MasterCraft Boat Holdings, Inc. · NASDAQ:MCFT
MasterCraft Boat — MCBC Holdings — Investor Presentation (March 2018)
40 slides from MasterCraft Boat's investor presentation, March 2018
Slide 1: MCBC Holdings, Inc. Investor Presentation March 2018
MCBC HOLDINGS, INC. INVESTOR PRESENTATION March 2018
Slide 2: Disclaimer
DISCLAIMER This presentation contains forward-looking statements within the meaning of the federal securities laws, which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events and include, without limitation, projections, forecasts and e
Slide 3: Management Presenters
MANAGEMENT PRESENTERS TERRY MCNEW PRESIDENT & CEO 30 years in the industry 5 years with MasterCraft Senior executive roles at both Brunswick and Correct Craft TIM OXLEY CFO 27 years in the industry 11 years with MasterCraft 16 years at Brunswick
Slide 4: Introduction to MasterCraft
INTRODUCTION TO MASTERCRAFT RAPID GROWTH Pro-Forma Net Sales (1) $ in millions ▪ Global, premium, performance-based lifestyle brand $315.2 ▪ Leading U.S. market share in the performance sport boat (“PSB”) $221.6 $228.6 $199.9 category $148.8 $163.6 $118.4 $143.5 ▪ Highly-engineered performance sport
Slide 5: Evolution of the Category Innovator
EVOLUTION OF THE CATEGORY INNOVATOR FIRST POWERSLOT DEDICATED NOW WON 2 OF 3 NMMA RECENTLY NEWLY MASTERCRAFT’S TRANSMISSION WAKEBOARD-SPECIFIC POPULAR INDUSTRY’S FIRST INNOVATION PATENTED RELEASED FIRST CUSTOM (LATER PATENTED BOAT USED IN PICKLE-FORK WAKE SHAPING AWARDS AT THE DOCKSTAR XSTAR HULL SK
Slide 6: The MasterCraft Difference
Aspirational, Iconic Brand Synonymous with Quality, COMPETITIVE Innovation and ADVANTAGES Performance THE MASTERCRAFT ▪ Proven performance ▪ Strong demand for DIFFERENCE new products ▪ Faster speed to market and portfolio Differentiated Industry-Leading Our differentiated approach Sales and Product
Slide 7: Product Portfolio Attracting Wide Customer Base
PRODUCT PORTFOLIO ATTRACTING WIDE CUSTOMER BASE NXT Series XT Series XSeries Star Series ProStar XStar Entry level series designed to appeal Appeal to a range of recreational Appeal to a range of recreational and Engineered to offer Engineered to offer to a younger demographic and activities by opti
Slide 8: Successfully Executing on Growth Strategies from IPO
SUCCESSFULLY EXECUTING ON GROWTH STRATEGIES FROM IPO We Continue to Focus on the Growth Strategies Presented During the July 2015 IPO… … And Have the Results to Prove Our Execution on These Strategies ✓ 3 new models launched in 2017 including the XT23, XT20 and XT21 Continue to Develop New and Innov
Slide 9: FY18 YTD Financial Highlights
FY18 YTD FINANCIAL HIGHLIGHTS ▪ Net sales increased 28.3% to $143.5 million ▪ Adjusted EBITDA margin at 18.5% vs prior year of 20.0% ▪ Net income totaled $15.1 million for FY18 YTD vs $11.0 million in the prior year 6 month ended FY17 ▪ Fully diluted pro forma adjusted net income per share, a non-GA
Slide 10: Attractive Market Dynamics Driving Demand
ATTRACTIVE MARKET PSB INCREASING SHARE DYNAMICS DRIVING DEMAND U.S. Performance Sport Boat (PSB) Retail Units and PSB Share of PSB and Sterndrive Units - Source: NMMA Favorable macro tailwinds suggest a long 10,000 46.8% 50.0% Performance Sport Boat (PSB) Retail Units PSB Share of PSB and Sterndrive
