MasterCraft Boat Holdings, Inc. (MCFT) Bundle
Understanding MasterCraft Boat Holdings, Inc. (MCFT) Revenue Streams
Understanding MasterCraft Boat Holdings, Inc.’s Revenue Streams
The revenue generated by MasterCraft Boat Holdings, Inc. is derived from multiple sources, primarily segmented into two categories: the MasterCraft brand and the Pontoon segment. Below is a detailed breakdown of these revenue sources for the three months ended September 29, 2024.
| Segment | Net Sales (in thousands) | Year-over-Year Change (in thousands) | Percentage Change |
|---|---|---|---|
| MasterCraft | $55,533 | $(20,303) | (26.8%) |
| Pontoon | $9,826 | $(8,643) | (46.8%) |
| Consolidated Total | $65,359 | $(28,946) | (30.7%) |
In the MasterCraft segment, revenue from boats and trailers accounted for $50,223, while parts contributed $4,023, and other revenues totaled $1,287. The Pontoon segment reported $9,192 from boats and trailers, $507 from parts, and $127 from other revenues. The overall consolidated revenue for the company decreased significantly compared to the previous year, primarily due to lower unit volumes and unfavorable model mix.
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate reflects a substantial decline across both segments. For the MasterCraft segment, the revenue dropped by 26.8%, while the Pontoon segment saw an even sharper decline of 46.8%. This resulted in a consolidated revenue decrease of 30.7% during the first quarter of fiscal 2025 compared to the same period in the prior year.
Contribution of Different Business Segments to Overall Revenue
The contributions of each segment to the overall revenue for the three months ended September 29, 2024, are illustrated below:
| Segment | Contribution to Total Revenue (in thousands) | Percentage of Total Revenue |
|---|---|---|
| MasterCraft | $55,533 | 84.9% |
| Pontoon | $9,826 | 15.1% |
| Consolidated Total | $65,359 | 100% |
This data indicates that the MasterCraft segment remains the predominant source of revenue, contributing approximately 84.9% of the total revenue, while the Pontoon segment accounts for 15.1%.
Analysis of Significant Changes in Revenue Streams
Significant changes in revenue streams have been observed due to varying factors including market conditions, unit sales volume, and dealer incentives. The consolidated net sales decreased by $28.9 million during the first quarter of fiscal 2025 compared to the same prior-year period, driven primarily by lower unit sales from both segments. The unit sales volume for MasterCraft decreased by 24.3%, while the Pontoon segment experienced a decline of 51.1%. This decline in volumes has had a profound impact on the overall revenue and profitability of the company.
The following table summarizes the unit sales volume for both segments:
| Segment | Unit Sales Volume | Year-over-Year Change | Percentage Change |
|---|---|---|---|
| MasterCraft | 374 | $(120) | (24.3%) |
| Pontoon | 177 | $(185) | (51.1%) |
| Consolidated Total | 551 | $(305) | (35.6%) |
A Deep Dive into MasterCraft Boat Holdings, Inc. (MCFT) Profitability
A Deep Dive into MasterCraft Boat Holdings, Inc.'s Profitability
Gross Profit Margin: For the three months ended September 29, 2024, the gross profit was $11,798,000 on net sales of $65,359,000, resulting in a gross margin of 18.1%. This represents a decline from the prior year’s gross profit of $22,475,000 on net sales of $94,305,000, which yielded a gross margin of 23.8%.
Operating Profit Margin: Operating income for the same period in 2024 was $1,004,000, leading to an operating margin of 1.5%. This is a significant decrease compared to the operating income of $10,553,000 and an operating margin of 11.2% for the three months ended October 1, 2023.
Net Profit Margin: The net income for the three months ended September 29, 2024, was a loss of $5,145,000, resulting in a net profit margin of (7.9%). This contrasts sharply with the net income of $6,195,000 and a net profit margin of 6.6% for the same period in the previous year.
Trends in Profitability Over Time
The profitability metrics have shown a downward trend over the past year. The gross margin decreased by 570 basis points, while operating income plummeted by 90.5% year-over-year. The net income loss reflects a substantial shift from profitability to a loss position, highlighting operational challenges.
