficiencies. Looking ahead to the new model year, we have responded directly into deeper feedback by improving performance across the lineup through meaningful enhancements in both in speed, design, and handling. We also introduced the new press conquest SE training and announced an industry-first integration of Apple Cartlade and Android Auto with on-water navigation directly from the factory.

These initiatives improve the ownership experience and provide consumers with compelling reasons to choose our brandings. Within our newly acquired brand, we are encouraged by the product and innovation roadmaps alongside the strength of the existing portfolio.

Cheparelle recently introduced the all-new SSX-4-0-V expanding brand premium outboard through our rider offering. Separately, our stir drive lineup now features the new easy step and innovative water entry design that received a 2026 NMMA innovation award.

Robolo continues to build momentum in the dual console category with products such as the R277 and new R237, both filling strategic wife space and expanding Robolo's ability to attract incremental customers.

As we deepen our understanding of these newly acquired businesses, our approach is clear. Protect what makes each bread strong in its market, invest behind the products and categories where we see the greatest opportunity to create value, and use the scale and capabilities of MCPH to accelerate that value creation.

One early example of how we are creating value across the portfolio is the Chaperelle Search platform. We've temporarily paused production of these models while we enhance the technology and overall customer experience. Like buying Chaperelle's strength in ride, design and layout with Mastercraft's deep weight and surf expertise, we believe we can deliver an even stronger product offering for consumers and dealers. This is an early example of how we tend to leverage the capabilities of the combined companies to drive product innovation and long term value creation.

Since closing the transaction, we've spent significant time with the Chaperelle and Robolo teams, dealers and products. Our conviction in the long term opportunities created by the combination has only increased. These are strong brands with talented teams, loyal customers and attractive market positions.

Our integration and synergy efforts are underway with structured work streams in place. In the near term, we are prioritizing and investing in attractive opportunities to enhance innovation, expanding the relationships with our robust product set, share technologies and leverage manufacturing and sourcing best practices.

Our capital allocation priorities remain unchanged, maintain a strong balance sheet, invest in innovation and growth, which includes synergy work, return capital to shareholders through share repurchases and maintaining a disciplined approach to maminating. Overall, we executed well in a challenging market. Delivered results that exceeded expectations, expanded profitability and completed the transformational acquisition and strengthens the future of NCDH.

With that, I'll turn the call over to Scott.

Thanks, Brad and good morning, everyone. Fiscal 2026 was a strong year, was a year strong execution and meaningful transformation for our company. I'll start by reviewing our fourth quarter and four year results, then provide additional detail regarding the impact of the marine price acquisition and finish with our outlook for the six months transition period. For the fourth quarter, the legacy net sales were 96.6 million and increased the 17.1 million for 21.5% percent compared to the prior year period.

The increase was driven by higher volumes of our premium next series models, discipline pricing and lower discounts, including 33.3 million and that sales from Japarell or Volo during the six week ownership period. Consolidated fourth quarter net sales were 129.9 million and increased the 50.4 million or 63.4% compared to the prior year period. These same factors impacting that sales also supported strong margin performance across their legacy business grows margin expanded approximately 690 basis points to 30%. Driven by improved fixed cost absorption on higher unit volumes, lower discounts and strong operating execution.

Including sad rail or ball of consolidated gross margin to climb 60 basis points compared to the prior year period, primarily reflecting purchase accounting impact associated with the marine price combination.

As part of our year end, year end impairment assessment, we reported a non cash impairment charge of 10.1 million in our leisure segment related to certain press brand and tangible assets. This charge reflects current conditions within the pontoon category is excluded from our adjusted results has no impact on our liquidity or cash flows. We continue to view pontoons attractive long term category or main focus on strengthening the segments through discipline, inventory management, targeted product innovation and improved execution as retail and market conditions stabilize.

The non cash impairment charge together with acquisition related person accounting impact and transaction cost is often in a gap net loss with quarter. Loss and continuing operations with 7 million or loss of 35 cents per dilute and share compared to income from continuing operations 5.59 or 33 cents per dilute and share in the prior year period. Due to the expense of the one time acquisition related and non cash items affecting gap results this quarter, we believe our adjusted results better reflect the underlying strength and operating performance of the business, which I will cover now.

On a legacy basis adjusted even a foot quarter with 18.6 million and increase of 9.1 million or 95.6% compared to the prior year period adjusted even a margin expanded 730 basis points to 19.3% from 12% a year ago, reflecting strong performance across our legacy businesses. And the partial period contribution, including that partial period contribution from Jack. Well, and follow consolidated adjusted even up was 20.5 million with an adjusted even a margin of 15.8%.

Consolidated adjusted net income was 13.5 million or 67 cents per dilute and share compared to 6.6 million or 46 per dilute and share a year ago. Turning to the full year, legacy net sales were 315.6 million up 31.4 million or 11% compared to fiscal 2025. Including the impact. Shaft rail or ball of this is net sales for 38.9 million and increase of 64.7 million or 22.8%.

