MasterCraft Boat Holdings, Inc. Q3 FY2025 earnings call

• Leadership Transition: Tim Oxley's retirement as CFO, with Scott Kent assuming the role on July 1. Tim had a 35-year career in the powerboat industry, 18 years at MasterCraft.
• Q3 Results: Exceeded expectations with improved profitability due to higher volumes, operating efficiencies, and favorable mix. Dealer inventories across brands decreased by 30% over the last year and by more than 45% vs pre-pandemic 2019.
• Tariffs and Risk Mitigation: Anticipated modest tariff impact on fiscal 2025 costs, working with suppliers to mitigate risk. Closely monitoring demand implications of tariffs.
• Brand Recognition: XStar won NMMA Innovation Award; MasterCraft and CREST received CSI awards. XStar's halo effect was positive for the MasterCraft brand globally.
• Dealer Network: Strengthened dealer presence in Dallas, Southern Utah, and Lake of the Ozarks. Pontoon segment adjusting production levels to right-size inventories; Mike O'Connell appointed President of Pontoon business.

MasterCraft segment: Net sales for the quarter were $76 million, with gross margin at 20.8% compared to 23.3% in the prior year period. The ramp in production of the premium XStar model contributed to favorable mix. Pontoon segment (including CREST and BALISE): Dealer inventories in the broader pontoon market were down 40% year-over-year. CREST has received Marine Industry Customer Satisfaction Index Awards for six consecutive years under MasterCraft's ownership. Revenue contribution details weren't explicitly given for each segment in terms of percentage, but the focus was on performance within each segment.

• Fiscal 2025 consolidated net sales expected to be approximately $275 million, adjusted EBITDA ~$20 million, and adjusted earnings per share $0.71.
• Full-year capital expenditures expected to be approximately $9 million.
• Accelerated share repurchase in fiscal Q4, with over $1.8 million spent repurchasing over 115,000 shares already in Q4-to-date.

• Macroeconomic Headwinds: Persistent macroeconomic headwinds and tariff uncertainty putting pressure on the marine sector.
• Dealer Network Health: Monitoring dealer network balance sheet and ensuring no pockets of stress, but closely monitoring dealer health with floor plan suppliers.

Q: Can we get quantification around tariff impact and potential price increase for model year 2026?

A: Tariff effect on pricing not yet determined, but expected to have inflationary impact, with modest impact in fiscal Q4 already embedded in guidance.

Q: What's the quantification of retail decline?

A: Expecting closer to 10% decline, with Q4 easiest comp being June, so won't know until it concludes but line of sight to being down in that 10% range.

Q: What's the direct and indirect tariff exposure?

A: Discussed with significant suppliers, parts like engine blocks from Canada, modest impact in Q4, evolving for fiscal 2026.

Q: How is the dealer network balance sheet and any stress?

A: No significant dealer failures, but monitoring dealer health closely with floor plan suppliers.

Q: How is BALISE revenue and fiscal 2026 outlook?

A: Anticipating net sales near $10 million for fiscal 2025, not ready to talk fiscal 2026 yet.

Q: Retail trends in April-May and premium buyers?

A: Premium buyers skewing, XStar launch helping, some green shoots from dealers; Q4 easiest comps, dealers optimistic but sustained vibrant momentum not yet seen.

Q: Approach to taking price in face of tariffs?

A: Aiming to balance volume, price, and cost; likely traditional market-based price adjustment, potentially moving to variable pricing model, goal is to cover input costs with tariffs causing latency and change.