MasterCraft Boat Holdings (MCBH) Q4 2026 Earnings Call - Legacy Profitability Surges Amidst M&A Integration and Retail Headwinds

Operator: Ladies and gentlemen, thank you for standing by and welcome to the MasterCraft Boat Holdings, Inc. fiscal fourth quarter and full year 2026 earnings conference call. Please be advised that today’s call is being recorded. After today’s prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Alec Carman, Senior Director, Strategy and Investor Relations. Please go ahead.

Alec Carman, Senior Director, Strategy and Investor Relations, MasterCraft Boat Holdings, Inc.: Thank you, Rebecca, and welcome everyone. Thank you for joining us today as we 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 10th, 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-GAAP measures that include or 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 will include a reconciliation of these non-GAAP measures to our GAAP results. Before turning to our results, I would like to provide some important context for the quarter and year. On May 15th, we completed our combination with Marine Products Corporation, welcoming the Chaparral and Robalo 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 realigned 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 Chaparral and Robalo brands are reported within our Recreation and Sport Fishing segment. 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. 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.

Brad Nelson, Chief Executive Officer, MasterCraft Boat Holdings, Inc.: Thank you, Alec, and good morning, everyone. Fiscal 2026 was a defining year for MasterCraft Boat Holdings. Strong execution across our legacy business drove results to significantly outperform expectations despite a challenging macroeconomic and retail environment. We grew net sales, expanded adjusted EBITDA nearly 80%, a margin improvement of more than 500 basis points year-over-year, and completed the transformational combination with Chaparral and Robalo. These results reflect the durability of our foundation and our disciplined execution against the priorities we established at the beginning of the year. 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 EBITDA was $43.8 million.

These results exceeded the increased guidance we issued last quarter and demonstrate the earnings power of our legacy business in a challenging market. The MasterCraft brand was at the center of that success. Strong retail performance and a successful rollout 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 the primary driver of growth across our business. Including the initial contribution from Chaparral and Robalo, total company net sales were $348.9 million, up 22.8% year-over-year, and adjusted EBITDA was $45.6 million, up 87.1% year-over-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 XStar.

Against that backdrop, our legacy business delivered 21.5% year-over-year net sales growth and expanded adjusted EBITDA 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 Chaparral and Robalo, total company fourth quarter net sales were $129.9 million, up 63.4% year-over-year. Adjusted EBITDA was $20.5 million, up 114.9% year-over-year. The new Recreation and Sport Fishing segment contributed $33.3 million of revenue and $1.8 million of adjusted EBITDA during the abbreviated six-week window of ownership. We do not believe the segment’s initial reported profitability is representative of its underlying earnings power or long-term potential. Scott will provide additional detail on these items shortly.

On a consolidated basis, a key reason for our outperformance was disciplined channel management. Dealer health remained a significant competitive advantage for MCBH. Field inventory in our legacy business finished the year down approximately 30% year-over-year, with turns improving to better than pre-pandemic levels. Chaparral and Robalo also ended the year with lower inventory levels and higher turns. 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 broader market. MasterCraft’s retail performance is a clear example of that dynamic. Entering the year, we expected category retail to decline 5%-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/wake category and the broader powerful market. In our Recreation and Sport Fishing segment, Robalo 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 Robalo helped MCBH outperform a broader powerful 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%-10% over the next six months, following current calendar year-to-date 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 disciplined 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 dealer health, differentiated innovation continues to be one of our most important competitive advantages. Within MasterCraft, the X Series continued to gain momentum throughout the year. With the reintroduction of the X23 alongside the X22 and X24, and building on the success of the XStar, dealer and consumer response has been outstanding. The X Series drove 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/wake category. Within Leisure, we improved segment profitability this year through disciplined cost management and operational efficiencies. Looking ahead to the new model year, we have responded directly to dealer feedback by improving performance across the lineup through meaningful enhancements in both in-speed design and handling.

We also introduced the new Crest Conquest SE Tritoon and announced an industry-first integration of Apple CarPlay 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 brands. Within our newly acquired brands, we are encouraged by the product and innovation roadmaps alongside the strength of the existing portfolio. Chaparral recently introduced the all-new SSX4 OB, expanding the brand’s premium outboard bow rider offering. Separately, our sterndrive lineup now features the new Easy Step, an innovative water entry design that received a 2026 NMMA Innovation Award. Robalo continues to build momentum in the dual console category with products such as the R277 and new R237, both filling strategic white space and expanding Robalo’s ability to attract incremental customers. As we deepen our understanding of these newly acquired businesses, our approach is clear.

