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DATE

Nov. 6, 2025, at 8:30 a.m. ET

CALL PARTICIPANTS

  • Chief Executive Officer — Brad Nelson
  • Chief Financial Officer — Scott Kent
  • Director of Investor Relations — Ala Carmen

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RISKS

  • Pontoon retail softness — Brad Nelson said, "The pontoon category remains highly competitive with retail softness persisting due to elevated interest rates and promotional activity."
  • Full-year retail volume guidance remains negative — Management reiterated expectations for MasterCraft segment retail to be down between 5%-10% for fiscal 2026 (period ending June 30, 2026), reflecting continued retail market headwinds.

TAKEAWAYS

  • Net sales -- $69 million, up $3.6 million or 5.6% year-over-year, driven by pricing, favorable option sales, lower dealer incentives, and planned production cadence.
  • Gross margin -- Gross margin was 22.3%, a 420 basis point improvement year-over-year, attributed to cost management and favorable sales mix.
  • Adjusted EBITDA -- Adjusted EBITDA was $6.7 million, up from $3.8 million in the prior year period. Adjusted EBITDA margin was 9.7%, compared to 5.9% in the prior year period.
  • Adjusted net income -- $4.5 million or $0.28 per diluted share, versus $1.9 million or $0.12 per share in the comparable period (adjusted, Q1 fiscal 2026 vs. Q1 fiscal 2025), calculated using a 23% effective tax rate.
  • Operating expenses -- $11.6 million, an $800,000 increase due to senior leadership transition costs and timing of compensation and commercial activity.
  • Pipeline inventory -- Dealer pipeline inventory improved 27% year-over-year, with inventory turns described by management as aligned with pre-COVID levels.
  • Segment guidance -- Management maintained guidance for retail down 5%-10% for the year, with a measured approach to pontoon due to softness.
  • Cash & liquidity -- $67.3 million in cash and short-term investments, no debt.
  • Share repurchases -- Over 100,000 shares repurchased for $2.3 million, cumulative 3.2 million shares and $76.5 million since inception of the share repurchase program as of the end of the quarter; management attributes a 20% benefit to adjusted EPS from the program.
  • Raised outlook -- Full-year guidance increased: consolidated net sales expected at $295 million to $310 million, adjusted EBITDA (non-GAAP) at $30 million to $35 million, and adjusted EPS at $1.18 to $1.43.
  • New products -- Launched the X24, the first model of the new X family, and introduced refreshed Crest pontoon offerings, including the Halo and Conquest SE.
  • Capital expenditures -- Expected to be approximately $9 million.
  • Production cadence -- Lower wholesale shipments planned in the first half to focus on product introductions, with production ramping in the second half to meet seasonal demand.
  • Strategic partnerships -- Entered into a partnership with the World Wake Association to enhance brand positioning and showcase product innovation.

SUMMARY

MasterCraft Boat Holdings (MCFT 4.01%) reported revenue growth, margin expansion, and higher adjusted earnings per share despite ongoing retail market headwinds. Management highlighted strong dealer engagement and new product launches as key contributors to current performance and sustained guidance. The company increased its full-year outlook for net sales, adjusted EBITDA, and adjusted EPS, reflecting confidence in demand for new models and continued cost discipline. Capital deployment remained focused on share repurchases, new product investment, and maintaining a debt-free balance sheet.

  • Dealers reported improved inventory health, with pipeline levels ending 27% improved year-over-year, and inventory turns reverting to pre-pandemic patterns.
  • CEO Nelson said, "Initial dealer and consumer response has been strong, building anticipation for delivery of the full platform of models."
  • Pontoon segment execution improved, with the launch of Crest Halo and Conquest SE broadening customer reach despite persistent competitive pressure.
  • CFO Kent noted, "expect to deliver total repurchases above prior year levels by the end of the fiscal year."
  • Management is evaluating M&A opportunities with a focus on maintaining balance sheet flexibility and prioritizing shareholder returns.

INDUSTRY GLOSSARY

  • Pipeline inventory: The volume of boats held by dealers awaiting sale to end customers, used as a key health indicator for wholesale channel management in the marine industry.
  • Dealer turn: A metric measuring how quickly a dealer sells through inventory, typically calculated as units sold divided by average inventory on hand.
  • Adjusted EBITDA: Earnings before interest, taxes, depreciation, and amortization, excluding specified non-recurring items, used to assess ongoing operating profitability.
  • Pontoon: A flat-deck boat built atop cylindrical flotation devices, popular for leisure boating and a specific growth focus within multiple marine OEM portfolios.

Full Conference Call Transcript

Ala Carmen: Thank you, Stephanie, and welcome everyone. Thank you for joining us today as we discuss MasterCraft Boat Holdings, Inc.'s fiscal first quarter performance for 2026. 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 provide 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, November 6, 2025.

