Executive Summary

Q1 FY2025 net sales were $65.4M, down 30.7% YoY, but ahead of the company’s prior Q1 guide ($61M); Adjusted EPS was $0.12 vs guidance of ~$0.04, and Adjusted EBITDA was $3.8M vs guidance of ~$2.0M, reflecting stronger-than-expected retail and accelerated dealer inventory reductions. Bold beat: revenue, Adjusted EPS, Adjusted EBITDA vs internal guidance .
Gross margin fell 570 bps YoY to 18.1% on lower production cost absorption and higher dealer incentives; Adjusted EBITDA margin was 5.9% vs 14.9% YoY .
Management raised the lower end of FY2025 guidance (sales to $270–$300M; Adjusted EBITDA $17–$26M; Adjusted EPS $0.55–$0.95) and guided Q2 FY2025 net sales ~$60M, Adjusted EBITDA ~$1M, and Adjusted loss per share ~($0.01); capital expenditures remain ~$12M .
Strategic updates: Aviara brand transfer closed Oct 18, 2024 and the Merritt Island facility sale for $26.5M is expected to close in Q2; dealer inventories reduced ~500 units in Q1, with turns back to pre-pandemic levels; focus shifts to premium launches (XStar) and Balise growth .
Stock reaction catalysts: raised guidance lower bound, stronger retail vs expectations, significant dealer destocking, and upcoming premium product launches; offset by margin pressure from incentives and cautious wholesale through H1 .

What Went Well and What Went Wrong

What Went Well

Results exceeded internal Q1 guidance: Sales $65.4M vs ~$61M, Adjusted EPS $0.12 vs ~$0.04, Adjusted EBITDA $3.8M vs ~$2.0M, driven by better retail and inventory actions .
Dealer inventory reductions ahead of plan (nearly 500 units in Q1; >1,000 units over 12 months), with turns back to pre-pandemic ranges; management cites positive retail momentum and lower floor plan costs as rates ease .
Strategic portfolio focus: Aviara brand transfer completed and facility sale expected in Q2, enhancing financial flexibility; FY guide raised at the lower end reflecting improved visibility .

Management quotes:

“We delivered results above expectations…led by significant progress rebalancing dealer inventories and sets a strong foundation for the rest of the fiscal year.” – CEO Brad Nelson .
“We have no net debt as our cash and short-term investments exceeded our debt by more than $33 million.” – CFO Tim Oxley .
“We are raising the lower end of our full year guidance.” – CEO Brad Nelson .

What Went Wrong

Top-line and profitability down sharply YoY: net sales -30.7%, gross margin -570 bps, Adjusted EBITDA -$10.2M YoY; lower production volumes and elevated incentives pressured margins .
Pontoon segment softness: consolidated units -35.6% YoY; pontoon units -51.1% YoY and net sales -46.8% YoY amid rate-sensitive entry-level consumer; promotional environment remains highly competitive .
Continued caution in wholesale through H1 due to market uncertainty and carrying costs; Q2 guide implies low margins (Adj EBITDA ~$1M; Adj LPS ~($0.01)) before H2 mix and overhead absorption improvement .

Financial Results

Consolidated P&L vs Prior Periods and Internal Guidance

Metric	Q3 2024	Q4 2024	Q1 2025
Net Sales ($USD Millions)	$95.7	$67.2	$65.4
Gross Margin (%)	19.2%	12.2%	18.1%
Adjusted EBITDA ($USD Millions)	$9.7	$0.8	$3.8
Adjusted EBITDA Margin (%)	10.1%	1.3%	5.9%
Diluted EPS – Continuing Ops ($)	$0.23	($0.49)	$0.06
Adjusted EPS ($)	$0.37	($0.04)	$0.12
Internal Guidance Comparison (Quarter)	Q3: n/a	Q4: n/a	Beat: Sales $65.4M vs ~$61M, Adj EPS $0.12 vs ~$0.04, Adj EBITDA $3.8M vs ~$2.0M

Notes: Discontinued operations (Aviara) impacted total net income; tables focus on continuing operations and non-GAAP reconciliations per company disclosures .

YoY Comparison (Q1 FY2025 vs Q1 FY2024)

Metric	Q1 2024	Q1 2025
Net Sales ($USD Millions)	$94.3	$65.4
Gross Margin (%)	23.8%	18.1%
Adjusted EBITDA ($USD Millions)	$14.0	$3.8
Adjusted EBITDA Margin (%)	14.9%	5.9%
Diluted EPS – Continuing Ops ($)	$0.50	$0.06
Adjusted EPS ($)	$0.60	$0.12

Segment Breakdown (Q1 FY2025; continuing operations)

Segment	Units	Net Sales ($USD Millions)	Net Sales per Unit ($USD Thousands)
MasterCraft	374	$55.5	$148
Pontoon	177	$9.8	$56
Consolidated	551	$65.4	$119

KPIs and Balance Sheet Highlights

KPI	Q3 2024	Q4 2024	Q1 2025
Consolidated Units	805	560	551
Net Sales per Unit ($K)	119	120	119
Share Repurchases ($USD Millions)	$1.6	$4.5	$3.5
Cash + HTM Securities ($USD Millions)	$105.7	$86.2	$82.8 (Cash $14.2 + HTM $68.6)
Gross Margin (%)	19.2%	12.2%	18.1%

