Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Mastercraft Boat Holdings, Inc. fiscal fourth quarter and full year 2025 earnings conference call. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you would need to press star 11 on your telephone. You will then hear an automated message advised and your hand is raised, and to withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to Scott Kent, Chief Financial Officer. Please go ahead, sir.

Thank you, Operator, and welcome, everyone. Thank you for joining us today as we discuss MasterCraft's fiscal fourth quarter and full year performance for 2025. As a reminder, today's call is being webcast live, and we will also be archived on our website for future listening. With me on this morning's call is Brad Nelson, Chief Executive Officer. We will begin with an overview of our operational performance. After that, I will discuss our financial performance. Brad will then provide some closing remarks before we open the call for questions. Before we begin, we would like to remind participants that the information contained in this call is current only as of today, August 27, 2025. The company assumes no obligation to update any statements, including forward-looking statements. Statements that are not historical facts are forward-looking statements and subject to a safe Harvard disclaimer in today's press release. Additionally, on this conference call, we will discuss non-GAAP measures that include or exclude items not indicative of our ongoing operations. For each non-GAAP measure, we will also provide the most directly comparable GAAP measure in today's press release, which includes a reconciliation of these non-GAAP measures to our GAAP results. There is also a slide deck summarizing our financial results in the investor section of our website. As a reminder, unless otherwise noted, the following commentary is made on a continuing operations basis, and all references to specific quarters and periods will be on a fiscal basis. With that, I will turn the call over to Brad.

Thank you, Scott, and good morning, everyone. We closed fiscal 2025 with a strong fourth quarter, outperforming expectations in what remains a challenging geopolitical and retail environment. This performance was driven by robust demand for our ultra-premium products and disciplined cost control. Q4 net sales increased $25 million, or 46 percent, year-over-year, and adjusted EBITDA rose nearly $8 million. dollars. I would like to thank each of our team members and dealers for their dedication and execution as we continue to navigate through this dynamic industry cycle. From the outset of the year, our priorities were clear to control what is most meaningful, such as optimizing channel inventory, championing innovation, and positioning us for the next upcycle. We have strengthened dealer health, advanced new product and brand initiatives, returned capital to shareholders, and maintained a strong balance sheet by maximizing earnings and cash flow. Recall that our initial guidance range for fiscal 25 reflected the uncertain demand environment. We carefully planned for multiple scenarios. Over the course of the year, the marine industry faced continued pressure for macroeconomic uncertainty, persistent elevated interest rates, and a volatile trade environment. Consumer sentiment stayed cautious, and unit retail performance for our brands ended within the lower end of our projected range. Even so, our operational execution allowed us to deliver results near the high end of our original earnings guidance. Despite recent headwinds and low cycle volumes, we maintain focus on our strategic and operational priorities across our master craft and crest brands we removed more than 900 units from dealer inventories near the high end of our targeted range our production discipline delivered the largest q3 to q4 filled inventory reduction in our history excluding the pandemic these actions strengthened dealer health we also expanded distribution in key markets Our MasterCraft brand launched its flagship X-Star product in fiscal 2025, once again establishing our leadership in the ultra-premium ski weight category, creating a positive halo effect across the lineup. Our team is already preparing another major premium launch for model year 26, which we will detail later. Belize, our premium pontoon brand, made progress in its first full year, contributing modest incremental volume as production ramped in our Owasso, Michigan facility, where Crest has successfully operated for nearly 70 years. We have stayed disciplined in our capital allocation approach. Fiscal 2025 free cash flow was $29 million, despite low-cycle volumes. This cash flow, in addition to the $26 million proceeds from the sale of our Merit Island facility, enabled us to fully repay all outstanding debt, strengthen our balance sheet, and reduce interest expense, while deploying nearly $10 million to our share repurchase program. As a result, net cash and investments grew by more than $42 million to $79 million, dollars, leaving us debt-free with one of the strongest balance sheets in the industry. This gives us the resilience to withstand a prolonged down cycle while continuing to invest in product innovation, channel development, and operational excellence. We are well-positioned well for long-term growth. Looking ahead to fiscal 2026, we're expecting some uncertainty to continue, and we are prepared for a range of demand and inventory scenarios. Consistent across the leisure sector, we are partnering with our dealers to fine-tune inventories, which may result in some modest destocking in 2026. Additionally, we expect retail units in our markets to decline 5% to 10% in fiscal 2026. Our cost control discipline and tight working in capital management should allow us to generate positive free cash flow again this year, underscoring the flexibility of our variable operating model. Over the longer term, we see favorable underlying secular trends across the industry. Our brands are well-positioned in key markets, and demographic and migration patterns continue to favor boating-friendly, high-income states. interest in outdoor recreation remains strong across all age groups benefiting all of our product lines and brands mastercraft remains the top-selling brand in the high-margin ski wake space a testament to our brand strength strong dealers and loyal customers the category wins premium and our products innovation strategy supports sustained leadership in our pontoon segment, we continue to refine our crest line to expand our market reach and presence over the long term. This positions us well to weather short-term industry and macro headwinds, including elevated interest rates and inventory levels across the category, and capitalize on the next market recovery. Our new ultra-premium beliefs product brings a new level of customer and dealer base, offering a differentiated pontoon experience. Despite near-term market challenges, our segments have outperformed the broader powerboat market over the past decade, and our brands are positioned for long-term growth. Our strong balance sheet supports ongoing investment in innovation, selective and disciplined M&A, and continued shareholder return. We expect shareware purchases in fiscal 2026 to exceed last year's levels. Innovation continues to be the lifeblood of the Mastercraft brand. Our broader model year 26 lineup includes a range of new features and enhancements, such as our advanced stern thruster with proportional control for effortless maneuvering, Meridian Audio for a premium on-water listening experience, and Keyless Ignition for safe, convenient startups. Building on the momentum of last year's successful X-Star launch, we are excited to announce the all-new, redesigned MasterCraft X family. This cornerstone of the MasterCraft legacy has been re-engineered, delivering more power, precision, and presence than ever before, combining elite performance with refined luxury in July we again sponsored the American Century Championship in Lake Tahoe showcasing the X star 23 and X star 25 which was met with strong dealer and consumer response crest new conquest series and conquest se expands and enhances our value offering in pontoons For model year 2026, we are expanding the Belief family with the launch of our new Halo series, twin-engine configurations, and broader customization options, along with expanded dealer coverage. With that, I'll turn it back to Scott to review the financials.