Comparison of Profitability Ratios with Industry Averages
Industry averages for similar companies typically show gross margins around 20% to 25%, operating margins of 10% to 15%, and net profit margins of 5% to 10%. MasterCraft's current margins are below these benchmarks, indicating potential areas for improvement.
Analysis of Operational Efficiency
In terms of operational efficiency, the company’s cost of sales for the three months ended September 29, 2024, was $53,561,000, leading to a decrease in gross profit. The total operating expenses were $10,794,000, down from $11,922,000 in the prior year, demonstrating some success in cost management despite declining revenues.
| Metric | Q1 2025 | Q1 2024 | Change |
|---|---|---|---|
| Net Sales | $65,359,000 | $94,305,000 | (30.7%) |
| Gross Profit | $11,798,000 | $22,475,000 | (47.5%) |
| Operating Income | $1,004,000 | $10,553,000 | (90.5%) |
| Net Income (Loss) | ($5,145,000) | $6,195,000 | (183.0%) |
| Gross Margin | 18.1% | 23.8% | (570 bps) |
| Operating Margin | 1.5% | 11.2% | (1,170 bps) |
| Net Profit Margin | (7.9%) | 6.6% | (14.5%) |
Debt vs. Equity: How MasterCraft Boat Holdings, Inc. (MCFT) Finances Its Growth
Debt vs. Equity: How MasterCraft Boat Holdings, Inc. Finances Its Growth
As of September 29, 2024, the total debt for MasterCraft Boat Holdings, Inc. was $49.5 million, an increase from $49.3 million as of June 30, 2024. This debt is primarily composed of long-term obligations, with $49.5 million outstanding under the Revolving Credit Facility. The company did not report any short-term debt obligations at this time.
The debt-to-equity ratio for MasterCraft as of September 29, 2024, stood at 0.28, calculated by dividing total debt by total equity of $175.447 million. This ratio is significantly lower than the industry average of approximately 0.5, indicating a relatively conservative leverage position compared to its peers in the boat manufacturing industry.
In the recent fiscal period, the company engaged in refinancing activities, including the repayment of $49.5 million on its Term Loan, which was offset by new borrowings under the Revolving Credit Facility. The company maintains a strong cash position, with $14.16 million in cash and cash equivalents as of September 29, 2024. This liquidity is bolstered by held-to-maturity securities amounting to $68.649 million.
MasterCraft balances its debt financing with equity funding through share repurchase programs. In July 2023, the Board authorized a share repurchase program allowing for the repurchase of up to $50 million of its common stock. During the three months ended September 29, 2024, the company repurchased 183,629 shares for $3.5 million. This strategy not only serves to enhance shareholder value but also reflects the company's confidence in its financial health and future growth prospects.
| Financial Metric | Value |
|---|---|
| Total Debt | $49.5 million |
| Debt-to-Equity Ratio | 0.28 |
| Total Equity | $175.447 million |
| Cash and Cash Equivalents | $14.16 million |
| Held-to-Maturity Securities | $68.649 million |
| Share Repurchase Amount (Q1 FY2025) | $3.5 million |
| Authorized Share Repurchase Program | $50 million |
Assessing MasterCraft Boat Holdings, Inc. (MCFT) Liquidity
Assessing MasterCraft Boat Holdings, Inc. Liquidity
The liquidity position of MasterCraft Boat Holdings, Inc. is critical for evaluating its ability to meet short-term obligations. Key liquidity ratios such as the current ratio and quick ratio provide insights into the company’s financial health.
Current and Quick Ratios
As of September 29, 2024, MasterCraft reported the following liquidity ratios:
- Current Ratio: 1.97
- Quick Ratio: 1.05
This indicates that the company has $1.97 in current assets for every $1 in current liabilities, suggesting a robust liquidity position. The quick ratio, which excludes inventories, shows that the company still retains a healthy liquidity position even when considering only its most liquid assets.
Analysis of Working Capital Trends
Working capital, defined as current assets minus current liabilities, for MasterCraft as of September 29, 2024, is:
- Working Capital: $53.4 million
This represents a decrease from $72.2 million as of June 30, 2024, highlighting a trend where the company has experienced a reduction in working capital, primarily due to increasing current liabilities.
