Brief Overview on Company’s Performance: MCBC Holdings, Inc. (NASDAQ: MCFT)

On Tuesday, Shares of MCBC Holdings, Inc. (NASDAQ: MCFT) surged 3.91% to $30.55. The stock opened its trade at $29.42 and after floating in a price range of $29.42 to $31.35; the stock grabbed the investor’s attention and traded 328,308 shares as compared to its average daily volume of 196.43K shares. The stock’s institutional ownership stands at 96.50%.

MCBC Holdings, Inc. (MCFT) recently declared financial results for its fiscal 2018 fourth quarter and full year ended June 30, 2018.

Fourth Quarter Results:

Net sales for the fourth quarter ended June 30, 2018 rose 63.6 percent, or $37.10M, to $95.40M, contrast to $58.30M for the year ago fourth quarter. The inclusion of NauticStar represented $21.70M, or 37.1 percent, of the increase while MasterCraft grew $15.40M, or 26.5 percent. The MasterCraft increase stemmed from a boost in sales volume, favorable product mix and price increases.

Fourth quarter gross profit increased $11.40M, or 69.5 percent, to $27.90M, contrast to $16.50M for the prior-year period. MasterCraft contributed $7.60M of the increase mainly because of growth in MasterCraft unit sales volume, a favorable product mix, lower warranty costs and reduced retail rebate activity. The inclusion of NauticStar contributed $3.80M to the increase in gross profit. Gross margin increased to 29.2 percent for the fiscal fourth quarter, contrast to 28.2 percent for the year earlier fourth quarter.

Selling and marketing expense increased $0.80M, or 38.0 percent, to $3.00M for the fourth quarter ended June 30, 2018, contrast to $2.20M for the year earlier period. This increase resulted mainly from the inclusion of NauticStar, which added $0.60M in selling and marketing expenses.

Fourth quarter general and administrative expense increased $1.70M, or 46.9 percent, to $5.40M, contrast to $3.70M for the prior-year period. This increase resulted mainly from the inclusion of NauticStar, a litigation settlement charge, startup costs for a new brand in a different boat segment and higher compensation costs. General and administrative expense, as a percentage of net sales, reduced by 70 basis points to 5.6 percent, contrast to 6.3 percent for the prior-year period. This favorable impact resulted from leverage practiced through noteworthy net sales increases contrast to lower increases in general and administrative expenses.

Fourth quarter net income totaled $13.10M, as compared to $6.30M for the year-earlier period driven by the inclusion of NauticStar, lower warranty costs, reduced retail rebate activity and reduced tax rates from the enactment of the Tax Cuts and Jobs Act. Adjusted Net Income of $12.40M, or $0.66 per share, on a fully diluted, weighted average share count of 18.80M shares, was computed using the company’s estimated annual effective tax rate of about 29 percent. This compares to Adjusted Net Income of $6.50M, or $0.35 per fully diluted share, in the prior-year period. Because of the Tax Cuts and Jobs Act, MasterCraft’s annual effective tax rate for fiscal 2019 is expected to decline to about 24 percent.

Adjusted EBITDA was $19.80M for the fourth quarter, contrast to $11.50M in the prior-year period. Adjusted EBITDA margin was 20.8 percent, up from 19.8 percent in the fiscal 2017 fourth quarter. See “Non-GAAP Measures” below for a reconciliation of Adjusted EBITDA, Adjusted EBITDA margin and Adjusted Net Income to the most directly comparable financial measures presented in accordance with GAAP.

Fiscal 2018 Results:

Net sales for the fiscal year increased 45.5 percent, or $104.10M, to $332.70M from $228.60M in the prior year. The inclusion of NauticStar represented $66.40M, or 29.0 percent, of the increase while MasterCraft grew $37.70M, or 16.5 percent. The MasterCraft increase stemmed from a boost in sales volume, reduced retail rebate activity, favorable product mix and price increases.

Fiscal year gross profit increased $26.90M, or 42.4 percent, to $90.40M, contrast to $63.50M for fiscal 2017. MasterCraft contributed $14.60M to the gain mainly because of growth in MasterCraft unit sales volume, lower warranty costs and reduced retail rebate activity. The inclusion of NauticStar contributed $12.30M to the increase in gross profit. Gross margin reduced to 27.2 percent for fiscal 2018, as compared to 27.8 percent for fiscal 2017. The decrease was mainly because of inclusion of the dilutive effect of NauticStar’s gross margin.

Selling and marketing expense increased $3.60M, or 38.7 percent, to $13.00M for fiscal 2018, contrast to $9.40M for the prior year. This increase resulted from the inclusion of NauticStar, which added $1.90M in selling and marketing expenses, a rise in dealer meeting and training costs, higher compensation expense and a boost in promotional activities.

General and administrative expense reduced by $0.70M, or 3.4 percent, to $19.80M for fiscal 2018, contrast to $20.50M for fiscal 2017. This resulted mainly from a decrease of $5.90M in patent litigation costs, partially offset by the inclusion of NauticStar, which increased general and administrative expenses by $2.20M, and $1.70M increase for costs associated with the NauticStar acquisition and $0.60M related to startup costs for a new brand in a different boat segment. General and administrative expense, as a percentage of net sales, reduced by 310 basis points to 5.9 percent, contrast to 9.0 percent for the prior-year period.

Net income totaled $39.70M for the fiscal year, up from $19.60M in fiscal 2017, which was driven by the inclusion of NauticStar, reduced retail rebate activity, lower warranty costs and reduced tax rates from the enactment of the Tax Cuts and Jobs Act. Adjusted Net Income totaled $39.40M, or $2.09 per share, for fiscal 2018, on a fully diluted, weighted average share count of 18.80M shares, and was computed using the company’s estimated normalized annual effective tax rate of about 29 percent. This compares with Adjusted Net Income of $24.30M, or $1.30 per share, in fiscal 2017.

Fiscal year 2018 Adjusted EBITDA was $64.00M, contrast to $43.50M in fiscal 2017. Adjusted EBITDA margin was 19.2 percent, up from 19.0 percent in the prior year.

MCFT has a market value of $592.98M while its EPS was booked as $2.08 in the last 12 months. The stock has 19.41M shares outstanding. In the profitability analysis, the company has gross profit margin of 27.20% while net profit margin was 11.90%. Beta value of the company was N/A; beta is used to measure riskiness of the security. Analyst recommendation for this stock stands at 1.90.

Marion Frost

Marion Frost

I am Marion Frost and I have over 16 years experience in the financial services industry giving me a vast understanding of how news affects the financial markets. I am an active day trader spending the majority of my time analyzing earnings reports and watching commodities and derivatives. I have a Masters Degree in Economics from Westminster University with previous roles counting Investment Banking.

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