Thanks, Brad. In Q4, net sales were $79.5 million, up $25 million, or 46% year-over-year, driven by favorable mix, higher volumes, and lower dealer incentives. Gross margins improved 740 basis points to 23.2%. Adjusted net income rose to $6.6 million, or $0.40 per share, up from $0.04 per share last year. Adjusted EBITDA increased by $8 million to $9.5 million. Turning to our full-year fiscal 25 financial results, we concluded with net sales of $284.2 million, a decrease of $38 million, or 12%, from the prior year. This was primarily due to the planned reduction in unit sales volume, partially offset by favorable mix and options. For the year, our gross margin was 20% compared to the prior year of 22.2%. These margins were primarily the result of lower cost absorption and price adjustments, partially offset by favorable mix and options. Operating expenses were $45.6 million for the year, an increase of $1.5 million when compared to the prior year due to the return of variable compensation and commercial launch activities. We continue to tightly manage discretionary spend, and operating expenses remain well controlled. Turning to the bottom line, adjusted net income for the year was $15.1 million or 92 cents per diluted share this compares to adjusted net income of twenty eight point nine million or one dollar and sixty nine cents per share in the prior year calculated using an effective tax rate of twenty percent for both periods we generated twenty four point four million of adjusted EBITDA for the year compared to forty point two million in the prior year adjusted EBITDA margin was eight point six percent compared to twelve point five percent in fiscal 24 as Brad stated we generated twenty nine million dollars of free cash flow during fiscal 25. Our ability to generate cash even in a down market allows us to continue to invest in innovation and other long-term growth initiatives. This execution has provided us with a strong financial position as we continue to navigate through the current cycle. We ended the year with $79 million in cash and short-term investments, no debt, and ample liquidity. We repurchased over 530,000 shares, totaling $9.5 million in fiscal 25, bringing cumulative repurchases to 3.1 million shares and $74 million since we started the share repurchase program, a 14% benefit to full-year adjusted EPS. Turning to the volatile trade and tariff environment, the impact of our fiscal 25 results was marginal. In fiscal 26, we anticipate offsetting most direct costs with temporary price surcharge and expect the profit impact to be negligible. The broader tariff impact on volume and overall sentiment from the uncertain macro environment is more difficult to estimate. The potential impact is embedded in our retail projections for the year. Now turning to our expectations for fiscal 26, as discussed earlier, our guidance reflects an assumption of retail unit sales being down between 5% and 10%. This cautious approach is indicative of macro and market uncertainties as we exit the summer selling season. Despite another year of projected retail decline, we expect net sales to increase over fiscal 25 to between $295 and $310 million. and adjusted EBITDA between $29 million and $34 million. We expect the looted earnings per share to be between $1.15 to $1.40. We expect capital expenditures to be approximately $9 million for the full year. Q1 net sales are expected to be near $69 million or $67 million with adjusted EBITDA of $4 million and adjusted earnings per share of approximately $16. cents. The Q1 guidance reflects a lower Q1 ASP as we transition to the next generation of our X-Series product line, which will begin shipping in our second fiscal quarter. With that, I'll turn the call back to Brad for his closing remarks.