Cash Flow Statements Overview
Cash flow from operating, investing, and financing activities provides a comprehensive view of MasterCraft's liquidity:
| Cash Flow Activity | Three Months Ended September 29, 2024 | Three Months Ended October 1, 2023 |
|---|---|---|
| Operating Activities | $(502,000) | $(4.77 million) |
| Investing Activities | $8.39 million | $22.52 million |
| Financing Activities | $(3.95 million) | $(8.42 million) |
| Net Change in Cash | $3.94 million | $9.33 million |
For the three months ended September 29, 2024, the company reported a net cash decrease from operating activities of $(502,000), a significant improvement compared to the previous year. Cash provided by investing activities was $8.39 million, while cash used in financing activities totaled $(3.95 million).
Potential Liquidity Concerns or Strengths
Despite the robust current and quick ratios, the decrease in working capital and net cash used in operating activities may raise concerns about future liquidity. The company maintains a revolving credit facility with $50.5 million of available borrowing capacity as of September 29, 2024, which enhances its liquidity position. The total cash and cash equivalents stood at $14.16 million, indicating a strong cash reserve relative to its obligations.
In summary, while MasterCraft shows strong liquidity ratios and cash reserves, the trends in working capital and operating cash flows warrant close monitoring by investors.
Is MasterCraft Boat Holdings, Inc. (MCFT) Overvalued or Undervalued?
Valuation Analysis
To assess the financial health of the company, we will examine key valuation metrics, stock price trends, dividend yields, and analyst consensus on the stock valuation.
Price-to-Earnings (P/E) Ratio
As of the latest financial reports, the trailing twelve-month (TTM) P/E ratio is 21.7.
Price-to-Book (P/B) Ratio
The current P/B ratio stands at 2.1.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is reported at 12.5.
Stock Price Trends
The stock price has shown significant volatility over the last 12 months:
- 12-month high: $27.50
- 12-month low: $15.80
- Current stock price (as of October 2024): $19.00
Dividend Yield and Payout Ratios
The company does not currently pay a dividend, resulting in a dividend yield of 0%.
Analyst Consensus
According to the latest analyst reports, the consensus rating is as follows:
- Buy: 3 analysts
- Hold: 5 analysts
- Sell: 1 analyst
| Metric | Value |
|---|---|
| P/E Ratio | 21.7 |
| P/B Ratio | 2.1 |
| EV/EBITDA Ratio | 12.5 |
| 12-Month High Stock Price | $27.50 |
| 12-Month Low Stock Price | $15.80 |
| Current Stock Price | $19.00 |
| Dividend Yield | 0% |
| Buy Analysts | 3 |
| Hold Analysts | 5 |
| Sell Analysts | 1 |
Key Risks Facing MasterCraft Boat Holdings, Inc. (MCFT)
Key Risks Facing MasterCraft Boat Holdings, Inc.
MasterCraft Boat Holdings, Inc. faces a variety of internal and external risks that can significantly impact its financial health and operational performance. Understanding these risks is crucial for investors seeking to make informed decisions.
1. Industry Competition
The marine industry is highly competitive, with numerous players vying for market share. In the most recent report, consolidated net sales decreased by $28.9 million, or 30.7%, compared to the previous year. This decline was primarily attributed to lower unit volumes and unfavorable model mix.
2. Regulatory Changes
Changes in regulations related to environmental standards and safety can impose additional costs on manufacturers. The company must remain compliant with various federal and state regulations, which can affect operational costs and production timelines.
3. Market Conditions
The overall market demand for recreational boating products has softened, particularly during key selling seasons. The company implemented a wholesale strategy that prioritized rebalancing dealer inventory levels, resulting in decreased net sales and reduced gross margins.
4. Operational Risks
Operational risks include challenges in production efficiency and supply chain disruptions. For the three months ended September 29, 2024, operating income fell by 90.5%, from $10.5 million to $1.0 million. The reduction in production volume leads to lower cost absorption, impacting gross margins.
5. Financial Risks
The company carries a significant amount of debt, with total debt of $49.5 million as of September 29, 2024. This level of indebtedness may limit the company’s financial flexibility and increase its vulnerability to interest rate fluctuations. Interest expense increased by 12.4% during the same period.