Slide 11: Investor Highlights
INVESTOR HIGHLIGHTS 1 World-renowned iconic brand synonymous with quality, innovation and performance 2 Leading market share position in performance sport boat category 3 Industry-leading product design and innovation HIGHLY-VISIBLE 4 Highly efficient product development and manufacturing AVENUES FO
Slide 12: Iconic Brand Synonymous with Quality, Innovation and Performance
ICONIC BRAND LEGACY Rich heritage defined by an engaged and innovative culture since 1968 SYNONYMOUS Recognized for superior performance, with a WITH QUALITY, POWER number of world records set and championships won using MasterCraft boats INNOVATION AND PRECISION Significant resale premiums and most
Slide 13: Leading Market Share Position
ROLLING QUARTERLY LTM MARKET SHARE THROUGH SEPT 2017 (1) LEADING MARKET 21.7% 21.2% 21.9% 22.1% 21.7% 21.8% 21.3% 21.7% SHARE POSITION 21.0% 20.9% 20.9% 21.3% 21.5% 21.8% 22.3% 22.1% Just starting to realize 16.8% 16.5% 16.3% 15.9% 16.1% 15.9% 16.0% 16.4% benefits of many recent initiatives that man
Slide 14: Industry-Leading Product Design and Innovation
INDUSTRY-LEADING PRODUCT DESIGN AND INNOVATION PLANNING DEVELOPMENT EXECUTION LAUNCH MasterCraft employs a Strategic MasterCraft utilizes a disciplined MasterCraft utilizes cross-functional MasterCraft releases 3 new models Portfolio Management Team of product development process and teams and tools
Slide 15: Highly Efficient Product Development and Manufacturing
HIGHLY EFFICIENT PRODUCT DEVELOPMENT GROSS MARGIN EXPANSION WITH AND MANUFACTURING MINIMAL BASE BOAT ASP INCREASES (1) Base Boat Price Increase Gross Margin MasterCraft’s significant 27.6% 27.8% investments in… 23.9% ▪ infrastructure 21.2% ▪ value-added processes 19.0% Fiscal Year ▪ engineering …res
Slide 16: Committed to Quality
COMMITTED TO QUALITY 250,000 Square foot facility External Defects Per Unit Additional units/day ~40% manufacturing capacity (1) 0.50 0.40 0.30 0.30 0.20 0.18 Year history of making 0.20 0.14 50 boats 0.10 0.00 FY 2014 FY 2015 FY 2016 FY 2017 435 Critical checkpoints 100% Lake tested “OSHA Recordabl
Slide 17: Strong Dealer Network
STRONG DEALER NETWORK Dealer Location named in Boating 96 NORTH Magazines list of Top 100 dealers AMERICAN DEALERS WITH … 160 LOCATIONS ARE IN THE TOP THREE 43 LOCATIONS IN EUROPE 5 LOCATIONS IN ASIA 160 LOCATIONS IN NORTH AMERICA 75% PERFORMANCE SPORT BOAT DEALERS IN THEIR RESPECTIVE U.S. MARKETS 7
Slide 18: Differentiated Sales and Marketing
SPONSORSHIPS AWARD-WINNING ADVERTISING CAMPAIGNS #4 wakeboarder DIFFERENTIATED #2 water ski jumper SALES AND #4 male slalom skier #4 female slalom skier MARKETING HIGHLY ENGAGED KEY LIFESTYLE AND CAPABILITIES CUSTOMER BASE INNOVATIVE CO-BRANDING ALSO PARTNER WITH MUSICIAN AND AVID SURFER DONAVON FRA
Slide 19: Highly Experienced Management Team with 140 Years of Industry Experience
TERRY MCNEW TIM OXLEY PRESIDENT AND CEO CFO HIGHLY EXPERIENCED 30 years in the industry. Executive roles at both Brunswick 27 years in the industry. 16 years at Brunswick. Certified MANAGEMENT TEAM Corp. and Correct Craft. Six Public Accountant. 11 years Sigma Black Belt certification. 5 with Master
