MasterCraft Boat Holdings, Inc.

Q4 2021 Earnings Conference Call

9/2/2021

spk_0: ladies and gentlemen thank you for standing by and welcome to the fourth quarter and fiscal twenty twenty one math the crab boat holding think are in a conference call this time or participant lines or the listen only mode after the seekers presentation they'll be a question and answer session ask a question do an assassin you need a pet store than one on your telephone please be advised that today's conferences be recorded if you require any further assistance please press star than zero now like the hand the conference over to him actually see financial officer please go ahead
spk_1: thank you operator and welcome everyone the hebrew during a two days we discuss math crafts fourth quarter and for your to school
spk_2: the twenty one before
spk_1: as reminder they've called me webcast live or will be archived our website for future listening for me on today's call or for afraid right bill chief executive officer and german and george steinberger keep revenue officer read will begin with an overview of the progress or strategic rowdies reviewer operational highlights from the quarter and four year old and discuss your financial performance where the fourth quarter for your pistol point one that out from the call back to bread for some closure marks before we open the called with una before it began with like to mine the participants that the information contained with paul his current only as of today september second twenty twenty one that can the assumed no obligation daddy any statements including forward looking statements stay within our store koufax report looking statements and subject to say part disclaimer in today's press release additionally on his conference call we were discussed get measures that include or exclude national pride him for not indicative of are ongoing operations reach not get measure we also provide the most directly comparable gap measure her fiscal twenty twenty one reporter for your fiscal earnings release includes a reconciliation these not get measures to our get results we're also like for my listeners that there's a slide deck summarize and replace result in advance for section of our website with that on the colbert of read
spk_3: morning everyone
spk_1: thank you for joining us today a business executed extremely well against or strategic priorities during fiscal two thousand and twenty one in a very challenging and dynamic environment
spk_4: and that we delivered record setting performances for each quarter of fiscal two thousand and twenty one with culminated in record net sales in earnings for the full year despite the many challenges we face we grew our net sales by more than forty four percent and are deluded adjusted earnings per share by nearly one hundred and forty eight percent year over year when compared to our previous record here fiscal two thousand and nineteen net sales were hired by newark nearly thirteen percent and deluded earnings per share were up by more than seventy percent all on an organic basis
spk_1: this exceptional performance was driven by your over here unit increases at each of our segments including the most wholesale units ever sold by the company and a fourth quarter to accelerate throughput and produce record level units in arguably the most challenging supply chain environment we have ever experienced in the building industry
spk_4: is a clear demonstration of are disciplined execution operational excellence in the strength of our team we were able to deliver for our dealers and consumers in israel bus demand environment
spk_1: the credit for this performance goes to are more than fifteen hundred employees who continue to execute a key strategic priorities in the face of adversity and the strength of our marketing market leading brands since refocusing ourselves and our value enhancing growth strategy last year we've made impressive progress in the pursuit of are over arching objective of driving sustainable accelerated growth by becoming the most consumer focused boating company drew fiscal two thousand and twenty one we continue to execute against each other for pillars of our strategy
spk_4: consumer experience digital marketing operational excellence and human capital development
spk_1: first with a surge of consumer demand we continue to experience meeting our consumers expectations during your mental living as many boats is possible to our dealers will not sacrificing quality during two thousand and twenty one we executed against an aggressive production ramp up plan which allowed us more than double our monthly shipment rate over the course of the year by aggressively hiring and training new labour expertly managing supply chain and executing the move of our of your a brand from our been or tennessee plan to a dedicated priscilla
spk_3: he married island for
spk_4: we believe our production ramp up as outperform many of our competitors in an environment where lack of the inventory can lead to loss of market share our ability to increase production faster than our competitors is leading to market share games
spk_1: recently released july and revised june market share data shows are master grabbed bram took market share and rowing twelve month basis while our top two competitors last year as important as product availability was this year maintaining the highest quality standards will always be paramount and is a key competitive advantage that is why we took great pains to ensure that despite the various supply chain and legal challenges we face this year or quality sailors were upheld without compromise as evidence of our success master crap crest antarctic star each received the two thousand and twenty green industry customer satisfaction index or see us i award for excellence in customer satisfaction in march two thousand and twenty one of your was not eligible for the word this past year