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-GAAP measures that exclude items not indicative of our ongoing operations. For each non-GAAP measure, we will also provide the most directly comparable GAAP measure in today's press release, which includes a reconciliation of these non-GAAP measures to our GAAP results. There is also a slide deck summarizing our financial results in the Investors section of our website. As a reminder, unless otherwise noted, the following commentary is made on a continuing operations basis.

And all references to specific quarters and periods will be on a fiscal basis. With that, I will turn the call over to Brad.

Brad Nelson: Thank you, Ala, and good morning, everyone. We delivered results that exceeded our expectations despite continued geopolitical uncertainty and a dynamic retail environment. Our team continues to execute our key operating initiatives and maintain disciplined cost controls, which contributed to our success in the quarter. Pipeline inventory levels improved year over year, reflecting our balanced approach to dealer health and focus on driving sustainable growth. Q1 net sales increased $3.6 million or 6% year over year, and adjusted EBITDA rose nearly $3 million, a margin improvement of 380 basis points.

As always, I want to thank each of our team members and dealers for their focus and partnership, which has provided us with a solid foundation from which to build for the rest of our fiscal year. Regarding channel inventory, we maintain the progress made over the past year. From prior year, with pipeline levels ending the quarter 27% improved. Dealer inventory levels are on track with our expectations, and inventory turns remain aligned with pre-COVID levels at this point in the year, supported by disciplined production planning and proactive pipeline management. From a distribution perspective, we continue to fine-tune our presence in key markets, consistently evolving our network, and capitalizing on opportunities to add strong partners globally.

While retail variability continues, early industry indicators have not changed our expectations for the year of down between 5-10% for our MasterCraft segment. The pontoon category remains highly competitive with retail softness persisting due to elevated interest rates and promotional activity. Overall, while near-term interest rate cuts provide us with cautious optimism, continued macroeconomic strengthening and sustained breakout in demand would further support meaningful order growth. Our flexible operating model and targeted dealer support programs position us well to respond to evolving retail dynamics and deliver on the full year. Now turning to our brands.

We remain encouraged by recent operational and quality trends with our own MasterCraft brand, which were echoed by our dealer network during our annual dealer meeting held in late September. The energy and excitement for our brand reinforce confidence in our strategic direction and product roadmaps. In the quarter, we launched the first model of the all-new X family, the X24, to our dealers, followed by a successful consumer debut. This groundbreaking model ushers in the next generation of premium ski wake products featuring advanced technology and elevated design, reinforcing our commitment to differentiated innovation and category leadership.

The timing of the X24 launch builds on the momentum of our ultra-premium X Star family and further positions MasterCraft at the forefront of the premium ski wake segment. Initial dealer and consumer response has been strong, building anticipation for delivery of the full platform of models. We remain disciplined in ramping production throughout the year to ensure quality and demand alignment. In addition to product innovation, we continue to strengthen our brand through strategic partnerships and industry involvement. As an example, our recent partnership with the World Wake Association reflects our standard of delivering premium experiences, welcoming new riders, fostering a vibrant community around water sports, while showcasing our latest innovations like the new X24.

Turning to our pontoon segment. Our pontoon segment delivered meaningful progress with year-over-year improvements in operational execution despite broader market challenges. Crest's model year 2026 lineup was well received at our recent dealer meeting. The refreshed portfolio includes multiple new products, most notably the rebranded Conquest line, modernizing the offering while honoring Crest's historical legacy. We also introduced the Conquest SE, a new model designed to expand our addressable market at a more accessible price point. Combined with the successful addition of several new distribution points in key markets across the US, Crest is well-positioned to capitalize on growth opportunities as market conditions improve.

Our new belief offering, which now includes the third model in the series, the all-new Halo, launched within the quarter, is garnering excitement and delivering a new level of differentiated consumer experience. While we remain measured in our near-term expectations given broader market dynamics, our focus is on building a foundation for future growth. Our strategy for the pontoon segment remains centered on delivering differentiated products that elevate the on-water experience, supporting and strengthening our dealer partners, and continuing to deliver marked operational improvements. Across the company, our financial position remains strong, and our strategic growth initiatives are fully resourced. Our flexible operating model and consistent cash flow generation are enabling us to invest confidently throughout the cycle.

We continue to advance differentiated innovation across our business, returning capital to shareholders through EPS accretive share repurchases, and remain disciplined in evaluating inorganic opportunities. With that, I'll turn it over to Scott to review the financials.

