MasterCraft Boat Holdings, Inc. · NASDAQ:MCFT
MasterCraft Boat — Investor Presentation (March 2017)
36 slides from MasterCraft Boat's investor presentation, March 2017
Slide 1: Investor Presentation March 2017
INVESTOR PRESENTATION March 2017
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 29 years in the industry 4 years with MasterCraft Senior executive roles at both Brunswick and Correct Craft TIM OXLEY CFO 26 years in the industry 10 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 250 ▪ Leading U.S. market share in the performance sport boat (“PSB”) 200 $221.6 $199.9 category 150 $148.8 $163.6 100 ▪ Highly-engineered performance sport boats used
Slide 5: Evolution of the Category Innovator
EVOLUTION OF THE CATEGORY INNOVATOR FIRST POWERSLOT DEDICATED NOW WON 2 OF 3 NMMA MASTERCRAFT’S TRANSMISSION WAKEBOARD-SPECIFIC POPULAR INDUSTRY’S FIRST INNOVATION PATENT PENDING FIRST CUSTOM (LATER PATENTED BOAT USED IN PICKLE-FORK WAKE SHAPING AWARDS AT THE DOCKSTAR HULL SKI BOAT IN 1981) ESPN’S X
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: Recent Financial Highlights
RECENT FINANCIAL HIGHLIGHTS ▪ Net sales increased 0.5% to $111.8 million ▪ Gross margin up 60 basis points to 28.7% ▪ Adjusted EBITDA up 5.4% to $22.3 million ▪ Adjusted EBITDA margin up 90 basis points to 20.0% ▪ Net income totaled $11.0 million, up from $0.5 million for the FY17 Q2 YTD ▪ Fully dil
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 Performance Sport Boat (PSB) Retail Units 9,000 37.7% 40.0% 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 HIGHLY-VISIBLE 3 Industry-leading product design and innovation AVENUES FOR EARNINGS 4 Highly efficient product development and man
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 2016 (1) LEADING MARKET 22.4% 21.9% 22.1% 21.7% 21.2% 21.9% 22.1% SHARE POSITION 20.8% 21.3% 20.6% 21.0% 20.9% 20.9% 21.3% Just starting to realize 17.3% 16.2% 16.3% 16.3% 15.9% 16.1% 15.9% benefits of many recent initiatives that new management has ex
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 investments in… 28.7% 27.6% ▪ infrastructure 23.9% ▪ value-added processes Fiscal 21.2% Year 19.0% ▪ 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 0.40 0.30 0.30 0.20 0.18 Year history of making 0.20 49 boats 0.10 0.00 FY 2013 FY 2014 FY 2015 FY 2016 435 Critical checkpoints 100% Lake tested “OSHA Recordabl
Slide 17: Strong Dealer Network
STRONG DEALER NETWORK Dealer Location named in Boating 91 NORTH Magazines list of Top 100 dealers AMERICAN DEALERS WITH … 144 LOCATIONS ARE IN THE TOP THREE 29 LOCATIONS IN EUROPE 4 LOCATIONS IN ASIA 144 LOCATIONS IN NORTH AMERICA 75% PERFORMANCE SPORT BOAT DEALERS IN THEIR RESPECTIVE U.S. MARKETS 5
Slide 18: Differentiated Sales and Marketing
SPONSORSHIPS AWARD-WINNING ADVERTISING CAMPAIGNS #2, #3 & #5 wakeboarders DIFFERENTIATED #2 water ski jumper SALES AND #3 male water skier #3 female water skier MARKETING HIGHLY ENGAGED KEY LIFESTYLE AND CAPABILITIES CUSTOMER BASE INNOVATIVE CO-BRANDING ALSO PARTNER WITH MUSICIAN AND AVID SURFER DON
Slide 19: Highly Experienced Management Team with Over 120 Years
HIGHLY EXPERIENCED TERRY MCNEW PRESIDENT AND CEO TIM OXLEY CFO MANAGEMENT TEAM 29 years in the industry. 26 years in the industry. 16 years at Brunswick. Certified WITH OVER 120 YEARS Executive roles at both Brunswick Corp. and Correct Craft. Six Public Accountant. 10 years Sigma Black Belt certific
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 more than 20,000 employee suggestions implemented to improve our OPERATIONAL EXCELLENCE manufact
Slide 21: Multi-Faceted Growth Opportunities
MULTI-FACETED Growth Opportunities