spk_4: the quality is even more paramount for this high end product and remains a core operational priority is we ramp up production in our new port a facility additionally we intensified our focus on consumer centric innovation by nearly doubling the headcount of our product development and engineering team during two thousand and twenty one these investments are an important component of our market share and financial growth plan or relentless dedication learning more about our consumers growing need than expected
spk_1: patients has allowed us to further refine our product development process and accelerate innovation and our master crap ran we recently unveiled one of the most aggressive and well received model year changes in the brand's history including three exciting new models the xt twenty three he x t twenty four and the at startup
spk_4: the all new xrf model built upon the iconic xr model by adding the largest and most comfortable transom chase wonders in the industry along with more balanced and improve serve of capabilities brought about by the launch of our new state of the art sir star system sir star is the latest evolution of our award winning gentoo sir system and includes all new more robust actuators position sensing technology that allows the most precise wave adjustments in the industry and an all new more intuitive user interface that revolutionize his how consumers can make adjustments to their waves all of this makes sir star in the most customizable wave making technology on the market today rounding out the model your changes were a myriad of other innovative in consumer centric performance styling and convenience features such as all new customizable power designs patent pending hydra like technology making our towers the easiest to raise and lower and most intuitive and powerful stern thruster in the market to name a few at crest we recently launched the all new continental model and will be launching another new model later this month and not star we will be wanting to new models at the upcoming fort lauderdale boat show or expanded and up talented product development and engineering team will continue to accelerate new model development innovation for all our brands which elite additional marketshare growth second we've made great progress on activating a consumer driven digital marketing strategy across our organization to increase consumer brand awareness creative community of interest expand our target market improve lead generation and ultimately drive sales and marketshare games earlier this year we launched several immersive digital experiences for consumers to learn about our brands and a three hundred and sixty degree digital environment
spk_1: these unique digital showrooms allowed consumers to immerse themselves and each of our brands and away they would typically do a traditional in person both shows
spk_4: we're in the process of updating these virtual showrooms and anticipate relaunching them with new content features ahead of the two thousand and twenty two boat show season
spk_1: given the lingering called nineteen pandemic and an industrywide shortage of dealer inventory remaining at the forefront of offering consumers immersive differentiated and safe alternatives to learn about our product is critical to our growth and a key strategic priority we also continue our investment in digital marketing capabilities across all or brands and rob record year over year lead generation and a record low cost really we will continue to invest in digital solutions that bring awareness and new consumers who are brands including all new web sites for nordic started crest in fiscal two
spk_5: thousand and twenty two
spk_4: this investment will increasingly drive marketshare games third we sustain the acceleration of operational excellence programs across all or manufacturing facilities to drive through put improvements and enhance quality we expertly manage the relocation of our our the our brand during the year and navigated supply chain is used to minimize disruptions into aggressively ramp up production or out standing supply chain team has done a tremendous job and minimizing a disruptions to our operations through our strong and longstanding relationships with leading suppliers two thousand and twenty one these relationships proved to be a competitive advantage for us and we will continue to align ourselves with superior partners as part of our continuous improvement initiative despite the inefficiencies inherent in our aggressive up production ramp up the dynamic supply chain environment and increasing material and labor costs the company delivered gross margins of twenty four point seven percent for the full year up nearly four hundred basis points versus the prior year when compared to fiscal year two thousand and nineteen for your gross margins where up nearly fifty basis points even more impressive during two thousand and twenty one we achieved record for your gross margins for master crap and crest france and improved nordic stars gross margin by two hundred and sixty basis points this performance is a testament to our town did a dedicated employees or experience and cycle tested leadership team and are after for operational excellence and forth will remain focus on strengthening our human capital framework to attract developing retained a highly skilled and specialized workforce we continue to successfully mean are skilled labor recruiting need that all or facilities having grown our workforce by nearly six hundred hourly and more than fifty salary personnel from the start of the fiscal year approximately fifty percent of our salary growth has come in our product development function for the year we encourage some way rate inflation do the tight labor market for is evidenced by are gross margin performance we were able to mitigate most of this increase through overhead absorption as volumes increased
