MasterCraft defies tough conditions with FQ3 profit beat

MasterCraft Boat Holdings (NASDAQ:MCFT) weathered a very tough macroeconomic environment in their fiscal third quarter and managed to earn a profit that beat Wall Street’s expectations by as much as 12 cents per share, driving the stock up 10% in Wednesday's trade. 

 “Our business performed well during the third quarter against a backdrop of macroeconomic and demand uncertainty,” noted CEO Brad Nelson, adding that the company’s capital allocation priorities remain “disciplined and consistent despite external pressures.” This, coupled with a debt-free balance sheet, will enable the company to provide a stable backdrop amid market and tariff uncertainties, while its variable operating model allows it to “swiftly adjust production as needed.”

For the fiscal third quarter, adjustments made to dealer inventory to align with the softer retail environment resulted in a 9.5% drop in sales to $76M, slightly better than Wall Street anticipated. Profits were also less than last year, dropping by 40% to $0.30 per share, but topped $0.18 expectations. Accordingly, the changes to sales price, material and overhead inflation narrowed the company’s gross margin by 250 basis points to 20.8%.

Looking ahead to FY25, the “evolving” macroeconomic conditions and a “challenging demand environment” led the company to revise its full year top and bottom-line guidance. Net sales are now expected to be between $275M versus prior estimates to be between $275M to $295M and is less than the consensus estimate of $285.6M.

Adjusted earnings are now expected to be $0.71 per share from prior guidance of $0.64 to $0.86 per share, 2 cents less than expectations. Adjusted EBITDA was revised to $20M from earlier expectations to be between $19M and $24M, while capital expenditures have been modified to $9M from $12M, previously.