MasterCraft Boat Holdings, Inc. · NASDAQ:MCFT
MasterCraft Boat — Baird Conference 2019
44 slides from MasterCraft Boat's conference presentation, June 2019
Slide 1: Investor Presentation June 2019
INVESTOR PRESENTATION JUNE 2019
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
Slide 3: Management Presenters
MANAGEMENT PRESENTERS — TERRY MCNEW PRESIDENT & CEO 31 years in the industry 7 years with MasterCraft Senior executive roles at both Brunswick and Correct Craft GEORGE STEINBARGER VP, BUSINESS DEVELOPMENT 8 years in the industry 1 year with MasterCraft 3
Slide 4: Introduction: MasterCraft Boat Holdings, Inc.
DEMONSTRABLE TRACK RECORD OF STRONG INTRODUCTION MASTERCRAFT BOAT HOLDINGS, INC. FINANCIAL GROWTH Pro-Forma Net Sales (2) 18.8% — CAGR $332.7 $ in millions $221.6 $228.6 World-renowned innovator, designer, manufacturer, and $199.9 marketer of a diversified portfolio of powerboat brands $163.6 $148
Slide 5: Diversified Portfolio of Leading Brands
DIVERSIFIED PORTFOLIO OF LEADING SERVING THE FASTEST GROWING SEGMENTS BRANDS — 01. 02. 03. 04. PERFORMANCE SPORT BOATS FIBERGLASS OUTBOARD BOATS PONTOON BOATS LUXURY DAY BOATS Iconic brand recognized as Fresh, innovative brand High-quality pontoon brand De novo brand that creates an the premier bran
Slide 6: Company Highlights
COMPANY HIGHLIGHTS — 01. G r o w i n g s t a b l e o f d i v e r s i f i e d b r a n d s s y n o n y m o u s w i t h q u a l i t y, i n n o v a t i o n a n d performance 02. L e a d i n g m a r k e t s h a r e p o s i t i o n s i n f o u r o f t h e HIGHLY-VISIBLE fastest growing segments of the pow
Slide 7: Highly Visible Avenues for Growth
HIGHLY VISIBILE AVENUES FOR GROWTH — PRODUCT DEVELOPMENT & 01. INNOVATION GOAL: Driving sales through new and innovative product designs and options DRIVE SUSTAINABLE, STRENGTHENING DEALER 02. NETWORK PROFITABLE GROWTH Relentless focus on having the best dealer for each respective brand in every mar
Slide 8: Addressable Market Expansion
ADDRESSABLE MARKET EXPANSION (1) — Since our IPO in July of 2015, we have expanded our direct addressable market by +11x through two strategic acquisitions and the start-up of a new brand Market expansion focused on the fastest growing segments of the powerboat industry Current product portfol
Slide 9: Management Team
MANAGEMENT TEAM — TERRY MCNEW PRESIDENT AND CEO TIM OXLEY CFO 31 years in the industry 28 years in the industry Executive roles at both 16 years at Brunswick Brunswick Corp. and Correct Corp. Craft 12 years with MasterCraft 7 years with MasterCraft Certified Public Accountant Six Sig
Slide 10: MasterCraft
iN.
Slide 11: Introduction to MasterCraft
INTRODUCTION TO MASTERCRAFT — Global, premium, performance-based lifestyle brand Leading U.S. market share in the performance sport boat segment Highly-engineered performance sport boats used for water skiing, wakeboarding and wake surfing, as well as general recreational boating Relentless
Slide 12: The MasterCraft Legacy
THE MASTERCRAFT LEGACY Rich heritage defined by an engaged and innovative culture since 1968 BRAND IS BUILT ON Recognized for superior performance, with a A CAREFULLY POWER number of world records set and championships won using MasterCraft boats CRAFTED SET OF PRECISION Significant resale premiums