spk_1: as real as we review two thousand and twenty one we're encouraged by the on momentum were saying
spk_4: around all four of our strategic role priorities and will continue to pro actively adapt our strategy to the business environment let me now briefly reviews of the latest developments across our brands that are the era we successfully completed the relocation of all our production to our merritt island for to facility that the silliest now producing all three of the or models the ab thirty two the a the thirty six in the ab forty we are busy optimizing production and ramping up that facility down to meet continued strong retail demand rbs retail performance continues to exceed our lofty expectations as almost every other europe produced so far has already been sold at retail have be are a dealer and as of the end of two thousand and twenty one is virtually nonexistent as consumers continue to appreciate the brand's progressive style elevated control modern comfort and quality details which are unmatched in the luxury day not segment today while increase in overhead due to the new merritt island facility will have a dilute of near term impact on margins and profitability the additional capacity will set the bread up for many years of future growth in sales and profits we are excited that this excess capacity will allow us to expand ib or as model line up the capitalized and the brand substantial addressable market and growth opportunities we look for to shared additional details of either years by a mile expansion in the future a crest weeks periods continued strength and retail performance during the fourth quarter underscoring the attractiveness of the crest bram the value it delivers and an attainable price point in the easy to use a new voter friendly nature the pontoon segment since we choir crest in october of two thousand eighteen or focus has been on expanding throughput to meet the increasing demand for the brand and to drive margin expansion in a board or crests continue the exceptional execution of it's operating a strategic priorities delivering an outstanding court crest wholesale unit by himself another quarterly record by shipping the most units have any fourth quarter in the company's history crest also said a fourth quarter record for gross margin which increased me were nearly five hundred and ninety basis points year over year this marks the third consecutive quarter in which crests achieve gross margin in excess of our twenty percent target and not xr although he experienced robust retail the man had it not been for a cute engine shortages during the fourth quarter we would have experience even greater growth such couldn't to the court and should supply continue to be an issue adversely affecting sales and we are working diligently to improve it although temporarily hampered at the end of the year not extort improved throughput for the quarter and the full year with wholesale unit shipments for the quarter up over one hundred and twenty percent year over year and sixty percent for the full year gross margin for the quarter was up more than nine hundred and twenty basis points year over year and up two hundred sixty basis points for the full year additionally nordic start generated positive adjusted even up for the full year and we expect continued expansion of both gross margin and adjusted even a margin for fiscal two thousand and twenty two we believe our turn around plan continues to progress with initiatives in place the for the ramp up production improve overall quality and enhance the product offering and our master crap ram retail performance during the fourth quarter continue down an incredible pace i was only limited by historically low dealer him and tories
spk_1: for the fourth quarter the mask crap ran again set net sales and unit shipment record for any quarter in the brand's history
spk_4: importantly we will continue to emphasize quality to further differentiate master crap from the competition dealer commitments for model year two thousand and twenty to continue to exceed our aggressive expectations as robots retail demand continues to be a strong tailwind on financial basis excluding the impact of ah the or up the mask crap rounds increase net sales and wholesale unit growth for the fourth quarter additionally mask crap achieved a strong fourth quarter gross margin which contributed to the brand achieving the highest for your gross margin in the history of the company driven by seemingly insatiable retail the man dealer inventories across all our brands are at historically low levels and a consolidated basis as of the ended june we believe that are dealer inventories are under him a tory by twenty five hundred units with nearly half of the shortfall at mask crap alone the shortfalls directly attributable to the strong retail the man with experience combined with a persistent supply chain disruption which continues to be a headwind to production as a result we believe it will be well on the calendar two thousand and twenty three before dealer inventories reach optimal levels combined with the current