Executive Summary

Q2 FY2025 net sales were $63.4M, down 29.4% YoY; gross margin fell 610 bps to 17.2%. GAAP diluted EPS from continuing operations was $0.03 and adjusted EPS was $0.10; adjusted EBITDA was $3.5M (5.6% margin) .
Results exceeded the company’s internal Q2 guidance ($~60M sales, ~$1M adj. EBITDA, $(0.01) adj. loss per share) and management said performance was “above expectations” amid a competitive retail backdrop .
Balance sheet strengthened: all debt repaid; $62.9M cash and investments and $100M revolver availability at quarter-end; CFO noted “nearly $11M” free cash flow in Q2 .
FY2025 guidance narrowed to net sales $275–$295M, adjusted EBITDA $19–$24M, adjusted EPS $0.64–$0.86; Q3 FY2025 guide: sales ~$75M, adjusted EBITDA ~$5M, adjusted EPS ~$0.17 .
Strategic and product momentum: ultra-premium XStar launch driving deposits and expected back-half mix/earnings uplift; Aviara divestiture completed with >$26M net cash proceeds .

What Went Well and What Went Wrong

What Went Well

“Delivered results above expectations” despite macro and retail headwinds; dealer inventories reduced >30% YoY as destocking progressed ahead of boat shows .
Strong liquidity and capital return: $62.9M cash/investments, no debt, $100M revolver availability; ~$0.75M in buybacks (~40k shares) in Q2; nearly $11M Q2 free cash flow .
XStar launch: management highlighted “overwhelmingly positive” demand and deposits; back-half ramp expected to lift ASPs/margins given premium price point .

What Went Wrong

Top line/mix pressure: net sales down 29.4% YoY to $63.4M; MasterCraft ASPs fell on mix shift to NXT/XT ahead of XStar ramp; gross margin down 610 bps on unfavorable mix and lower absorption .
Profit compression: adjusted EBITDA down to $3.5M (5.6% margin) from $12.9M (14.4%) YoY; adjusted EPS $0.10 vs $0.55 in prior-year Q2 .
Pontoon segment softness persists with interest-rate sensitive buyers and elevated aged inventory; environment remains “highly promotional” with judicious retail rebates .

Financial Results

Metric	Q4 2024	Q1 2025	Q2 2025
Net Sales ($USD Millions)	$67.2	$65.4	$63.4
Gross Margin (%)	12.2%	18.1%	17.2%
GAAP Diluted EPS – Continuing Ops ($)	$(0.49)	$0.06	$0.03
Adjusted EPS ($)	$(0.04)	$0.12	$0.10
Adjusted EBITDA ($USD Millions)	$0.85	$3.84	$3.53
Adjusted EBITDA Margin (%)	1.3%	5.9%	5.6%

Segment breakdown (continuing ops):

Segment KPI	Q1 2025	Q2 2025
MasterCraft Units (units)	374	400
Pontoon Units (units)	177	153
MasterCraft Net Sales ($USD Millions)	$55.5	$55.1
Pontoon Net Sales ($USD Millions)	$9.8	$8.3
Consolidated Net Sales per Unit ($000)	$119	$115

Key KPIs and balance sheet:

KPI	Q1 2025	Q2 2025
Cash & Cash Equivalents ($USD Millions)	$14.2	$34.3
Short-term Investments ($USD Millions)	$68.6	$28.5
Total Debt ($USD Millions)	$49.5 (LT)	$0.0 (LT and current)
Revolver Availability ($USD Millions)	$50.5 avail at Q1 draw context	$100.0 availability
Free Cash Flow (quarter)	—	“nearly $11M”
Share Repurchases (quarter)	~$3.5M; ~180k shares	~$0.75M; ~40k shares

Notes: Q4’24 consolidated figures included Aviara prior to reclassification; FY2025 results and segmentation in Q1/Q2 exclude Aviara in continuing ops .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Consolidated Net Sales ($USD Millions)	FY2025	$270–$300 (Q1)	$275–$295	Narrowed; raised lower end
Adjusted EBITDA ($USD Millions)	FY2025	$17–$26 (Q1)	$19–$24	Narrowed; raised lower end
Adjusted EPS ($)	FY2025	$0.55–$0.95 (Q1)	$0.64–$0.86	Narrowed; raised lower end / reduced upper
Capital Expenditures ($USD Millions)	FY2025	~$12	~$12	Maintained
Consolidated Net Sales ($USD Millions)	Q3 2025	—	~$75	New
Adjusted EBITDA ($USD Millions)	Q3 2025	—	~$5	New
Adjusted EPS ($)	Q3 2025	—	~$0.17	New
Initial FY2025 guide (context)	FY2025	$265–$300 sales; $15–$26 adj. EBITDA; $0.36–$0.87 adj. EPS (Q4’24)	—	Superseded