Scott Kent: Thank you, Brad. We are pleased with this quarter's performance, delivering results above our expectations for both net sales and earnings due to the strong operating performance of both of our segments. Focusing on the top line, net sales for our fiscal first quarter were $69 million, up $3.6 million or 5.6% year over year. The increase was primarily driven by pricing, favorable option sales, lower dealer incentives, and in alignment with our planned production cadence for the first half of the year. Gross margin improved 420 basis points over the prior year to 22.3%, a result of strong cost management and operating performance across both segments, pricing, and favorable mix.

Operating expenses were $11.6 million for the quarter, an increase of $800,000 when compared to the prior year, due to senior leadership transition costs and timing of compensation and commercial activities. We continue to tightly manage discretionary spend and operating expenses remain well controlled. Turning to the bottom line, adjusted net income for the quarter was $4.5 million or $0.28 per diluted share, this compares to adjusted net income of $1.9 million or $0.12 per share in the prior year, calculated using an effective tax rate of 23% in fiscal 2026 compared to 20% for the prior year period. We generated $6.7 million of adjusted EBITDA for the quarter compared to $3.8 million in the prior year.

Adjusted EBITDA margin was 9.7%, compared to 5.9% in fiscal 2025, a 380 basis point improvement over the prior year period. We ended the quarter with $67.3 million in cash and short-term investments, no debt, and ample liquidity. We expect to deliver positive free cash flow for the year. We believe our debt-free balance sheet remains one of the strongest in the industry and continues to benefit us as we progress through fiscal 2026. We repurchased over 100,000 shares totaling $2.3 million in Q1, reflecting our continued confidence in our long-term outlook. This brings cumulative repurchases to 3.2 million shares and $76.5 million since we started the share repurchase program, a 20% benefit to Q1's adjusted EPS.

We continue to prioritize returning capital to shareholders and expect to deliver total repurchases above prior year levels by the end of the fiscal year. As we look ahead, based on our fiscal Q1 performance and current expectations, we are raising the earnings and adjusted earnings per share ranges of our full-year guidance. For fiscal 2026, consolidated net sales are expected to be between $295 million and $310 million with adjusted EBITDA now expected to be between $30 million and $35 million. Adjusted earnings per share between $1.18 and $1.43. We continue to expect capital expenditures to be approximately $9 million for the year.

For the 2026, consolidated net sales are expected to be approximately $69 million with adjusted EBITDA of approximately $5 million and adjusted earnings per share of approximately $0.16. Keep in mind, our lower wholesale shipments in the first half remain consistent with our initial production plans for the year as we prioritize the introduction and ramp of our new generation of X family products. In the second half of our fiscal year, we plan to ramp up production as we execute our new product initiatives and maintain readiness for seasonal demand. To that end, our wholesale and financial plan is disciplined and provides us with the ability to deliver year-over-year growth despite continued market uncertainty.

I will now turn the call back to Brad for his closing remarks.

Brad Nelson: Thanks, Scott. Our team executed well during the quarter despite retail uncertainty. We delivered solid results supported by disciplined production planning, dealer engagement, the X24, and the early success of our new product launches, including the refreshed Conquest lineup. These innovations reinforce our commitment to quality, performance, and delivering the best consumer experiences in our industry. From a capital allocation standpoint, we are in a strong position, fully funded for our strategic initiatives, and continuing to return capital to shareholders through our share repurchase program. Our flexible operating model and highly variable cost structure remain key advantages, allowing us to adjust production as needed to support dealer success and align with retail demand.

We are managing the business for the long term. And while near-term uncertainty persists, underlying trends continue to move in our favor. As the market stabilizes, we are well-positioned to capitalize on any future upswing and drive sustainable growth across our brands and continued value creation for shareholders. Operator, you may now open the line for questions.

Operator: Thank you. At this time, we will conduct a question and answer session. As a reminder, to ask a question, you will need to press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Craig Kennison with Baird. Your line is open.

Craig Kennison: Hey, good morning. Thanks for taking my question. I wanted to ask about the current marine consumer. Any details you can shed on and any light you can shed on their retail trends this quarter and into October? Then just I'm really looking for a sense of how the consumer is behaving in this market with rates moving lower, but still a lot of uncertainty in the year.

Brad Nelson: You mentioned rates. Obviously, I think, is a positive thing for the industry as we see them go down. Well, obviously, have the backdrop of some of the macroeconomic and job growth, etcetera, that we'll have to pay attention to. Early SSI for Q1 is obviously showed the industry a little bit down. I think we performed really well in Q1. Our initial views are we are gaining share in that quarter. I think it's a reflection of all of the focus we've had on new product and as well as some of the dealer growth we've had and changes we've made there.