supply and demand dynamic in our industry this provides us with unprecedented wholesale growth visibility while our facilities currently have a capacity above and beyond what we are producing today supply chain logistics and covert related disruptions continue to be the primary getting factor poop for production process all the brands in addition to support our aggressive growth plans we have identified and are pursuing targeted capital projects and master crap not it's dark and crest to ramp up production past current production capacity levels looking back on the year or progress on our strategic priorities business fundamentals and the strength of our brands allowed of to deliver a record setting fiscal year two thousand and twenty one we will look to build upon that success in fiscal twenty two as we remain committed to making investments to further strengthen our competitive position roller categories deliver shareholder value guided by our long term focus and strategic priorities judging by our talented employees and experience leadership team responded to the challenges of two thousand and twenty month we are confident that we will continue to deliver superior performance in fiscal two thousand and twenty two
spk_1: oh now turn the call over to camp will provide more color on our financial results temp thanks spread looking at the top line net sales for the full year or record five hundred twenty five point eight million the increase of one hundred sixty two point seven million or forty four point eight percent compared to three hundred sixty three million for the
spk_6: prior year
spk_1: this increase was primarily a result of higher whole self unifying and though already or sentence as recalled the man has remained robust this what he was partially offset by the impact of segment mix for the how context regarding our except from performances year when compared to test gop twenty nine team which was our previous record net sales increased by fifty nine point four million or twelve point seven percent as for admission this was the most proper we're in the country's history growth profit for the for year increased fifty four point six million to whatever three million compared to seventy five point four million for the prior year period press we driven by herself volumes lower the or in cinemas and higher prices they say reveal what he was partially offset by her material cost cost associated with the transition out of here at our new mayor around the celery and haircut session cost gross margin was twenty four point seven percent for the full year and increase of three hundred ninety basis points compared to the prior year period the increase was primarily attributable to lower the weren't sent of fable overhead absorption driven by the higher sales volume and higher prices partially offset by costs associated with the transition of ah error to our new mayor of our facility and our labor cost compared to fiscal twenty nine teen arkansas day gross margin was that more than forty base operating expenses were fifty four million for the full year a decrease of forty seven point nine million or forty seven percent compared to the prior year period the take decrease was primarily driven by goodwill and other intangible assets pyramid charges a fifty six point four million related or not extorted crest segments record in fiscal twenty twenty in addition the company had lower selling and marking cost notice with twenty twenty one primarily due to the lack of in person both shows and the strength of organic retail demand the decrease was partially offset by hair general and miss rate of expenses resulting from higher compensation cost and additional investments related product development and information technology despite our continued investment pride the bellman other areas of se ne for the full year as soon as as dna as a percentage of net sales was the lowest on record since we became a public company trying to the bottom line i just didn't come from the full year increased to a record sixty two point eight million or thirty three hours and thirty one cents per diluted share computed using the company's estimated annual effective tax rate the approximately twenty three percent this compares to know just didn't combos twenty five point one million or one dollar thirty four cents per diluted share a prayer your period and fifty three million or two hours and eighty two cents per diluted share the fiscal twenty nineteen i just city but i was a record nine two point eight million for the full year compared to forty four point three million for the prior year period justin bieber margin with seventeen point six percent up five hundred forty basis points from twelve point two percent in the prior year period compared to fiscal twenty nineteen adjust the but i was up nearly seventeen percent and just the of our margin was that more than sixty basis points as for the fourth quarter results net sales profitability and earnings all been has been for the robots retail demand environment and our delivery of the eyes wholesale unit volume for any fourth quarter in the history the company net sales were a record one hundred fifty five point five million an increase of fifty one million or two hundred four percent compared to the covert impacted prior year period primarily as a result record sales volume gross profit for the quarter was a record thirty seven point two million and are gross margin was twenty three point nine percent increase and of nine hundred forty basis points this gross margin improvement list presley driven by favorite overhead absorption from higher sales volume lower morty