Sales totaled $57 million for MasterCraft in its third quarter, an 11.6 percent increase from the same period year earlier, excluding the terminated Hydra-Sports manufacturing contract, because of a gain in unit volume of 49, a 7.5 percent increase from the previous year.
Including Hydra-Sports in the prior-year period, net sales for the quarter were up $2.7 million, or 5.1 percent, compared with $54.3 million the previous year.
Gross margins for the Tennessee-based company rose 27.8 percent, earnings before interest, taxes, depreciation and amortization increased 35.3 percent, to $10 million, and adjusted EBITDA margins increased 17.7 percent for the quarter that ended March 27.
Net income totaled $4.9 million for the quarter, or 26 cents a diluted share, up from $105,000, or 1 cent a share, in the year-earlier quarter. Fully diluted adjusted net income per share grew 82.4 percent, to 31 cents.
“Once again, strong demand for performance sport boats, combined with our relentless focus on operational excellence and continuous improvement, drove notable revenue and earnings growth, as well as gross margin and adjusted EBITDA gains,” MasterCraft president and CEO Terry McNew said in a statement. “Among our boat models, we saw particular strength in X23, X26 and NXT22 orders.”
Net sales per MasterCraft unit grew by 3.8 percent, chiefly stemming from greater adoption of higher-end option packages, demand for new models — in particular, the X23, X26 and NXT22 — and price increases.
“Like most marine manufacturers we saw international headwinds, particularly in Canada, persist. And while these partially offset U.S. results, we continue to deliver domestic sales increases. Moreover, demand for our boats remains solid, particularly in the entry-level segment, and we expect to continue to drive sustainable and profitable market share gains,” McNew said.
Gross profit for the fiscal 2016 third quarter increased $2.9 million, or 22.9 percent, to $15.8 million, compared to $12.9 million in the prior year. Gross margin rose to 27.8 percent from 23.7 percent for the prior-year period.
The 410 basis point increase primarily stemmed from cost reductions driven by a culture focused on eliminating waste, sales of higher-end content option packages, lower warranty costs and new innovative features. In addition, the company replaced its Hydra-Sports volume with higher-margin MasterCraft volume.
“Positive feedback on the new X26 continues to pour in from both dealers and consumers alike. Since its release, MasterCraft has sold 160 percent more X26 boats than the prior-year model it replaced. As we’ve previously mentioned, all X26 production slots are fully allocated for the remainder of the model year,” McNew said.
“We continue to deliver solid performance, and we expect organic growth to remain strong in the fiscal 2016 fourth quarter,” McNew said. “As a company we are steadfast in our five-pronged growth strategy: developing new and innovative products in core markets; further penetrating the entry-level segment of the performance sport boat category; capturing share from adjacent boating categories; strengthening our dealer network; and driving margin expansion through continuous operational excellence.”