Slide 20: Creating a Culture of Operational Excellence
Highly skilled workforce of approximately 500 employees handcraft our boats from hull to upholstery near Knoxville, Tennessee CREATING A CULTURE OF Culture of continuous operational improvement, with nearly 20,000 employee suggestions implemented to improve our manufacturing OPERATIONAL EXCELLEN
Slide 21: NauticStar Acquisition
NAUTICSTAR ACQUISITION ▪ On October 2nd, 2017 announced the acquisition of NauticStar, LLC, a leading manufacturer of 18-28 foot, high-quality bay boats, deck boats and offshore center console boats ▪ Purchase price of $80.5 million ▪ Deal unites two leading and complementary boat brands ▪ NauticSta
Slide 22: About NauticStar
ABOUT NAUTICSTAR ▪ Founded in 2002, located in Amory, Mississippi ▪ NauticStar has a reputation for reliability, quality and consistency with a loyal network of dealers and customers including professional and sport fisherman, and recreational and pleasure boating enthusiast ▪ Established network of
Slide 23: NauticStar Competitive Overview
INDUSTRY OVERVIEW $121 Billion Recreational Boating Overall Contribution to • NauticStar is a market leader across all its US Economy product segments • Strong Market share • #1 in Bay Boats • #3 in Deck Boats $37 Billion NAUTICSTAR • #5 in Offshore Boats Total US Expenditures on Boats, Engines and
Slide 24: NauticStar Competitive Overview: Multiple Revenue Streams
MULTIPLE REVENUE STREAMS Offshore Boats Deck Boats Bay Boats NAUTICSTAR COMPETITIVE OVERVIEW 37.4% of 2017 Sales $49,000 – 2017 ASP 25.0% of 2017 Sales $32,000 – 2017 ASP 37.6% of 2017 Sales $30,500 – 2017 ASP 40.3% YOY Growth 32.3% YOY Growth 18.0% YOY Growth ✓ Lifetime hull warranty ✓ All composit
Slide 25: Multi-Faceted Growth Opportunities
MULTI-FACETED Growth Opportunities
Slide 26: Continue to Develop New and Innovative Products
Cash Flows Over Product Development Lifecycle Demand for Boat Portfolio Over Time 5 3 4 Cash flow ($) CONTINUE Units Product Launch Inception 2 R&D Growth Maturity Product Product Product TO DEVELOP 1 Introduction Introduction Introduction #1 #2 #3 Portfolio Demand Product Demand 1▪ A more disciplin
Slide 27: Capture Share from Adjacent Boat Categories
CAPTURE SHARE FROM ADJACENT BOAT CATEGORIES Targeting crossover customers seeking high performance powerboats for general recreation 1 2 3 4 5 2 WATERSPORTS CUSTOMIZED ENHANCED ROOMY, PLUSH STORAGE / VERSATILITY STYLING SAFETY INTERIOR SPACE 4 TRADITIONAL LARGE REC DAYBOATS 5 ▪ Gen 2 Surf System ▪ N
Slide 28: Further Strengthen Dealer Network
FURTHER STRENGTHEN DEALER NETWORK Supply Dealers With High …And Maintain The …While Thoughtfully Quality, Relevant Boats… Highest Quality Dealers… Managing Our Exposure 3 MOST DEALERS IN TOP 20 (1) LOW DEALER CONCENTRATION Annual new model releases keep % # Dealer Ranks % Net Sales MasterCraft fresh
Slide 29: Continuous Operational Improvement
FIRST-TIME QUALITY (1) ON-TIME DELIVERY CONTINUOUS OPERATIONAL 75.0% 91.0% 94.0% 97.0% 88.0% 90.0% 91.0% 93.0% IMPROVEMENT ▪ Faster and more disciplined product FY 2014 FY 2015 FY 2016 FY 2017 FY 2014 FY 2015 FY 2016 FY 2017 innovation process has accelerated new product development ▪ Significant ma