Protect what makes each brand 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 MCBH to accelerate that value creation. One early example of how we are creating value across the portfolio is the Chaparral Surf platform. We have temporarily paused production of these models while we enhance the technology and overall customer experience. By combining Chaparral’s strength in ride, design, and layout with MasterCraft’s deep wake 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 intend to leverage the capabilities of the combined company to drive product innovation and long-term value creation. Since closing the transaction, we have spent significant time with the Chaparral and Robalo 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, expand dealer 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, returning capital to shareholders through share repurchases, and maintaining a disciplined approach to M&A. Overall, we executed well in a challenging market, delivered results that exceeded expectations, expanded profitability, and completed the transformational acquisition that strengthens the future of MCBH. With that, I will turn the call over to Scott.

Scott Kent, Chief Financial Officer, MasterCraft Boat Holdings, Inc.: Thanks, Brad, and good morning everyone. Fiscal 2026 was a year of strong execution and meaningful transformation for our company. I will start by reviewing our fourth quarter and full year results, then provide additional details regarding the impact of the Marine Products acquisition, and finish with our outlook for the six-month transition period. For the fourth quarter, legacy net sales were $96.6 million, an increase of $17.1 million or 21.5% compared to the prior year period. The increase was driven by higher volumes of our premium Max series models, disciplined pricing, and lower discounts. Including $33.3 million in net sales from Chaparral and Robalo during the six-week ownership period, consolidated fourth quarter net sales were $129.9 million, an increase of $50.4 million or 63.4% compared to the prior year period. These same factors impacting net sales also supported strong margin performance across our legacy business.

Gross margins expanded approximately 690 basis points to 30%, driven by improved fixed cost absorption on higher unit volumes, lower discounts, and strong operating execution. Including Chaparral and Robalo, consolidated gross margins declined 60 basis points compared to the prior year period, primarily reflecting purchase accounting impact associated with the Marine Products combination. As part of our year-end impairment assessment, we reported a non-cash impairment charge of $10.1 million in our Leisure segment related to certain Crest brand intangible assets. This charge reflects current conditions within the pontoon category. It is excluded from our adjusted results, has no impact on our liquidity or cash flows. We continue to view pontoons as an attractive long-term category and remain focused on strengthening the segment through disciplined inventory management, targeted product innovation, and improved execution as retail and market conditions stabilize.

The non-cash impairment charge, together with acquisition-related purchase accounting impact and transaction costs, resulted in a GAAP net loss for the quarter. Loss from continuing operations was $7 million, or a loss of $0.35 per diluted share, compared to income from continuing operations of $5.5 million, or $0.33 per diluted share in the prior year period. Due to the extent of the one-time acquisition related and non-cash items affecting GAAP 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 EBITDA for the quarter was $18.6 million, an increase of $9.1 million or 95.6% compared to the prior year period. Adjusted EBITDA margin expanded 730 basis points to 19.3%, up from 12% a year ago, reflecting strong performance across our legacy businesses.

Including the partial period contribution from Chaparral and Robalo, consolidated adjusted EBITDA was $20.5 million, with an adjusted EBITDA margin of 15.8%. Consolidated adjusted net income was $13.5 million, or $0.67 per diluted share, compared to $6.6 million or $0.40 per diluted 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 of Chaparral and Robalo businesses, net sales were $348.9 million, an increase of $64.7 million or 22.8%. Profitability also improved meaningfully for the year. Legacy gross margins expanded 520 basis points to 25.2%, supported by the same operating drivers that benefited our fourth quarter results. Including Chaparral and Robalo, consolidated gross margin was 22.9%, an increase of 290 basis points compared to fiscal 2025. Despite the purchase accounting impacts related to Marine Products combination.

Legacy adjusted EBITDA 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 Chaparral and Robalo, consolidated adjusted EBITDA increased 87.1% to $45.6 million. Consolidated adjusted net income was $30.2 million, or $1.76 per diluted share, compared to $15.1 million or $0.92 per diluted share in the prior year. Turning to the balance sheet, we remain disciplined and continue to generate cash in a transformational year. We generated $22.3 million of free cash flow for the year after funding $8.1 million of capital expenditures and absorbing transaction-related costs associated with the Marine Products combination. We ended the year with $43.9 million in cash, no debt outstanding, and full availability under a $75 million revolving credit facility.