So we still are in line for assuming that we'll be down in the 5% to 10% range for retail for the full year. So Q1 didn't change any of our opinions about where the full year comes in. And frankly, I just need to kind of perform, generally speaking, how we performed in Q1 for the rest of the year to stay within that 5% to 10%.

Scott Kent: Also, Craig, good morning. We're still doing pretty well with premium buyers out there. And we're seeing that in our portfolio demand. And we're just looking for that sustained retail momentum and we're hearing the same thing from our dealer network.

Craig Kennison: Yeah. Thanks for that. And regarding your dealer network and then your retail outlook, have the additions you've made to that network will that result in maybe outperforming the industry? And is that embedded in the 5% to 10% decline you expect?

Brad Nelson: Yes. I would yes to all of that. Yes. We certainly believe that the dealer changes we've made are helping us gain the share. It's that along with our new products and product innovations, and we do think that should continue. I mean, we have certainly had that as part of our strategy to make those changes and I think we're finally starting to see some of the results.

Scott Kent: Dealers remain cautiously optimistic. I don't think that comes as a surprise to anyone. Some of the macroeconomic conditions can dampen sentiment somewhat. But overall, cautiously optimistic remaining. We're not hearing a lot about canceled orders. And we've not seen significant dealer failures to this point. But again, until we see more sustained retail momentum, we expect some continued cautiousness.

Craig Kennison: Great. Thanks. I'll get back in the queue.

Operator: Thank you. And one moment for our next question. Our next question is from Eric Wold of Texas Capital Securities. Your line is open.

Eric Wold: Thank you. Good morning. A couple of questions. I guess, first question, kind of following up on the last one. Can you just give us just kind of update us on your sense of the kind of like the cadence of how you expect kind of retail to progress through your fiscal year? And kind of on the rate cut question. I recall from the last call, you were not embedding any benefit from rate cuts in your guidance. Is that still the case?

And is that kind of based on you kind of want to see the benefits of how those are flowing through to dealers and consumers before you kind of make that assumption or kind of, you know, maybe kind of update your thoughts on that? And then I have a follow-up.

Brad Nelson: On interest rates, we obviously, there's a benefit to both us and our dealer on lower interest rate costs from a financial perspective. And we only embed in our forecast and planning the rates that have already happened. So the rates that have already occurred are certainly factored in. But not necessarily future rate cuts. And obviously, the longer in the year those go, the less impactful they'll be for our P&L anyway. Obviously, love that interest rates are coming down. It's a great thing for the industry. It's certainly a psychological, I think, benefit to our customers when interest rates go down.

But do keep in mind, a lot of the rates that the consumers actually pay are really more based on longer-term rates and will probably take a little longer to come down than the short-term fed rates.

Scott Kent: And also, morning, Eric. On the cadence of the year, we're pleased with the results from the fiscal first quarter and Q1 is one of our tougher comps. Year over year, so even better. Scott mentioned projecting down, retail being down in the 5% to 10% range. We still see that. But the way our revenue ramps throughout the year, of course, you know, we're in a low seasonal pattern now. And until boat shows, it's a little bit dark in terms of how we're gonna sense the market. But in the second half of our fiscal year, we're confident in a nice ramp there driven by the launch of our new X series products. Starting with the X24.

We are in early low-rate production in that model. So far, dealer sentiment and hunger for that product is high, and we anticipate strong consumer demand, will ramp into our half, which is embedded into our outlook.

Eric Wold: Got it. Appreciate that. And then the kind of the full last question. Mentioned you're kind of obviously looking at M&A opportunities out there while still pursuing the share repurchase program. Can you talk about your comfort level with leverage now that you've got obviously a clean balance sheet? You know, how high would you be willing to go in the short term to pursue an acquisition? And then how quickly would you need to or kind of want to, work that leverage back down? Or would you be willing to kind of, you know, keep a certain number certain level of leverage kind of on the balance sheet, you know, for the longer term?

Brad Nelson: Sure. Thanks for the question. We work really hard to keep a balance sheet that gives us flexibility. And, of course, we're going to direct capital within our capital allocation framework and our strategy there. For the highest returns. For shareholders. So that, of course, includes share buyback. That includes maximizing results in our core business. And certainly, it includes evaluating with high scrutiny inorganic M&A. We do have flexibility to do that. We do have open processes there as we evaluate opportunities. Terms of the scale and the trigger points there, that's something we won't comment on. But we do maintain activity in that arena.

Eric Wold: Understood. Thank you.

Operator: Thanks, Eric. Thank you. At this time, we're not showing any further questions in the queue. If anyone would like to ask an additional question, please press 11 on your telephone and wait for your name to be announced. Okay. I'm showing no further questions in the queue. This now concludes our question and answer session. Thank you for your participation in today's conference call. This does conclude the program. You may now disconnect.