Slide 13: Creating a Culture of Operational Excellence
Between our four brands, MasterCraft Boat Holdings employs a highly skilled workforce of approximately 1,100 employees in Vonore, Tennessee, Owosso, Michigan and Amory, Mississippi Culture of continuous operational improvement, with nearly 20,000 CREATING A CULTURE OF employee suggestions implem
Slide 14: Best-in-Class Product Design and Innovation
BEST-IN-CLASS PRODUCT DESIGN AND INNOVATION ACHIEVEMENTS THROUGH INNOVATION 8 NMMA INNOVATION AWARDS IN 10 YEARS 6 YEARS IN A ROW 23 ISSUED AND 17 PENDING PATENTS PLANNING DEVELOPMENT EXECUTION LAUNCH MasterCraft employs a Strategic MasterCraft utilizes a disciplined MasterCraft utilizes cross- Mast
Slide 15: 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 16: Attractive PSB Segment Dynamics Driving Demand
ATTRACTIVE PSB SEGMENT PSB INCREASING SHARE DYNAMICS DRIVING DEMAND U.S. Performance Sport Boat (PSB) Retail Units and — PSB Share of Total Powerboat Units ex. PWC - PSB Share of Total Powerboats ex. PWC (%) Source: NMMA Favorable segment tailwinds suggest a 11,000 4.2% 4.4% 4.6% 5.0% long runway fo
Slide 17: Leading Market Share Position
LEADING MARKET SHARE ROLLING LTM BRAND MARKET SHARE THROUGH MARCH 2019 (1) POSITION 21.5% 22.3% 21.7% 21.3% 21.6% 21.7% — 22.0% 21.7% 21.3% 21.2% 20.6% 20.2% Just starting to realize benefits of many recent 16.8% 16.5% 17.3% 17.4% 16.0% 16.3% initiatives that management has executed 11.3% 11.3% 10.1
Slide 18: Aviara
AVIARA
Slide 19: Introduction to Aviara
INTRODUCTION TO AVIARA — D e n o v o l u x u r y r e c r e a t i o n a l d ay b o a t b ra n d f o c u s e d o n m o d e l s 30’ – 40’ in length P r o v i d e s a d d i t i o n a l p o r t f o l i o d i v e r s i f i c a t i o n i n a fa s t g r o w i n g s e g m e n t – ke e p s c o n s u m e r
Slide 20: Market Opportunity
MARKET OPPORTUNITY — Aviara will fill a whitespace in the MasterCraft-family product portfolio Two propulsion types – outboard and sterndrive – combined for more than 180k retail units and $7 billion in retail sales in 2017 ( 1) The 30’ – 40’ outboard and sterndrive runabout segment has grown
Slide 21: AV32 Outboard
AV32 Outboard 21
Slide 22: AV32 Outboard and Sterndrive
AV32 Outboard AV32 Sterndrive 22
Slide 23: Crest Marine
CREST MARINE
Slide 24: Crest Acquisition
CREST ACQUISITION — On September 10, 2018 announced the acquisition of Crest Marine LLC, a leading manufacturer of high-quality pontoon boats Closed transaction on October 1, 2018 for a purchase price of $80.0 million (~$70.0 million NPV of tax benefits); Accretive to earnings in first year De
Slide 25: About Crest
ABOUT CREST — Founded in 1957, located in Owosso, Michigan Reputation for innovation and quality with a loyal network of dealers and customers Established network of 125 North American dealer locations - have added 15 locations since acquisition Operates out of a ~150,000 square-foot manufac
Slide 26: Pontoon Segment & Crest Taking Share
INDUSTRY OVERVIEW PONTOON INCREASING SHARE PONTOON SEGMENT & CREST TAKING SHARE U.S. Pontoon Retail Market Share of Total Outboard Retail - Source: NMMA 33.3% — 35.0% 30.0% 25.0% Pontoons have been taking share from the broader 20.0% 21.7% outboard boating category over the past 12 years 15.0% 10.