Processability also improved meaningfully for the year. Lacy gross margin expanded 520 basis points to 25.2% supported by the same operating drivers that benefited our fourth quarter results. Including Shaft rail and ballo, consolidating gross margin was 22.9% an increase of 290 basis points compared to fiscal 2025.

Despite the purchase accounting impact related to marine products domination. Lacy adjusted even that increased 79.6% up 43.8 million compared to 24.4 million in fiscal 2025 with margins expanding 530 basis points to 13.9% up from 8.6% in the prior year. Including the partial period contribution from Shaft rail and ballo, consolidated adjusted even that increased 87.1% to 45.6 million.

Consolidated adjusted net income was 30.2 million or 1.76 cents per diluted share compared to 15.1 million or 92 cents per diluted share in the prior year.

Turning to the balance sheet, remain disciplined and continue to generate cash into a transformational year. We generated $22.3 million of free cashflow for the year after funding 8.1 million of capital expenditures and absorbing transaction related costs associated to marine products domination. We ended the year with 43.9 million in cash, no debt outstanding and full availability under $75 million revolving credit facility.

Before discussing the consolidating outlook, I'm going to highlight a few items related to Shaft rail and ball of acquisition, including the impact of person accounting. In the fourth quarter, we reported $2.8 million per step up in inventory value, of which $2.6 million was recognized as coffee sale to spend in Q4 with the remainder being recognized in Q1.

Q4 intangible amortization expense was $2.9 million, including $2.6 million for a short-lived backlog intangible that fully amortized in fiscal year 26. We expect amortization normalized at approximately $0.6 million per quarter.

Depreciation included in the growth margin was $1.1 million in Q4 and is expected to normalize the price to be $2.7 million per quarter.

A couple of lines of note on Shaft rail and ball of volume versus our prior market recovery and growth assumptions. Due to delayed retail recovery, we are moderating production levels to align wholesale and retail demand, which result in holding shipments and averaging selling prices near our Q4 exit rate. Additionally, as Brad mentioned, we have also temporarily paused production of the Shaft rail search series to further enhance the platform.

While timing and market recovery is delayed, our confidence in the long-term opportunity is grounded in our proven ability to create value through strong execution and meaningful product innovation.

Now, turning to our consolidated results for a consolidated outlook. As Alec mentioned earlier, we are transitioning our fiscal year to align with calendar year. And today, we are providing guidance for the six months transition period covering July through December of 2026. This guidance reflects the combined company, including Shaft rail and ball and covers the seemingly low volume period for our business. For the upcoming September quarter, we expect net sales of approximately $147 million adjusted even of approximately $16 million and adjusted earnings per share of approximately $0.40.

For the six months transition period, we expect net sales of between $287 million and $291 million adjusted even between $29 million and $32 million and adjusted earnings per share between $0.66 and $0.76. We expect capital expenditures or approximately $9 million in the period.

These results reflect strong growth from our legacy brands, despite our expectations that the retail involvement environment will decline approximately 5% to 10%. Our ability to grow in a down market reflects consistent execution against proven core strategies. The master credit X series is a clear example of this strategy in action. During the first quarter of the prior year, we taught X series productions to support the other cell through outgoing models and facilitate a disciplined transition to the next generation lineup.

In the other coming September quarter, all three new X series models will be in full production. While this production time increase an unusual year over a year comparison, it also positions us with a complete premium product lineup and strong momentum entering the transition period.

Looking ahead, we will continue to evaluate market conditions, dealer inventory levels and product launch timing as we closely align post sale production with retail demand and focus on executing our strategic priorities.

We have a balance sheet of cash flows to invest not only in the synergy opportunities created by the acquisition, but also in our ongoing focus on new differentiated products that will continue that will continue to win in the marketplace. We remain confident in the strength of our portfolio, the long term earnings power to my company and our ability to create value despite challenging market conditions.

With that, I'll turn it back to Brad for closing remarks.

Thanks, Scott. We executed well and delivered results that exceeded our expectations while expanding profitability and broadening our growth platform will give me confidence is that these results were earned not market driven. Our teams executed with discipline remain focused on the fundamentals and consistently delivered against our priorities. As a result, we strength and deliver help gain retail share and expanded our platform for future growth.

There is real energy and excitement across the organization as we enter our next chapter as a larger, more diversified company. With our five brands, we now have a broader portfolio spanning attractive recreational voting categories expanded reach across inland and coastal markets and greater opportunities serve dealers and customers with differentiated products and a wider range of price points.

The macroeconomic and retail environment remains challenging. However, our long term view and execution minded focus has not changed. We believe our portfolio of leading brands, the status to your network strong balance sheet and flexible operating model position as well to navigate near term uncertainty drive growth and create value as market conditions stabilize. I want to thank our team members, team partners, suppliers and shareholders for their support this year.

And once again, welcome the chaperelle and revolver teams to the company. We are excited about what we are building together and we remain confident in the long term value creation potential of MCBH.