Before discussing the consolidated outlook, I am going to highlight a few items related to Chaparral and Robalo acquisition, including the impact of purchase accounting. In the fourth quarter, we reported $2.8 million for step-up in inventory value, of which $2.6 million was recognized as cost of sales expense 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 2026. We expect amortization to normalize at approximately $0.6 million per quarter. Depreciation included in the gross margin was $1.1 million in Q4 and is expected to normalize at approximately $2.7 million per quarter. A couple items of note on Chaparral and Robalo volumes 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 average selling prices near our Q4 exit rate. Additionally, as Brad mentioned, we have also temporarily paused production of the Chaparral Surf Series to further enhance the platform. While timing of 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 or 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-month transition period covering July through December 2026. This guidance reflects the combined company, including Chaparral and Robalo, and covers a seasonally low volume period for our business.

For the upcoming September quarter, we expect net sales of approximately $147 million, adjusted EBITDA of approximately $16 million, and adjusted earnings per share of approximately $0.40. For the six-month transition period, we expect net sales of between $287 million and $291 million, adjusted EBITDA of between $29 million and $32 million, and adjusted earnings per share between $0.66 and $0.76. We expect capital expenditures of approximately $9 million in the period. These results reflect strong growth from our legacy brands, despite our expectations that the retail environment will decline approximately 5%-10%. Our ability to grow in a down market reflects consistent execution against proven core strategies. The MasterCraft X Series is a clear example of this strategy in action.

During the first quarter of the prior year, we paused X Series production to support dealer sell-through of outgoing models and facilitate a disciplined transition to the next generation lineup. In the upcoming September quarter, all three new X Series models will be in full production. While this production timing creates an unusual year-over-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 wholesale production with retail demand and focus on executing our strategic priorities. We have the balance sheet and cash flow 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 to win in the marketplace.

We remain confident in the strength of our portfolio, the long-term earnings power of the combined company, and our ability to create value despite challenging market conditions. With that, I’ll turn it back to Brad for closing remarks.

Brad Nelson, Chief Executive Officer, MasterCraft Boat Holdings, Inc.: Thanks, Scott. We executed well and delivered results that exceeded our expectations while expanding profitability and broadening our growth platform. What gives me confidence is that these results were earned, not market-driven. Our teams executed with discipline, remained focused on the fundamentals, and consistently delivered against our priorities. As a result, we strengthened dealer health, gained 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 boating categories, expanded reach across inland and coastal markets, and greater opportunities to serve dealers and customers with differentiated products at 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, established dealer network, strong balance sheet, and flexible operating model position us well to navigate near-term uncertainty, drive growth, and create value as market conditions stabilize. I want to thank our team members, dealer partners, suppliers, and shareholders for their support this year, and once again, welcome the Chaparral and Robalo 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. Operator, you may now open the line for questions.

Operator: We will now begin the question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from Craig Kennison with Baird. Craig, please go ahead.

Craig Kennison, Analyst, Baird: Hey, good morning. Thank you for taking my question. Regarding your guidance for the next six-month sub-period, could you help us unpack the contribution of Chaparral and Robalo to those results?

Scott Kent, Chief Financial Officer, MasterCraft Boat Holdings, Inc.: Sure. I’ll start by reminding you, we are at a low point in the market, and this is also our low season that we go in the next six-month sub-period. As you think about the results for the six-week period of Chaparral and Robalo, just keep in mind they are impacted by purchase accounting items in that six-week period. Most of which is the inventory step-up, which was $2.6 million. Our public gross margins in the K are going to show 0.9% for the gross margins for the Chaparral and Robalo business for that six-week ownership period. Those margins would actually be 9% without the inventory step-up. The margins are also impacted by higher depreciation as we wrote up all of our fixed assets in the purchase accounting process.

The depreciation in that six-week period was $1.1 million, and that’ll obviously have an ongoing impact in the future as well. We approximate $2.7 million on a go-forward quarterly basis for what the depreciation will run for the Chaparral and Robalo businesses. All that ultimately led to an adjusted EBITDA, which excludes both the depreciation as well as the inventory step-up, that came in at about 5.5% 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 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.

Craig Kennison, Analyst, Baird: That’s very helpful. Thank you, Scott. Just thinking about the revenue contribution over the next six months embedded in your guidance for those two brands, how should we think about that?

Scott Kent, Chief Financial Officer, MasterCraft Boat Holdings, Inc.: As I tried to say in my prepared remarks, we’re keeping the volumes fairly flat, the run rate volume fairly flat on how we exited Q4 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 the run rate of that should continue into the six-month transition period as well.

Brad Nelson, Chief Executive Officer, MasterCraft Boat Holdings, Inc.: Craig, which also really aligns production wholesale with retail generally.