Slide 27: Broad Product Offering
BROAD PRODUCT OFFERING —Crest has developed a broad product offering ranging from affordable to extreme luxury that continues to grow with new introductions Opportunity to leverage MasterCraft’s proven product development and engineering processes to accelerate and improve upon Crest’s new produ
Slide 28: NauticStar
we
Slide 29: NauticStar Acquisition
NAUTICSTAR ACQUISITION — On October 2nd, 2017 announced the acquisition of Nautic Star, LLC, a leading manufacturer of 18’-28’ LOA, high-quality bay boats, deck boats and offshore center console boats Purchase price of $80.5 million; Accretive to earnings in first year Gain presence in the sal
Slide 30: About NauticStar
ABOUT NAUTICSTAR — Founded in 2002, located in Amory, Mississippi 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 94 North Ameri
Slide 31: Shifting Segment Dynamics Driving Product Development
SHIFTING SEGMENTINDUSTRY DYNAMICS DRIVING PRODUCT DEVELOPMENT OVERVIEW STRATEGY —Fiberglass saltwater outboard segment is one of the largest and fastest growing segments in the powerboat industry Segment seeing a shift in retail demand from smaller boats (<24’) to larger boats (>24’) Historica
Slide 32: Diverse Product Portfolio
DIVERSE PRODUCT PORTFOLIO — NauticStar has developed a broad product offering ranging from offshore, deck and bay boats of various sizes and price ranges Actively leveraging MasterCraft’s proven product development and engineering processes to pivot NauticStar’s product development strategy to l
Slide 33: Key Financial Info
MASTERCRAFT yy * BAT HOLDINGS INC as |
Slide 34: Strong Combined Financial Performance
STRONG COMBINED FINANCIAL PERFORMANCE — Adjusted EBITDA (2) 83.1% Pro-Forma Net Sales (2) 18.8% $ in millions $64.0 CAGR CAGR $ in millions $332.7 $43.5 $221.6 $228.6 $41.2 $199.9 $31.5 $163.6 $148.8 $118.4 $18.4 $11.8 $1.7 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2012 FY2013 FY2014 FY2015
Slide 35: FY19 Third Quarter Highlights
FY19 THIRD QUARTER HIGHLIGHTS — Record-setting results in net sales, gross profit and adjusted EBITDA Net sales for the third quarter increased to $128.4 million, up 36.9% Adjusted EBITDA increased to $21.9 million, up 25.0% Adjusted net income for the quarter totaled $14.6 million, up 31.7%
Slide 36: Shareholder Returns Driven by Strong Earnings Growth
SHAREHOLDER RETURNS DRIVEN BY STRONG EARNINGS GROWTH — Adjusted Net Income before Taxes $ in millions $60.0 $55.5 60.3% $50.0 CAGR $40.0 $38.0 $36.5 $30.0 $23.1 $20.0 $10.0 $8.4 $- FY2014 FY2015 FY2016 FY2017 FY2018 36 Note: See Appendix for reconciliation of Adjusted Net Income before Taxes. FY2018
Slide 37: Fiscal 2019 & Initial Aviara Expectations
FISCAL 2019 & INITIAL AVIARA EXPECTATIONS — Reaffirming fiscal 2019 guidance and providing initial high-level fiscal 2020 expectations for new Aviara brand METRIC FY 2019 METRIC FY 2020 Net Sales Growth Low 40% range Net Sales $10 - $15 million range Slightly higher than Adjusted EBITDA Margin Mid
Slide 38: Capital Allocation Strategy
CAPITAL ALLOCATION STRATEGY — Near-term capital allocation strategy focused on GROWTH and DELEVERING 01. 02. INVESTMENTS IN GROWTH PAY DOWN DEBT Product development & innovation are key Conservatively levered today drivers of new boat demand 2.1x net leverage at closing of Crest acquisition
Slide 39: Wrap Up
WRAP UP — 01. G r o w i n g s t a b l e o f d i v e r s i f i e d b r a n d s s y n o n y m o u s w i t h q u a l i t y, i n n o v a t i o n a n d performance 02. L e a d i n g m a r k e t s h a r e p o s i t i o n s i n f o u r o f t h e HIGHLY-VISIBLE fastest growing segments of the powerboating i
Slide 40: Appendix
APPENDIX
Slide 41: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA RECONCILIATION — Net Income Income Tax Expense (Benefit) (1) FY 2014 $19.9 (11.4) FY 2015 $5.5 6.6 FY 2016 $10.2 8.3 FY 2017 $19.6 11.7 FY 2018 $39.7 12.9 Interest Expense 7.5 5.2 1.3 2.2 3.5 Depreciation and Amortization 2.5 3.3 3.4 3.2 5.1 EBITDA $18.5 $20.6 $23.2 $36.7 $61.1 Chang
Slide 42: Adjusted Net Income Reconciliation
ADJUSTED NET INCOME RECONCILIATION — Net Income Income Tax Expense (Benefit) (1) Change in Common Stock Warrant Fair Value (2) FY 2014 $19.9 (11.4) 2.5 FY 2015 $5.5 6.6 6.6 FY 2016 $10.2 8.3 3.4 FY 2017 $19.6 11.7 0.0 FY 2018 $39.7 12.9 0.0 Transaction Expenses (3) 0.0 7.1 0.5 0.1 1.7 Litigation cha
Slide 43: Balance Sheet
BALANCE SHEET — Assets: JUNE 30, 2017 JUNE 30, 2018 Cash $4,038 $7,909 Accounts receivable 3,500 5,515 Inventories, net 11,676 20,467 Other current assets 2,438 3,295 Property, plant & equipment 14,827 22,265 Intangible assets, net 16,643 51,046 Goodwill 29,593 65,792 Other 606 635 Total Assets $83,
Slide 44: MasterCraft Boat Holdings Inc.
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