cost and lower the or incentives and partially offset by hair material costs costs associated with the new mayor i facility and her labor cost to harvard your costs were primarily driven by inflation of will supply chain and logistics disruptions adjusted net income increased eighteen point six million for the quarter or ninety eight cents per diluted share computed using the company's as made annual you effect of tax rate of approximately twenty three percent this compares to ingested that loss of one plate million or ten cents per diluted share in the prior year period trying to balance sheet and liquidity and june we closed on a new one hundred sixty million dollar credit facility his credit facility which replaced the company's previous credit facility will provide us with additional liquidity and financial flexibility to continue to execute on a consumer centric growth strategy and capital allocation objectives through the new facility we increased or accessed revolving credit from thirty five million two hundred million and dish are strong operating performance and and president wholesale the man disability enabled us to push are effective interest rates lower which we expect will yield and receiving over the term of the new facility driven by strong operating cash flow we ended the year with thirty nine point three million of cash despite funding substantial growth oriented projects during the year when we add this may add add that cash to the sixty six million of the building our new revolving credit facility the in a beer with over one hundred and five million in total liquidity and yet leverage was point six times just leave it out at the end of year we also announced that are bored records has authorized a new sheriff purchase program under which we may repurchase up to fifty million dollars worth of outstanding comstock the boards authorization this program reflects the confidence we have our company our growth strategy a comprehensive portfolio brands and our ability a execute on what we believed to be a tremendous opportunity before us we maintain a discipline and thoughtful approach to capital allocation through which we prioritize balance sheet resiliency and growth while looking for present opportunities to return capital to shareholders we believe the company's recent share price represents a great doubt investors and we look forward to be near to opportunistically utilize this program to create additional value for shareholders at first opportunity to be in a market under this program will be later this month for the full year fiscal twenty twenty to consolidate net sales growth is expected to be up in the high teens percent range with the just the but i'm margins flat your rear adjusted earnings per share grow up in the high teens percent range year over year driven by growth oriented projects we expect capital expenditures to be between twenty five million thirty million for the for you this guy's represents another record year it is all organic for the first quarter of fiscal lightweight to consolidate net sales growth is expected it to be up in amid thirty percent range with adjusted ebitda margin in the low fourteen percent range and adjusted earnings per share growth up in a low twenty percent range year over year importantly we face significant ongoing risen from supply chain disruptions and the impact of coven we may laser focused on their game is headwinds i'll now from a call back over to fret they still to summarize my earlier convinced we are pleased by the progress we've made during fiscal two thousand and twenty one to accelerate production
spk_4: efficiently manage our supply chain to meet increase consumer demand across our brains and maintain our uncompromising quality standards
spk_1: this exceptional execution result in in record organic growth in sales and earnings am based on the june two thousand and twenty one data has led to market your games we continue to believe the increase retail momentum we have experience for consumers seeking the boating lifestyle and are brands one door leading continued growth for our company
spk_4: as we managed through an unprecedented and dynamic business environment near term we remain committed to long term value creation for our shareholders and all stakeholders we will continue to be purpose driven business committed to our consumers dealer and vendor partners and people operator you mean now in line for questions
spk_7: thank you
spk_0: as a reminder to ask a question you do any a faster than one and your telephone killers trial your question please press the pound key keep them are we compile the queue in a roster i first question comes on the line of joe auto bailout what raymond james yolanda how open
spk_8: bank had last morning i'm sorry to those questions for at it you twenty five hundred units gilliam my toy deficit i decided does not assume deal it turns get back to pre cook at levels were you sitting turns remain elevated not a deal as a land operate at lower the toy levels that assumes that we improve our fish
spk_4: you'd see of operate with lower inventory levels and our dealers and hired turnover absolutely assumes a step up in performance
spk_8: guy and it's second attempt to the guidance it's at me about a to debate with point decline in it unlicensed and you want you're here at i think sequentially bad about three hundred basis points out could understand what's what's striking down margins and one i guess how much confidence you have in the balance to the year or two an offset that that's a good that the flat