Slide 30: Key Financial Information
KEY FINANCIAL Information
Slide 31: Strong Combined Financial Performance
STRONG COMBINED FINANCIAL PERFORMANCE PRO-FORMA NET SALES ADJUSTED EBITDA $ in millions $ in millions $56.1 $315.2 $41.2 $43.5 $221.6 $228.6 $31.5 $199.9 $163.6 $148.8 $18.4 $26.6 $118.4 $143.5 $11.8 $1.7 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 F FY 2012 FY 2013 FY 2014 FY 2015 FY 20
Slide 32: Cash Conversion Cycle – MasterCraft Only
CASH CONVERSION CYCLE – MASTERCRAFT ONLY ($ in thousands) FY 2015 FY 2016 FY 2017 FY 2018 Q2 Net Sales $214,386 $221,600 $228,634 $58,239 Cost of Sales $163,220 $160,521 $165,158 $41,856 Beginning Inventory $11,685 $11,541 $13,268 $11,569 Ending Inventory $11,541 $13,268 $11,676 $12,820 Beginning Ac
Slide 33: Fiscal 2018 Combined Guidance
METRIC FYE 2018 TARGET FISCAL 2018 Revenue Growth High 30 percent range (NauticStar representing ~ 20 percent) COMBINED Adjusted EBITDA Margin (1) High 17 percent range GUIDANCE (2) EPS Growth Low-to-mid 40 percent growth range _____________________ Note: These goals are forward-looking, are subject
Slide 34: Wrap Up
WRAP UP 1 World-renowned iconic brand synonymous with quality, innovation and performance 2 Leading market share position in performance sport boat category 3 Industry-leading product design and innovation HIGHLY-VISIBLE 4 Highly efficient product development and manufacturing AVENUES FOR EARNINGS 5
Slide 35: Appendix
APPENDIX
Slide 36: Detailed Financial Summary
DETAILED FINANCIAL SUMMARY ($ in millions, actual units) FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 YTD MCBC Holdings (Including Hydra-Sports in FY14 & FY15) Total Boats Sold 2,185 2,592 2,742 2,790 1,976 YoY % Change 9.4% 18.6% 5.8% 1.8% 46.5% Net Sales $177.6 $214.4 $221.6 $228.6 $143.5 YoY Growth %
Slide 37: Detailed Financial Summary
DETAILED FINANCIAL SUMMARY ($ in millions, actual units) FY 2017 FY 2017 FY 2017 MasterCraft NauticStar Consolidated Total Boats Sold 2,790 2,145 4,935 YoY % Change 1.8% 20.2% 9.0% Net Sales $228.6 $76.9 $305.7 YoY Growth % 3.2% 28.4% 8.9% Cost of goods $165.2 $62.9 $228.1 Gross Profit $63.5 $13.9 $
Slide 38: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA RECONCILIATION ($ in millions) FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 YTD Net Income $19.9 $5.5 $10.2 $19.6 $15.1 Income Tax Expense (Benefit) (1) (11.4) 6.6 8.3 11.7 5.2 Interest Expense 7.5 5.2 1.3 2.2 1.6 Depreciation and Amortization 2.5 3.3 3.4 3.2 2.2 EBITDA $18.5 $20.6 $23.2
Slide 39: Adjusted Net Income Reconciliation
ADJUSTED NET INCOME RECONCILIATION ($ in millions) FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 YTD Net Income $19.9 $5.5 $10.2 $19.6 $15.1 Income Tax Expense (Benefit) (1) (11.4) 6.6 8.3 11.7 5.2 Change in Common Stock Warrant Fair 2.5 6.6 3.4 0.0 0.0 Value (2) Transaction Expenses (3) 0.0 7.1 0.5 0.1 1
Slide 40: Balance Sheet
BALANCE SHEET ($ in thousands) June 30, 2017 December 31, 2017 Assets: Cash $4,038 $6,250 Accounts Receivable 3,500 1,917 Inventories - Net 11,676 18,283 Other Current Assets 2,438 3,021 Property, Plant and Equipment - Net 14,827 19,533 Intangible Assets - Net 16,643 52,090 Goodwill 29,593 66,818 Ot