Could you help us unpack the contribution of chaperelle and rebelo to those results? Sure. So, I guess I'll start by reminding you, we are kind of at a low point in the market. And this is also our low season that we go in the next six month stub period. But as you think about the results for the six week period of chaperelle and revolts. Keep in mind they are impacted by first accounting items in that six week period.

Most of which is the inventory step up, which was two point six million dollars. So our public gross margins in the K you're going to show point nine percent for the gross margins for the chaperelle and ball of business for that six week ownership period. Those margins would actually be nine percent without the inventory step up. The margins are also impacted by higher depreciation as we wrote up all of our fixed assets and the purchase accounting process.

So the depreciation in that six week period was one point one million dollars and that will obviously have an ongoing impact in the future as well. But we approximate two point seven million dollars on a go forward quarterly basis for what the depreciation will run for the chaperelle of businesses. Now all that ultimately led to an adjusted EBITDA, which excludes both in depreciation as well as the inventory step and step up to came in at about five point five percent for that six week period.

As we look forward into that business, I think you can think of the margins at least for the adjusted EBITDA are going to be somewhere in that same same range on a go forward basis until we get through some of our synergies and some of the initial investments we're putting into the brands.

Just thinking about the revenue contribution over the next six months embedding your guidance for those two brands. How should we think about that?

So, and they're trying to say that the, the, my, we're sort of prepared to mark our, we're keeping the volumes fairly flat and run rate volume fairly flat and how we exit to four for that business as well. Just keep in mind that it was six weeks worth of activity in that fourth quarter period for us, but then run rate of that should continue into the six, the six months or six, you know, six months transition period as well. Which, which also really aligns production wholesale with retail generally.

And maybe Brad, if I could just ask you curious, you know, any early surprises or challenges associated with the marine products. I'm sure there are many surprises as you dig in deeper.

Many, I mean, the only thing that's really changed from our early assumptions is the retail environment and recovery of the retail environment has just been pushed out some. Here's to you to bounce at the low part of the market. But in general, on the fundamentals of the business from an addressable market perspective that more than doubles. Are participation with a wide range of price points now with a larger platform for product channel and even operational leverage.

We've been really thrilled with that. We've got active synergy plans in place. Then we're excited celebrating value creation there. But in general, our conviction and confidence around this is only increased.

Thanks, Greg.

Thanks. As I think we mentioned that the five to 10% were sort of assuming for the industry across really all of our segments. It was really a reflection of the current calendar year trend that's been going on across our segment. Some are a little better, some are a little worse in that 10 to 5 to 10% range. But we're just assuming that that sort of continues through the rest of the season. Keep in mind, the rest of the six month period is the low point of retail. So it is hard on account, harder on account to your basis to catch up much. So we still believe in the quarter as well as for the calendar year, we'll still be in that five to 10% range.

Thanks. I do think that over the last two years, the entire industry has been trying to bring down inventory levels coming out of the kind of COVID highs of retail. That certainly has continued. I think the entire industry is healthier than it used to be. And we're certainly in that way in that as well. So I think as we kind of mentioned, the legacy brands for a pipeline are down about 20% or 30% on a, on a legacy side.

And about 20%, including our new chaperel and revolve brand. So we think we've done what we need to do to bring down inventories. And as we've done tried to say, as you think forward, we're going to do a lot better trying to line wholesale or retail and not really focus on trying to get, get any further pipeline productions and unless the market just continues to go down and we have to follow the market.

So. Also, no, just to build on that a little bit on the positive front. As Scott mentioned, dear inventory is clean. Promotional intensity is healthier than it's been. Premium customers remain engaged in our brands and voting participation support is the long term. So although we're managing relatively conservative today through this period with retail recovery delay, when that broadens were prepared for upside there. So that delayed retail recovery is really a timing issue. In order you not not a change in any long term fundamentals in the marine space.

You mentioned a number of items that you're working on in the recreation and sport fishing segment. Innovation, dealer relations, manufacturing. I thought to focus on dealer relations and I'm just curious of what changes you're working and implementing post acquisition. Thanks. Well, across the board, as we accelerate value creation of a larger group here with presence with five brands in all these categories.

I'm the first of all, let me just say we're protecting what makes our brand special and that includes chaperelle or ball. Keeping them strong while we use scale and process and cross company expertise to drive even more value. So with synergy plans in general, as it relates to dealers, you can imagine with that at scale, product diversity.

Brand leverage. There's all kinds of discussions happening. We've already seen successes. Of dealers picking up new brands within our portfolios. I wish there are also numerous other discussions ongoing is that unfolds. Everyone those conversations creates value opportunity for the future. It's one of our core synergy items that we're deeply engaged in right now today. And that will continue to unfold over time.

Have you made any changes to the Georgia plant since you finished acquisition? Well, the teams are working together on all kinds of best practice sharing and that goes in all directions. It's not just master craft injection into the Georgia facility. There's best practices there that we're applying in reverse. There's a handful of high priority operational items and play there. We have structured integration and synergy team very disciplined working through that and in time that that will prove out.

As we look at, and that also includes purchasing synergies as well on the source inside.