spk_1: sure that that the headlines are experiencing and he starts with labour inefficiencies associate with the supply chain disruptions ah you know where we're we're putting parts on the boats out of sequence ah we're working overtime because our part to come in and not later than that they would have expected so that is i have a big driver the decrease him in and margin were talking about ah we also have a mix of profits are coming from lower margin segments or during the core ah we add the effect of the are the era overhead ah but which is incremental to i compared to quarter of a year ago ah we've got a bit higher inflation on them we regionally anticipated arm we can we have established are or budget and it and gail keep in mind that that those things are partially offset by overhead absorption offerings from as leverage
spk_8: okay thank you guys present
spk_7: thank you
spk_0: i'm next comes on the line of credit kenneth and with their you're honest and open
spk_9: take my picture taken my questions and something i can't he got a better job of getting supply and at a channel but you're still in a well below where you want to be with respect to inventory so is there a way to think through how much retail you might be missing out on based on the level of demand vs white you've actually seen turn at retail
spk_4: i'm you're one of the thing that ever to turn assorted george after make a breed comment that the one of things as important as we have consumers and are ordering
spk_1: i'm
spk_4: and therefore you know we have wholesale shipments are immediately translating to retail sales as soon as they have the dealer as a result the inventory of there on the floor but we're still able to support that retail sales so
spk_10: i'm you know some extent we've seen a change in behavior
spk_1: well began
spk_4: what was passed practice in terms of you know ordering ahead by consumers georgia yeah gregg i guess what i would add you know it's difficult to pinpoint but you know we were were saying and what we're hearing from our dealers or that retail continue to be robot consumers continue to be attracted to the boating lifestyle obviously with than you know that the resurgence of the will have that covered in the delta variant
spk_1: yeah consumers are recognizing that things are gonna go back to normal any time soon and so
spk_11: yeah we've got many consumers that even if they don't have inventory on the ground today are putting and orders for both that they're they're already pre buying both today for took next summer's that selling next summer's voting season so i'm in our i think we're not losing much it's just are delaying that when the consumers get the both and i worry
spk_9: we were hearing from dealers that the a high percentage of the vote that they've already been allocated are pre sold on and so that that's encouraging the author and we think that momentum will continue
spk_4: enjoy this pong up on that with with more pre sold units i assume there may be more customize does that mean your they're coming up with higher higher level of features and therefore may be a higher margin i as t kind of boat in the pre order book
spk_11: he added that absolutely right crag that we we experience that obviously last year with the high percentage of retail sold boats and we expect that trend the continue ah in particular as we continue to come out with new innovations and features is fred described on the call with our latest model your introductions ah we think that will continue to drive
spk_9: additional i as be and margin growth and then lastly with respect to guidance it does the does the revenue guidance ah is the cap on that your production capacity or is it some assumption about retail and inventory
spk_4: because it does seem like you know it's such an urgent need for inventory and pretty strong demand that is probably demand for more than what your oven guidance supplies
spk_12: first and foremost
spk_4: isn't that absolutely not retail in in the the man we believe we've got a two year run way ahead of us were will be scrambling to satisfy the of the man having said that when you talk about capacity it's capacity constrained by the supply chain in the coven a pandemic that continues to linger in you know rear it's head again in the delta forum so we have probably twenty five percent thirty percent more capacity today
spk_13: than were able to operate at based them the the cap due to supply chain so supply chain is a short answer
spk_0: great a thank you okay thank you as a reminder to ask a question you need to pass star than one on your telephone while mama for questions
spk_14: there are no further questions ladies and gentlemen includes that a conference call we thank you for your participation you may now disconnect
spk_0: and and oh the
spk_1: yeah
spk_2: ladies and gentlemen thank you for standing by a welcome to the fourth quarter and fiscal twenty twenty one math the crab boat holding think are news conference call
spk_1: this time operate as a pet lines or the listen only mode the the seacoast presentation they'll be a question and answer session good question during the session you need a depressed or than one on your telephone please be advised that today's conferences be recorded if you require any further assistance please press star than zero out now like the hand the conference over to him actually see financial officer please go ahead thank you operator and welcome everyone the hebrew during a today as we discuss mask crafts fourth quarter and for your to school but twenty one before as reminder they've called me webcast live or also be archived our website for future listening for me on today's call are afraid right built chief executive officer a german and towards steinberger keep revenue officer will begin with an overview of the progress our strategic priorities review or operational highlights from the quarter and four year old and discuss her financial performance for the fourth quarter for your fiscal twenty one get out from the call back to bed for some closure marks before we open the call for q and eight