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
Dealer inventory destocking	Targeted pipeline reductions; removed ~500 units in Q1; dealer turns near pre-pandemic	>30% YoY inventory reduction; lowest Q1→Q2 channel increase since IPO	Improving dealer health
Pricing/ASP & mix	ASP down expected in Q2; back-half uplift from XStar	ASPs down on mix to NXT/XT; ASPs to rise in H2 as XStar ramps	Near-term pressure; H2 uplift
Macro/interest rates	Easing rates could aid retail; cautious optimism; promotional environment persists	Rate hurdle: another 50–100 bps decline would help; MasterCraft buyers ~50% cash	Gradual improvement possible
Product performance (XStar)	Flagship redesign; expected 2H shipments	Overwhelming demand; deposits; back-half earnings/cash flow impact	Positive momentum
Pontoon segment	Elevated aged inventory; rate-sensitive buyer; cautious wholesale	Mixed boat show results; continued hand-to-hand competitive environment	Challenging
Tariffs/supply chain	Not highlighted	Tariff cost implications modest; mainly US-sourced materials; monitoring variability	Managed risk
Strategic portfolio actions	Aviara impairment and divest plan (Q4)	Aviara sale proceeds >$26M; bolsters balance sheet	Executed

Management Commentary

“MasterCraft delivered fiscal second quarter results that exceeded expectations... Early boat show season results have been encouraging, especially with strong demand for our new ultra-premium XStar lineup...” — CEO Brad Nelson .
“We ended the quarter with nearly $63 million in cash and short-term investments. We have no debt... Despite low cycle volumes, we generated nearly $11 million of free cash flow during the quarter.” — CFO Tim Oxley .
“Production commenced [for XStar] in our second quarter with the first wholesale shipments in our third quarter... premium price point will drive significant earnings and free cash flow in our second half, particularly in the fourth quarter.” — CEO Brad Nelson .
“We are narrowing our full year guidance... encouraged by the XStar launch... As we move beyond inventory rebalancing, we are highly focused on positioning the business to capitalize on the upcoming market recovery.” — CEO Brad Nelson .

Q&A Highlights

Channel inventory: Q2 channel increase was the lowest from Q1→Q2 since IPO; company still targets 600–1,000 boats removed from channel in FY25 .
ASP/mix: ASPs down in MasterCraft due to mix toward NXT/XT; expected to rise in Q3/Q4 as XStar ramps; pricing actions addressed affordability on certain models .
Capital allocation vs growth: focus on “fortress” balance sheet, innovation, brand development, improving distribution; continued buybacks with flexibility for selective inorganic opportunities .
Competitor environment: highly promotional, especially in pontoon; company remains judicious with rebates to drive sales .
Interest rates: retail financing more tied to long-term rates; another 50–100 bps drop would help; MasterCraft less rate-sensitive (~half cash buyers) vs pontoon .

Estimates Context

S&P Global Wall Street consensus estimates for Q2 FY2025 (EPS and revenue) were unavailable due to SPGI request limits; therefore, estimate comparisons could not be retrieved. Values would have been retrieved from S&P Global if available.
Relative to company’s internal guidance set in Q1 (for Q2), MCFT beat on sales ($63.4M vs ~$60M), adjusted EBITDA ($3.5M vs ~$1M), and adjusted EPS ($0.10 vs $(0.01) loss) .

Actual vs Company Q2 Guidance:

Metric	Company Guidance (Q2)	Actual (Q2)
Net Sales ($USD Millions)	~$60	$63.4
Adjusted EBITDA ($USD Millions)	~$1	$3.5
Adjusted EPS ($)	~(0.01)	$0.10

Key Takeaways for Investors

Back-half setup improves: XStar ramp should lift ASPs/mix and margins (management explicitly expects H2 earnings and FCF uplift), a potential catalyst into Q4 seasonality .
Liquidity and buybacks provide downside support: zero debt, $62.9M cash/investments, $100M revolver availability, continued repurchases; balance sheet optionality for selective inorganic actions .
Near-term margin headwinds remain: gross margin down 610 bps YoY in Q2 on mix and absorption; promotional environment persists, especially in pontoon; monitor H2 mix improvement .
Guidance tightening signals confidence: FY25 narrowed with raised lower bounds for sales/EBITDA/EPS; watch execution vs Q3 guide and XStar production ramp milestones .
Rate sensitivity bifurcated: MasterCraft’s cash-heavy buyer base buffers rate impact, but pontoon remains rate-sensitive; macro rate trajectory is a swing factor for retail demand .
Channel health improving: dealer inventories reduced >30% YoY; the modest Q2 channel increase vs historical cadence indicates progress—watch inventory turn data as boat show season progresses .
Portfolio simplification complete: Aviara exit and >$26M proceeds clean up the story and add cash; focus now on core brands’ innovation and distribution expansion (e.g., Chevy partnership activation) .

Additional Relevant Press Releases

XStar redesign launch (Jan 8, 2025): ultra-premium features, Ilmor supercharged 6.2L standard, MAAX audio, Z100 tower; expected to drive brand halo and pricing power .
Barrett-Jackson debut and Chevrolet partnership tie-in (Jan 14, 2025): showcasing XStar with Silverado “Official Truck & Tow Vehicle” activation .
Chevrolet partnership details (Dec 10, 2024): event support across boat shows and Rule the Water Tour; tech synergy with GM-powered Ilmor marine engines .

MasterCraft Boat Holdings, Inc. (MCFT)·Q2 2025 Earnings Summary