Thank you, Scott. Our business executed well during fiscal 2025 as we advanced product innovation, improved dealer health, and maintained capital, and operational discipline. Since 2021, we've returned more than $74 million of excess cash to our shareholders. Our strong balance sheet provides us with the financial flexibility to pursue our strategic growth initiatives. As we look ahead to fiscal 2026, our plans are built for a range of demand scenarios, and our track record shows we can execute through various market conditions our focus remains on supporting our dealers and optimizing the business for the long term our flexible operating model and brand equity remains a competitive advantage and we are poised to capitalize on the next market recovery as we navigate this dynamic environment we are well positioned to leverage our strong portfolio brands and explore long-term growth opportunities while maintaining the flexibility to return capital to shareholders. Operator, you may now open the line for questions.

Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. And to withdraw your question, please press star 11 again. And our first question will come from Joe Autobello with Raymond James. Your line is open.

Thank you. Hey, guys. Good morning. I guess first couple questions on retail. Maybe kind of walk us through what you saw in terms of cadence throughout the quarter and what you're seeing here in Q1. Is it within that sort of 5% to 10% decline that you kind of laid out for the full year?

So our fourth quarter for us was a pretty good quarter on the Mastercraft side, a little weaker on the pontoon side. Obviously, we don't index completely on the current short-term months and just starting the season, but we still believe that the 5%, 10% with how we're starting out the year is still possible.

Also, Joe, I mean, despite those lower retail assumptions, we still believe we can see host sell growth this year due to proactive measures that we've taken in 25 and will continue to take throughout 26 as far as lowering inventory, the pipeline and inventory levels. That helps us on the wholesale side, really positioning for that next market upswing.

Okay. And just kind of to follow up on that, you mentioned that you took out over 900 units out of the channel this year. Where do dealer turns stand today? Since you're implying, I think, that you might need to take out more units out of the channel this year.

So where do dealer turns stand today, and how does that compare to historical norms? we don't typically quote our turns but obviously the dealer inventories are in a healthier place because we took so many boats out you know really the de-stocking next year would really be more because we expect retail to be down a little bit more so we need to continue to be make sure our channels stay healthy and bring those down you know but at the end of the day the amount of de-stocking will really depend on how retail shakes out we don't think it'll be as extreme in 26 as 25 it's more fine-tuning at this point certainly dependent on retail

okay understood thank you and the next question will come from craig kennison with bayard your line is open yeah thanks for taking my question as well just wanted to maybe dig into the consumer dynamic this summer. You know, we had a tariff headwinds, which clearly impacted consumer sentiment in your category. And then we've had some relief lately. I think there's some optimism around your consumer today, but I'm wondering how you see it, given all these cross headwinds and tailwinds.

You know, morning, Craig. The way we look at that right now is is uh like everybody out there in the discretionary space uh we're looking for something sustained and it's been stops and starts at the consumer level the market uh as we see it is leaning premium and we expect that to continue that helps us we're in a good position there because of our brand strength and our premium offerings as well as the premium nature of our dealer network Some of the tariff overlay certainly has some impact and continued uncertainty. We expect that to continue. It's just been chugging along. We definitely would like to see more sustained retail activity moving forward.