spk_3: before it began with like to remind the participants that the information contained this call his current only as of today september second twenty twenty one that come the assumed no obligation to add the any statements including forward looking statements stay within our store cool facts report looking statements and subject to say part
spk_1: disclaimer in today's press release
spk_4: additionally on this conference call we will discuss not get measures that include or exclude national pride and not indicative of our ongoing operations he breach not get measure we also provide the most directly comparable gap measure our fiscal twenty twenty one reporter for your fiscal earnings release includes erectus really i should the not get majors to our gap results we're also like for my listeners that there's a slide deck summarize in your flash result in the best for section of our website with that alternate colbert of read
spk_1: morning everyone thank you for joining us today
spk_4: a business executed extremely well against or strategic priorities during fiscal two thousand and twenty one in a very challenging and dynamic environment is that we delivered record setting performances for each quarter of fiscal two thousand and twenty one with culminated in record net sales in earnings for the full year despite the many challenges we face we grew our net sales by more than forty four percent and are deluded adjusted earnings per share by nearly one hundred and forty eight percent year over year when compared to our previous record here fiscal two thousand and nineteen net sales were hired by newark nearly thirteen percent and deluded earnings per share were up by more than seventy percent all on an organic basis
spk_1: this exceptional performance was driven by your over here unit increases at each of our segments including the most wholesale units ever sold by the company and a fourth quarter
spk_4: to accelerate throughput and produce record level units in arguably the most challenging supply chain environment we have ever experienced in the building industry is a clear demonstration of are disciplined execution operational excellence and the strength of our team
spk_1: we were able to deliver for our dealers and consumers in israel bus demand environment the credit for this performance goes to are more than fifteen hundred employees who continued to execute are key strategic priorities in the face of adversity and the strength of our marketing market leading brands
spk_4: since refocusing ourselves on our value enhancing growth strategy last year we've made impressive progress in the pursuit of are over arching objective of driving sustainable accelerated growth by becoming the most consumer focused boating company drew fiscal two thousand and twenty one we continue to execute against each other for pillars of our strategy consumer experience digital marketing operational excellence and human capital development first with a surge of consumer demand we continue to experience meeting our consumers expectations during your mental the bring as many boats as possible to our dealers will not sacrificing quality during two thousand and twenty one we executed against an aggressive production ramp up plan which allowed us to more than double our monthly shipment rate over the course of the year by aggressively hiring and training new labour expertly managing the supply chain and executing the move of our of the a brand from our been or tennessee plan to a dedicated facility
spk_1: he and merritt island for we believe our production ramp up as outperform many of our competitors in an environment where lack of inventory can lead to loss of market share our ability to increase production faster than our competitors is leading to marketshare games
spk_4: recently released july and revised june market share data shows are master crap bram took market share a rowing twelve month basis while our top two competitors last year as important as product availability was this year maintaining the highest quality standards will always be paramount
spk_1: and as a key competitive advantage that is why we took great pains to ensure that despite the various supply chain and labour challenges we face this year or quality sailors were upheld without compromise
spk_4: as evidence of our success master crap crest antarctic star each receive the two thousand and twenty green industry customer satisfaction index or see us i award for excellence in customer satisfaction in march two thousand and twenty one aguero was not eligible for the word this past year with quality is even more paramount for this high end product and remains a core operational priority is we ramp up production in our new port facility additionally we intense find our focus on consumer centric innovation by nearly doubling the headcount of our product development and engineering team during two thousand twenty one these investments are an important component of our market share and financial growth plan or relentless dedication learning more about our consumers growing need than expected patients has allowed us to further refine our product development process and accelerate innovation and our master crap ran we recently unveiled one of most aggressive and well