Craig Kennison, Analyst, Baird: Got it. That makes sense. Brad, if I could just ask you, curious, any early surprises or challenges associated with Marine Products? I mean, I am sure there are many surprises as you dig in deeper.

Brad Nelson, Chief Executive Officer, MasterCraft Boat Holdings, Inc.: Not many. 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 as we continue 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 our 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 that we’re excited, accelerating value creation there. But in general, our conviction and confidence around this has only increased.

Craig Kennison, Analyst, Baird: Great. Thank you.

Scott Kent, Chief Financial Officer, MasterCraft Boat Holdings, Inc.: Thanks, Craig.

Operator: Your next question comes from Noah Zatzkin with KeyBanc Capital Markets. Please go ahead.

Noah Zatzkin, Analyst, KeyBanc Capital Markets: Hi. Thanks for taking my questions. I guess first, just on the industry retail commentary, what did you kind of see play out through the quarter and maybe what are you seeing now? Any kind of change in retail performance for you guys or the broader industry as things progressed? Thanks.

Scott Kent, Chief Financial Officer, MasterCraft Boat Holdings, Inc.: As I think we mentioned, the 5%-10% we’re sort of assuming for the industry across really all of our segments was really a reflection of the current calendar year trend that’s been going on across our segments. Some are a little better, some are a little worse in that 5%-10% range. We’re just assuming 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’s harder on a calendar year basis to catch up much. We still believe in the quarter as well as for the calendar year, we’ll still be in that 5%-10% range.

Noah Zatzkin, Analyst, KeyBanc Capital Markets: Got it. Very helpful. Then maybe just now kind of exiting selling season, just any comments on what you are seeing in terms of inventory positions kind of across the industry and how you are feeling? Thanks.

Scott Kent, Chief Financial Officer, MasterCraft Boat Holdings, Inc.: I do think that over the last 2 years, the entire industry has been trying to bring down inventory levels coming out of the COVID highs of retail. That certainly has continued. I think the entire industry is healthier than it used to be, and we are certainly in that as well. So I think as we kind of mentioned, the legacy brands for our pipeline are down about 20% or 30% on the legacy side, and about 20%, including our new Chaparral and Robalo brand. So, we think we have done what we need to do to bring down inventories.

As we have kind of tried to say on, as you think forward, we are going to do a lot better trying to align wholesale with retail, and not really focus on trying to get any further pipeline reductions unless the market just continues to go down and we have to follow the market.

Brad Nelson, Chief Executive Officer, MasterCraft Boat Holdings, Inc.: Also, Noah, just to build on that a little bit. On the positive front, as Scott mentioned, dealer inventory is clean, promotional intensity is healthier than it has been. Premium customers remain engaged in our brands. Boating participation supports the long term. So although we are managing relatively conservatively today through this period with retail recovery delay, when that broadens, we are prepared for upside there. So that delayed retail recovery is really a timing issue in our view, not a change in any long-term fundamentals in the marine space.

Noah Zatzkin, Analyst, KeyBanc Capital Markets: Thank you. Very helpful.

Operator: Your next question comes from Gregory Miller with Truist Securities. Please go ahead.

Gregory Miller, Analyst, Truist Securities: Thanks. Good morning, Brad and Scott. 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 what changes you’re working on implementing post-acquisition. Thanks.

Brad Nelson, Chief Executive Officer, MasterCraft Boat Holdings, Inc.: Across the board, as we accelerate value creation of a larger group here with presence with five brands and in all these categories. First of all, let me just say we’re protecting what makes our brands special, and that includes Chaparral and Robalo, keeping them strong while we use scale and process and cross-company expertise to drive even more value. With synergy plans in general as it relates to dealers, you can imagine with that added 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, of which there are also numerous other discussions ongoing as that unfolds. Every one of those conversations creates value opportunities 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.

Gregory Miller, Analyst, Truist Securities: Okay, thanks. I think you may have addressed this a little bit in the call already, but from a manufacturing or plant operations context, have you made any changes to the Georgia plant since you finished acquisition?

Brad Nelson, Chief Executive Officer, MasterCraft Boat Holdings, Inc.: Well, the teams are working together on all kinds of best practice sharing, and that goes in all directions. It is not just MasterCraft injection into the Georgia facility. There are best practices there that we are applying in reverse. There is a handful of high priority operational items at play there. We have structured integration and synergy teams, very disciplined, working through that, and in time that will prove out as we look at it. That also includes purchasing synergies as well on the sourcing side.

Gregory Miller, Analyst, Truist Securities: All right. Thank you very much.

Operator: There are no further questions at this time. This concludes today’s call. Thank you for attending. You may now disconnect.