Thanks. And maybe just thinking about the price surcharge that you mentioned and thinking about that in the broader context of affordability, I hear you that the premium consumer is definitely hanging in there better than that payment-sensitive buyer, but I suspect you're going to want that payment-sensitive buyer to come back to really fuel your cyclical recovery. And what are you doing, I guess, to get after that affordability trend that has been elusive in marine?

Yeah, thanks, Craig. You know, as a reminder, recall that our pricing in Mastercraft during model year 25 was flat to even down. We lowered prices on some of our more entry-level products, the NXT line, and even some of our XT midline product, which is helping. Certainly, the more entry-level products do require more of the mass market to be healthy at the consumer level. and in an elevated interest rate environment, that continues to unfold. We use discounting where needed. Certainly lower interest rates could help spur things, and we'll see what happens there for finance buyers. For 26, it's challenging to have two years in a row of lowering prices just due to tariff inflations, but we're controlling costs to give us flexibility there and then use programs and discounting on a spot basis where needed.

If I could sneak one more in, just on the dealer network, I wonder if you could give us an update on some of your wins and maybe the net gains that you've had from a dealer perspective.

Yeah, we've been working on and will continue to work on strengthening distribution. And we look at that in two areas. there's there's white space coverage that still needs needs more coverage out there that's one angle the second angle is just really increasing and fine tuning density within existing geographies with with existing dealers which means adding rooftops and growing markets there's always shifting demographics traffic patterns buying patterns even whether can shape this weather trends. So we've seen some, you know, I'd highlight a couple of examples. We've made changes in the number one ski tow wake market in the United States, which is Dallas, Texas. And we've made some dealer changes there. Houston is another one that I'd like to highlight. And, you know, another example would be in Southern Utah, in St. George, where we've got a great deal out there that added a rooftop there in a great demographic market Coeur d'Alene Idaho is another example so there's always a handful of these that we're working on and so far we're seeing those benefit us thanks Brett and and our next question will come from Eric Wold with Texas Capital Securities your line is open thank you good morning guys a couple questions there's two questions i guess one you within the fiscal 26 guidance um given your comments around um your

retail sales expectations and uh continued you know de-stocking that may be needed um in the channel is the assumption um for fiscal 26 revenue or net sales guidance growth um assuming kind of continued uptick in asps for both the mastercraft and pontoon segments kind of driving that that growth, you know, with both kind of the launch of, you know, the new brands about the segment, is that kind of a part of that, that the driver behind that revenue growth is kind of a continued uptick in NASP as part of that, given that you expect overall net, you know, retail sales and VSOC has exceeded that move lower a little bit?

Well, really, units are probably the bigger driver as we, you know, as we manage the inventory as well this year, we're able to have a wholesale growth despite the retail growth. On the ASP front, for the full year, you can sort of expect ASPs overall are going to be fairly flat. Mastercraft should be up a little bit, while pontoons will be a little flatter, and then we've got a little bit of mix going on between the two segments. So, you can kind of expect relatively flat for the full year. Now, keep in mind that this year we had a higher ASP in the second half than the first half, And that is going to happen again this year. Those X-Series launches with them starting shipping in Q2, our ASPs are going to be a little lower in the first half and a little higher in the second half. And so we're going to have kind of that, again, a theme of second half is going to be a little stronger than first half from an ASP's perspective.

Got it. And for the year, ASP is up across the board.

Yeah. I mean, last question, going back to follow up on one of the prior questions, kind of on that payment buyer, the lower end buyer. And those will get to a kind of a two part question to get to a period where hopefully rates do start to come down. Where do you think the inflection is for rates to kind of what you've heard from your dealers to kind of get that that payment buyer more comfortable in terms of the cost of ownership to kind of get them over the line to maybe want to buy again? And I know we're going to be getting into the point probably where rates start to tick lower as you get into boat show season. They'll probably start happening somewhat simultaneously, you know, but maybe not enough of rate coming down as boat show season starts. Do you think you kind of have to kind of prod those buyers maybe with another season of promotional help? to kind of maybe not lose another boat show season as rates start to tick lower and maybe get another season of discounting to kind of, you know, get those guys across the line maybe a little bit earlier than they may, you know, want to be?