Slide 22: 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 23: 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 24: 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 25: Continuous Operational Improvement
FIRST-TIME QUALITY (1) ON-TIME DELIVERY CONTINUOUS OPERATIONAL 75.0% 91.0% 94.0% 86.0% 88.0% 90.0% 91.0% IMPROVEMENT 61.0% ▪ Faster and more disciplined product FY 2013 FY 2014 FY 2015 FY 2016 FY 2013 FY 2014 FY 2015 FY 2016 innovation process has accelerated new product development ▪ Significant ma
Slide 26: Long Term Performance Targets
METRIC TARGET LONG TERM Revenue Growth Mid to high-single digit PERFORMANCE Adjusted EBITDA Margin 19% – 21% TARGETS (1) EPS Growth Mid-single to low-double digit _____________________ Note: These goals are forward-looking, are subject to significant business, economic, regulatory and competitive un
Slide 27: Key Financial Information
KEY FINANCIAL Information
Slide 28: Strong Financial Performance
STRONG FINANCIAL PERFORMANCE NET SALES ADJUSTED EBITDA $ in millions $ in millions $41.2 $221.6 $199.9 $31.5 $163.6 $148.8 $111.8 $22.3 $18.4 $11.8 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Q2 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Q2 YTD YTD YoY GROWTH 26% 10% 22% 11% 1% YoY GROWTH 601% 56% 71% 31%
Slide 29: Cash Conversion Cycle
CASH CONVERSION CYCLE ($ in thousands) FY 2014 FY 2015 FY 2016 FY 2017 Q2 Net sales $177,587 $214,386 $221,600 $51,134 Cost of sales $139,975 $163,220 $160,521 $36,848 Beginning Inventory $11,316 $11,685 $11,541 $12,596 Ending Inventory $11,685 $11,541 $13,268 $11,365 Beginning Accounts Receivable $
Slide 30: Fiscal 2017 Guidance
METRIC FYE 2017 TARGET Revenue Growth Low to mid-single digit FISCAL 2017 GUIDANCE Adjusted EBITDA Margin (1) Growth from FY 2016, 18.6% to low 19’s (2) EPS Growth Mid to high-single digit _____________________ Note: These goals are forward-looking, are subject to significant business, economic, reg
Slide 31: 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 HIGHLY-VISIBLE 3 Industry-leading product design and innovation AVENUES FOR EARNINGS 4 Highly efficient product development and manufacturing G
Slide 32: Appendix
APPENDIX
Slide 33: Detailed Financial Summary
DETAILED FINANCIAL SUMMARY ($ in millions, actual units) FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Q2 YTD Consolidated Total Boats Sold 1,998 2,185 2,592 2,742 1,349 YoY % Change 6.2% 9.4% 18.6% 5.8% (2.1)% Net Sales $162.0 $177.6 $214.4 $221.6 $111.8 YoY Growth % 18.0% 9.6% 20.7% 3.4% 0.6% Cost of go
Slide 34: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA RECONCILIATION ($ in millions) FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Q2 YTD Net Income $2.8 $19.9 $5.5 $10.2 $11.0 Income Tax Expense (Benefit) (1) (0.0) (11.4) 6.6 8.3 6.5 Interest Expense 9.2 7.5 5.2 1.3 1.1 Depreciation and Amortization 2.0 2.5 3.3 3.4 1.6 EBITDA $14.0 $18.5 $20
Slide 35: Adjusted Net Income Reconciliation
ADJUSTED NET INCOME RECONCILIATION ($ in millions) FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Q2 YTD Net Income $2.8 $19.9 $5.5 $10.2 $11.0 Income Tax Expense (Benefit) (1) (0.0) (11.4) 6.6 8.3 6.5 Change in Common Stock Warrant Fair 0.0 2.5 6.6 3.4 0.0 Value (2) Transaction Expenses (3) 0.0 0.0 7.1 0.
Slide 36: Balance Sheet
BALANCE SHEET ($ in thousands) June 30, 2016 January 1, 2017 Asset s: Cash $73 $6, 366 Account s Recei vabl e 2, 966 2, 464 I nvent ori es - Net 13, 268 11, 365 Ot her Curr ent Asset s 1, 785 2, 603 Pr opert y, Pl ant and Equi pment - Net 13, 826 13, 318 I nt angi bl e Asset s - Net 16, 750 16, 696
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