6. Strategic Risks
The company has undergone changes in leadership and organizational structure, which can create uncertainty. The costs associated with CEO transition and organizational realignment were reported at $334,000 for the three months ended September 29, 2024. These strategic changes may impact employee morale and operational continuity.
7. Mitigation Strategies
To mitigate these risks, the company has implemented various strategies, such as diversifying its product offerings and enhancing its dealer network to improve sales performance. Additionally, maintaining a strong liquidity position with cash and cash equivalents of $14.2 million as of September 29, 2024, provides a buffer against unexpected challenges.
| Risk Factor | Description | Recent Impact |
|---|---|---|
| Industry Competition | High competition in the marine industry affects market share. | Net sales decreased by $28.9 million. |
| Regulatory Changes | Compliance with environmental and safety regulations. | Potential increase in operational costs. |
| Market Conditions | Softening demand for recreational products. | Implemented wholesale strategy leading to lower sales. |
| Operational Risks | Challenges in production efficiency and supply chains. | Operating income fell by 90.5%. |
| Financial Risks | Significant debt levels impacting financial flexibility. | Total debt of $49.5 million. |
| Strategic Risks | Leadership changes creating operational uncertainty. | Transition costs of $334,000. |
| Mitigation Strategies | Diversification and enhancing dealer networks. | Cash reserves of $14.2 million. |
Future Growth Prospects for MasterCraft Boat Holdings, Inc. (MCFT)
Future Growth Prospects for MasterCraft Boat Holdings, Inc.
Analysis of Key Growth Drivers
MasterCraft Boat Holdings, Inc. is poised for growth through several key drivers:
- Product Innovations: The company has been focusing on enhancing its product lineup with advanced technology and design improvements. Recent innovations include the introduction of new boat models that feature upgraded performance and luxury amenities.
- Market Expansions: The company is actively exploring international markets, particularly in Europe and Asia, where demand for recreational boating is on the rise.
- Acquisitions: On October 18, 2024, the company completed the Aviara Transaction, selling its Aviara brand to MarineMax, which may allow for a more concentrated focus on its core brands.
Future Revenue Growth Projections and Earnings Estimates
The company's financial outlook reflects a challenging environment, but with strategic initiatives in place, growth is still anticipated:
- For the first quarter of fiscal 2025, consolidated net sales decreased to $65.4 million from $94.3 million in the prior year, a decrease of 30.7%.
- Earnings projections suggest a gradual recovery, with analysts estimating revenue growth of approximately 5-10% annually over the next three years as market conditions stabilize.
Strategic Initiatives or Partnerships That May Drive Future Growth
The company is focused on several strategic initiatives:
- Dealer Network Enhancements: Investments in the dealer network are expected to improve sales effectiveness and customer engagement.
- Partnerships with Technology Providers: Collaborations aimed at integrating smart technology into products are being pursued to attract tech-savvy consumers.
Competitive Advantages That Position the Company for Growth
MasterCraft has several competitive advantages:
- Strong Brand Recognition: The company has established a strong reputation in the premium boat segment, which provides a loyal customer base.
- Robust Supply Chain: A well-managed supply chain allows for efficient production and distribution processes, helping to keep costs in check.
| Key Financial Metrics | Q1 FY2025 | Q1 FY2024 | Change (%) |
|---|---|---|---|
| Consolidated Net Sales | $65.4 million | $94.3 million | -30.7% |
| Operating Income | $1.0 million | $10.6 million | -90.5% |
| Gross Margin | 18.1% | 23.8% | -570 bps |
| Cash and Cash Equivalents | $14.2 million | $7.4 million | +91.9% |
As of September 29, 2024, the company reported total assets of $309.1 million, a decrease from $318.0 million in June 2024. This reflects ongoing adjustments to align with market conditions.
Future growth prospects appear promising with the right strategies in place, despite current challenges in sales performance and market dynamics.
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Resources:
- MasterCraft Boat Holdings, Inc. (MCFT) Financial Statements – Access the full quarterly financial statements for Q1 2025 to get an in-depth view of MasterCraft Boat Holdings, Inc. (MCFT)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View MasterCraft Boat Holdings, Inc. (MCFT)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.