Yeah, Eric, difficult to predict. You know, we do see pockets where it seems like consumers and dealers alike are getting used to a higher interest rate environment in general compared to you know almost free money for a long period of time prior and you know there's evidence of some potential downticks out there that's or any any of those things help and obviously there's impact here at the consumer level for purchases for a payment buyer as well as dealer holding costs for floor planning so we've seen pockets where it's less impact impactful but overall it does provide a still somewhat of a drag on consumer sentiment and we expect that uncertainty continue and we'll see what happens with rates but certainly any downward tick would be an improvement now we have not built into our current guidance any interest rate downtick so if that were to move favorable that could potentially drive some upside for us and the next question will come from anna glaskin with the rally securities your line is open hey good morning guys uh thanks for taking my question just as a follow-up on eric's um you spoke to you know retail expectations to be down five to ten

and then spoke to be stocking but it sounds like the guidance is assuming units are up so i just want to clarify.

That was a little hard to hear, Anna. What I heard was maybe a question on maybe more color on destocking. Could you please restate?

Oh, yeah, sorry. I was just asking on given the expectation for retail decline in fiscal 26 plus potential destocking in response to that, how does that get to units ending up up for the year?

I don't think we're going to talk about a range this year because it's really going to depend on where retail shakes out and what kind of the stocking. But as Brad mentioned, it's going to be fairly modest this year. So it's not going to be as much of a major driver to us as it was last year.

Yeah, in general, on inventory, broadly speaking, we're comfortable with inventory levels as well as the improvement in the aging profile of existing channel inventory and what we're talking about here in 26 as we sit here today is we do we would like to see an increase in turns uh with dealers why well that's really driven by market uncertainty at the retail level now when we start to see uh sustained retained retail spiking, then that's better. But it is more of a fine-tuning adjustment in the cycle or in the channel as far as inventory levels.

Got it. And then on the pacing of that destocking, it sounds like it would be consistent throughout the year in response to retail movements. It doesn't seem like it would be front-loaded in the first half or the first quarter, right? I mean, it's not in response to, you know, you feel pretty good about inventories as they fit today.

It'll be more across the year as opposed to all happening in a single quarter. I mean, our Q1, we are still being a little careful with shipments just to make sure we don't put too much into the field, but we're not necessarily looking to start destocking. We don't expect destocking will immediately start happening right at a Q1. So it's really going to be based on where retail heads for the full year.

Great. Thanks, guys.

And the next question comes from Noah Zetskin with KeyBank Capital Market. Your line is open.

Hi. Thanks for taking my questions. I guess first, just would love to get your thoughts on kind of the health of the broader industry dealer base, as well as any insight into kind of broader industry inventory levels and how that dynamic impacts you.

So obviously pulling out 31% of the dealer's inventory this year really helped the dealers for sure and helped our channel. It's always better to have a little less inventory, especially in uncertain times, as Brad kind of mentioned there. That also means as we enter the year that our non-current inventories are lower than they were a year ago as well, and that also really helps with the dealer health side of things. That doesn't mean the dealers aren't intending to be cautious, as they probably should in this environment, because we would, as Brad mentioned, love to see the dealers continuing to be able to have higher turns. I think it's good for them, and it's good for us. But until we see something to give us a little bit more confidence and a sustained recovery, I expect our dealers are going to remain a little cautious out there.

But we're not hearing a lot about canceled orders right now, NOAA, and we track dealer health as well very closely in partnership with floor plan providers, very disciplined about that. And we don't see a giant risk right now as far as dealer failures. And then across the industry, we're seeing better health this year projected forward than the prior year on overall channel inventory. You know, the pontoon market is lagging behind the ski-toe-wake category with inventory health. There's still a couple of competitors out there that are working through challenges there that does have impact for us and really anyone in that space.

The other thing that will help dealer health is if we do start seeing some interest rate declines as well. It helps us on the cost side, but it also really helps the dealers, and it'll certainly add to dealer health if their interest rates can be a little lower going into the year as well.

Very helpful. Maybe just one more, obviously, challenging environment, but just any thoughts kind of around how you're thinking about M&A? Thanks.

You bet. Thanks, Noah. We're continuing our approach, which is very careful, very selective, and opportunistic from an inorganic growth perspective. We're very proud of our organic strategic growth initiatives that we continue to fully fund internally. And then our strong balance sheet that we've been disciplined with does give us flexibility there with M&A, but we will continue to be highly selective.

Great.

Thank you. thank you and I am showing no further questions at this time and I would like to thank you for participating and this does conclude today's conference call you may now disconnect and have a great day