Additional liquidity notes: Company drew $49.5M on revolver (amendment/waiver related to Aviara transactions), leaving $50.5M available; CFO noted net cash and investments exceed debt by >$33M at quarter-end .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Consolidated Net Sales ($USD)	FY 2025	$265M–$300M	$270M–$300M	Raised lower end
Adjusted EBITDA ($USD)	FY 2025	$15M–$26M	$17M–$26M	Raised lower end
Adjusted EPS ($)	FY 2025	$0.36–$0.87	$0.55–$0.95	Raised both ends
Capital Expenditures ($USD)	FY 2025	~$12M	~$12M	Maintained
Consolidated Net Sales ($USD)	Q1 2025	~$61M (pre-quarter guide)	Actual: $65.4M	Beat
Adjusted EBITDA ($USD)	Q1 2025	~$2.0M	Actual: $3.8M	Beat
Adjusted EPS ($)	Q1 2025	~$0.04	Actual: $0.12	Beat
Consolidated Net Sales ($USD)	Q2 2025	n/a	~$60M	New
Adjusted EBITDA ($USD)	Q2 2025	n/a	~$1M	New
Adjusted Loss per Share ($)	Q2 2025	n/a	~($0.01)	New
Balise Revenue ($USD)	FY 2025	~“$10M+” (prior commentary)	~“$10M+”	Maintained

Earnings Call Themes & Trends

Topic	Q3 2024	Q4 2024	Q1 2025	Trend
Dealer inventory & destocking	Proactive reductions; target up to ~1,000 units; competitive pressure rising	~20% YoY reduction by FY-end; aiming 600–1,000 units in FY2025	Removed ~500 units Q1; turns back to pre-pandemic levels	Improving dealer health; accelerated pipeline cleanup
Promotional environment	Heightened due to competitor distress; incentives used judiciously	Elevated; continued caution in wholesale	“Highly promotional”; expected to continue into boat shows; balanced support	Still competitive; managed carefully
Interest rates / financing	Macro uncertainty; rate hopes tempered	Elevated rates impacting carrying costs	Easing rates lowering floor plan costs; psychological boost to buyers	Gradual improvement tailwind
Product innovation	Balise launch; MY25 enhancements	Premium pontoon strategy; accretive margins	XStar redesign launch H2; Balise traction continues	Mix shift to premium improving H2 margins
Aviara divestiture	n/a	Announced asset exchange; exit brand	Branding transfer closed; facility sale expected Q2	Portfolio streamlined; focus on core
ASP & mix	Pricing minimal; ASP driven by mix; MY25 pricing low single-digit	n/a	H2 ASP uplift from XStar; Q2 mix down	Mix tailwind in H2
Capital allocation	Share repurchases ongoing; strong balance sheet	~$16.3M repurchases in FY; fortress balance sheet	Priorities unchanged; slower buybacks in Q2–Q3 due to credit terms	Consistent discipline

Management Commentary

“We removed nearly 500 units…well ahead of schedule…dealer inventory turns are in the range of pre-pandemic levels.” – CEO Brad Nelson (prepared remarks) .
“Adjusted EBITDA was $3.8M for the quarter…we have no net debt…ended the quarter with nearly $83M of cash and short-term investments.” – CFO Tim Oxley .
“We are raising the lower end of our full year guidance…easing interest rates…could catalyze wholesale and retail demand.” – CEO Brad Nelson .
“XStar…completely redesigned…reestablishes our position in the ultra-premium ski/wake space; first shipments in the second half.” – CEO Brad Nelson .
“Balise remains on track (~$10M revenue) and accretive to pontoon margins; distribution expanding in target markets.” – CFO Tim Oxley .

Q&A Highlights

Retail performance surprised positively across brands; Tommys liquidation impact subdued, indicating strong brand loyalty; retail up YoY on a YTD basis .
Promotional environment expected to remain elevated through boat show season; company sharing discounting with dealers while staying balanced .
ASP dynamics: limited pricing contribution; H2 ASP uplift expected at MasterCraft from ultra-premium XStar; Q2 ASP/mix down modestly .
Margin trajectory: modest pressure in Q2 from mix and low absorption; improvement in H2 from higher production and premium mix (Balise, XStar) .
Capital allocation: fortress balance sheet, fund organic growth, maintain repurchases (slower pace near-term), selective inorganic opportunities; Aviara cash proceeds further enhance flexibility .

Estimates Context

Wall Street consensus (S&P Global) for Q1 FY2025 EPS and revenue was unavailable at time of analysis due to data access limitations. Once accessible, we will update comparisons and any beat/miss assessments against S&P Global consensus. Values to be sourced from S&P Global when available.

Key Takeaways for Investors

Near-term: Bold beat vs internal guidance, improved retail, and accelerated dealer destocking should support sentiment into boat show season despite continued promotional intensity .
Mix inflection in H2: Premium launches (XStar) and accretive Balise pontoon mix are set to lift ASPs and margins as production ramps, offering a path to margin recovery in H2 FY2025 .
Guidance credibility: Raising FY2025 lower bound (sales, EBITDA) and higher EPS range signals improved visibility and cost control; monitor Q2 trough profitability before H2 improvement .
Balance sheet: Liquidity remains robust (Cash+HTM ~$82.8M; ample revolver availability); net cash position vs debt supports flexibility for innovation and measured buybacks .
Watch points: Gross margin headwinds from incentives and low absorption in H1; competitive discounting (especially in pontoons) and rate-sensitive consumers warrant caution .
Strategic focus: Exit of Aviara simplifies portfolio and reduces drag; Q2 facility sale proceeds add optionality for core brand investment and operational efficiency .
Trading implications: Stock likely reacts to the raised guidance lower bound and narrative of H2 margin recovery; risk skew from Q2 margin trough and promotional environment may cap near-term multiple expansion until evidence of H2 mix/absorption benefits materializes .

MasterCraft Boat Holdings, Inc. (MCFT)·Q1 2025 Earnings Summary