MasterCraft Boat Holdings, Inc. reported significant declines in financial performance for the three months ended September 29, 2024, compared to the same period in the previous fiscal year. Net sales decreased by 30.7% to $65.4 million from $94.3 million, primarily driven by reduced demand and a strategic shift to a wholesale strategy aimed at rebalancing dealer inventory levels. The MasterCraft segment saw a 26.8% drop in net sales to $55.5 million, while the Pontoon segment experienced a 46.8% decline to $9.8 million.

Gross profit also fell sharply, down 47.5% to $11.8 million from $22.5 million, reflecting a gross margin percentage decline of 570 basis points due to lower production volumes and increased dealer incentives. Operating income plummeted 90.5% to $1.0 million, down from $10.6 million, with income before income tax expense decreasing by 89.0% to $1.2 million. The company reported a net loss of $5.1 million for the quarter, contrasting with a net income of $6.2 million in the prior year.

In terms of cash flow, MasterCraft generated $2.4 million from operating activities, a notable improvement from a net cash outflow of $9.1 million in the same quarter last year. Cash and cash equivalents increased to $14.2 million, up from $7.4 million at the end of the previous quarter. The company also reported total assets of $309.1 million, down from $318.0 million, while total liabilities decreased to $72.9 million from $77.9 million.

Strategically, MasterCraft has exited the luxury dayboat category by selling the Aviara brand and related assets to MarineMax, with the transaction completed on October 18, 2024. The company also announced plans to sell the Aviara manufacturing facility, expected to close in the second quarter of fiscal 2025. The sale of these assets is part of a broader effort to streamline operations amid challenging market conditions.

The company’s long-term debt stood at $49.5 million, with a revolving credit facility available for further borrowing. MasterCraft remains compliant with its financial covenants and has authorized a share repurchase program, under which it repurchased approximately $3.5 million of common stock during the quarter. The effective tax rate for the quarter was 16.0%, down from 22.6% in the prior year, attributed to changes in tax positions and increased credits.