Transcript • May. 7, 2026 12:30 PM • MasterCraft Boat Holdings, Inc. Common Stock (MCFT)
Transcript
May. 7, 2026 12:30 PM
MasterCraft Boat Holdings, Inc. Common Stock (MCFT)
Daniel S. Pauly: our goal is to certainly align wholesale and retail a lot closer. So we'll certainly need to get through the rest of the selling season, see how it ends, and then we'll be prepared to give guidance on that as we go into the 27th year.
Brad Collins: Also, Kevin, this is Brad. We've got a lot to learn with the upcoming selling season, but coming out of boat show season and here in early spring, we've been generally pleased with the results. One thing I'd like to highlight is not only is our inventory better than pre-COVID traditional levels, inventory turns are also below those levels. So that together with the momentum coming out of boat shows continued lean in from customers and dealers on our new products gives us that confidence as well as the visibility into our production model that Scott referenced earlier.
Kevin: Gotcha. Thanks. And then if I had one quick follow-up, but just the closer to flat retail assumption, Is that for like total company retail or is that a SkiWake Mastercraft brand specific comment? That's a Mastercraft specific comment. Okay. Thanks.
Operator: Thank you. Our next question comes from Anna Gleskin of the Riley Securities. Your line is now open.
Anna Gleskin: Hi, good morning. Thanks for taking my question. I'd like to ask on the gross margin performance in the quarter. Really nice expansion, I think, reached the highest level since 2023 in the quarter, despite a lower sales growth. Could you maybe unpack the mixed benefit or the contributors to that expansion and just generally how we should be thinking about gross margin as we assume greater parity between retail and wholesale? Thanks.
Daniel S. Pauly: There are several drivers to our margin that are really more or less consistent than we've had through the entire year, but certainly affecting us in the Q3 as well. So in Q3, our margins are certainly improved a little bit by discounts. Our discounts have generally been lower as we go into, well, it will have been all year, but certainly as we go into Q3, our margins are certainly impacted by that. We do have a little bit of segment mix as well as Pontoon's wholesale went down a little bit more than the Mastercraft units did as well, so we get a little benefit from the extra Mastercraft sales there. We've also been having really good operations improvements really throughout the year, so we've had some cost improvements there. Our pontoon business has had fairly flat sales for the year, but our margin improvement on the pontoon business has been about $1.9 million at adjusted EBITDA. So that's helping our overall margins as well. Along with some quality improvements, we've been having a little bit of favorable warranty really throughout the entire year, and that continued into the Q3 as well. So lots of things ultimately chipping away and adding to that margin improvement as we've gone through the quarter and the year.
Anna Gleskin: Great, thanks for that. And then, secondly, I know that acquisition hasn't closed, but anything you could share on MPX's retail this quarter and potentially into April 9th? Thanks.
Daniel S. Pauly: Yeah, obviously, I think you can go out on their website and you can see their kind of results for the quarter. I think they're publishing today as well. I'll leave the quarter to them to talk through, so... But you can certainly go out and look at that on their own website.
Anna Gleskin: Okay, thanks. And then one more follow-up on guidance. I believe in the prepared remarks you said something to the effect of incorporating the current uncertainty into the guidance. I guess, could you expand on what you're thinking there and how that's impacting the guidance? Thanks.
Brad Collins: Yeah, hey, Anna, that's really just driven around some of the macroeconomic and geopolitical issues that are happening. And there has been a little bit of a pausing or a downdraft at retail across the broader industry and broader categories. We've been generally pleased with our outperformance at the retail level inside of that, but it's more geopolitical in nature, which we view as temporary.
Operator: Got it. Thanks. Thank you. One moment for our next question. Our next question comes from Brandon Roll from Loop Capital. Your line's now open.
Brandon Roll: Good morning. Thank you for taking my questions. First, just on general and administrative costs, it seems like that ticked up a little bit in the quarter. Is that expected to continue throughout 4Q and into fiscal year 2017?
Daniel S. Pauly: Now, I realize that most of the pickup was really the one-time cost associated with the acquisition. So I think of the $9.2 million in the quarter, if you looked into our adjustments there, about $8.4 million of that was related to the acquisition. We also have some continued costs related to our ERP implementation for a couple hundred thousand dollars as well. And we do have some timing of between quarters, as well as it's a little increase year over year in sales and marketing. I think those are the three main drivers that kind of are impacting that. Obviously, the acquisition costs will go away, the ERP costs will go away, and the sales and marketing are kind of timing-related.
Brandon Roll: Okay, great. And then just on the pontoon category, I think you gave more optimistic retail expectations for the Mastercraft brand. Anything, any update on kind of recent trends within the pontoon segment and any updated trends retail expectations there?
Brad Collins: Yeah, pontoon in general hasn't really got going yet. Of course, that business traditionally is more of a payment buyer, highly compressed in the summer selling season, of which we're just in the early rounds of that. We view 26 for us as really a stabilization year. as we fight through just macroeconomic pressure and a promotional environment out there that's still elevated from traditional levels. And our brand, you know, using Crest as an example, it's a very proud brand with 68 years of brand equity. We're working hard on this business with discipline, aligning inventory, strengthening our dealer network. So overall, that category, it's giant. It's the biggest subsegment within marine. We've got good tradition and history there, strong brands, as well as a good dealer network. So as we stabilize going forward through the summer selling season, we do need to see sustained retail in that market. What we think will drive that is more macroeconomic attitude in general that would apply to the entire marine category as well.
Daniel S. Pauly: So just remember, that stabilization was really done what we planned to do this year, right? And we really have seen that happening. So on a year-to-date basis, the adjusted EBITDA for the pontoon segment has gone up about $1.9 million on relatively flat wholesale. So this year has done exactly what we wanted it to do, get that stabilization, and now we've really got a platform set for the growth in the future.
Brandon Roll: Great. Thank you.
Operator: Thank you. One moment for our next question. Our next question comes from Garrick Johnson of Seaport Research Partners. Your line is now open.
Garrick Johnson: Good morning. Thank you. Hey, piggybacking on Anna's question, you did not mention anything about commodities. Wondering how those are trending for you, how you lock in price or hedge, and what you're seeing and experiencing going forward on those commodities, resins and aluminum in particular.
Daniel S. Pauly: So on the fuel petroleum-based products, resins, gels, and really foam, it's still a relatively small portion of our entire bill of material. So we do have some implied increases coming into that in our fourth quarter guidance or our full year guidance. It's not significant. I think you can think of like 1% of our entire gross margins or material costs. It's just not that significant overall. We are doing what we can to work with our suppliers to mitigate that as best as possible, but not having huge impacts necessarily on our full-year profitability. But again, we do have some of that embedded in our guidance and margins assumptions for the full year. On the aluminum front, that's really more impacted by tariffs and the tariff, even the past tariffs. As you might recall, we have at the Mastercraft level been putting a surcharge on our invoices for tariffs, and that is largely doing exactly what we planned. We are offsetting the cost of those tariffs on an almost dollar-for-dollar basis through what we've been charging through that extra surcharge. So we have been kind of netting out the effect of the aluminum increases.
Garrick Johnson: Okay, gotcha. Thank you. And then on your pro forma, thank you for the pro forma examples. You know, you are issuing shares to consummate this deal, so are you able to provide us, you know, depreciation tax rate and pro forma shares to help us get to an EPS?
Daniel S. Pauly: We will give you more of that guidance when we get into the 27-year. Obviously, the proxy that we sent out has some of that data in it. You can get a little bit of that data, but Just keep in mind that there's going to be a lot of purchase accounting adjustments, so anything you see, even in MPX's past numbers, it's going to change a bit as we move into getting finalized on purchase accounting and moving forward. So we'll give you a little bit more of that guidance when we finalize some of those entries for going into 27. Okay.
Garrick Johnson: Gotcha. Thanks. And one last one. You know, you mentioned retail is overperformed. You've been launching new models, particularly Mastercraft, the X series. You know, the 22 in November, the 24 in January, and now the 23. Just wondering how much more of the market can you get with that one foot difference? Do you cannibalize from the 22 and 24, or can you get incremental customers? Just the, you know, the rationale behind the 22, 23, and 24 one foot each.
Brad Collins: Eric, in general, our momentum there from dealers and the consumer level isn't just new products. This is about a customer experience and unrivaled support, quality products in general, which are surging. A catalyst with new products certainly is helping. The new lineup, recall last year we launched the X-Star at the top end, ultra-premium, end of the space, which is garnering share. And now with X24, 2022, and 2023, as you mentioned, same thing's happening. What we're hearing from dealers and consumers alike is that these products are winning on three fronts, design, performance and quality, and premium value. And we like how they're positioned against the competition. And they're winning incremental share. Now, the market continues to lean premium. That's an advantage for us with our premium brand. We expect that to continue, especially until the mass market starts to recover. But there's no doubt that with our share capture momentum that we're pleased with, we're winning incremental business. But it's not just all on the backs of new products. We're seeing surges in pretty much all of our product lines.
Daniel S. Pauly: Yeah, we do work really closely with our dealers, and actually the dealers are the ones that requested to have a 23 in the lineup. They believe, we believe, that we will get, by having all three of those products in the lineup, we will get incremental share and incremental sales from the combined of the three models combined. It gives us a really nice price point. Certain markets are better with a 23, certain markets are better with a 22, and some markets can sell the 24. So, It does make a difference to our dealers. They have certainly requested it, and we've listened to them and put it back in the lineup. Okay. Gotcha. Great. Thank you very much.
Operator: Thank you. I am showing no further questions at this time. I'd like to thank you all for your participation in today's conference. This does conclude the program. You may disconnect.