received model year changes in the brand's history including three exciting new models the xt twenty three he acts t twenty four and the at startup the all new xrf model built upon the iconic xr model by adding the largest and most comfortable transom chase loud years in the industry along with more ballast and improve serve capabilities brought about by the launch of our new state of the art surf star system sir star is the latest evolution of our award winning gentoo to sir system and includes all new more robust actuators position sensing technology that allows the most precise wave adjustments in the industry and an all new more intuitive user interface that revolutionize his how consumers can make adjustments to their waves all of this makes sir star in the most customizable wave making technology on the market today rounding out the model your changes were a myriad of other innovative in consumer centric performance styling and convenience features such as all new customizable power designs patent pending hydra like technology making our towers the easiest to raise and lower and most intuitive and powerful started thruster in the market to name a few
spk_1: at crest we recently launched the all new continental model and will be launching another new model later this month
spk_4: and not ext are we will be launching to new models at the upcoming fort lauderdale boat show
spk_1: our expanded and are talented product development and engineering team will continue to accelerate new model development innovation for all our brands which will lead to additional marketshare growth second we've made great progress and activating a consumer driven digital marketing strategy across our organization to increase consumer brand awareness create a community of interest expand our target market improve lead generation and ultimately drive sales and marketshare games
spk_5: earlier this year we launched several immersive digital experiences for our consumers to learn about our brands and a three hundred and sixty degree digital environment
spk_4: these unique digital showrooms allowed consumers to immerse themselves and each of our brands and away they would typically do and traditional in person both shows we're in the process of updating these virtual showrooms and anticipate relaunching them with new content it features a head of the two thousand and twenty two boat show season given the lingering called nineteen pandemic in an industrywide shortage of dealer him and tory remaining at the forefront of offering consumers immersive differentiated and safe alternative to learn about our product is critical to our growth and a key strategic priority we also continue our investment in digital marketing capabilities across all or brands and robbed record year over year lead generation and a record low cost really we will continue to invest in digital solutions that bring awareness and new consumers to our brands including all new web sites were not extorted crest and fiscal two thousand and twenty two this investment will increasingly drive market share games third we sustain the acceleration of operational excellence programs across our manufacturing facilities to drive through put improvements and enhance quality we expertly manage the relocation of our our the our brand during the year and navigated supply chain is used to minimize disruptions into to aggressively ramp up production are out standing supply chain team has done a tremendous job and minimizing the disruptions to our operations through our strong and longstanding relationships with leading suppliers during two thousand and twenty one these relationships proved to be a competitive advantage for us and we will continue to align ourselves with superior partners as part of our continuous improvement initiative despite inefficiencies inherent in our aggressive production ramp up the dynamic supply chain environment and increasing material and labor costs the company delivered gross margins of twenty four point seven percent for the full year up nearly four hundred basis points versus the prior year when compared to fiscal year two thousand and nineteen for your gross margins where up nearly fifty basis points even more impressive during two thousand and twenty one we achieved record for your gross margins for master crap and crest france and improved nordic stars gross margin by two hundred and sixty basis points this performance is a testament to our town
spk_1: did a dedicated employees or experience and cycle tested leadership team and are aptitude for operational excellence
spk_4: import we remain focus on strengthening our human capital framework to attract developing and retained a highly skilled and specialized workforce we continue to successfully mean are skilled labor recruiting needs that all our facilities ever grown our workforce by nearly six hundred hourly and more than fifty salary personnel from the start of the fiscal year approximately fifty percent of our salary growth has come in our product development function for the year when personally rate inflation do the tight labor market presented by gross margin performance we were able to mitigate most of this increase to overhead absorption as volumes increased as real as we review two thousand and twenty one we're encouraged by on momentum were saying around all four of our strategic rock priorities and will continue to pro actively adapt our strategy to the business environment let me know briefly reviews of the latest developments across our brands that are the era we successfully completed the relocation of all our production to our merritt island for to facility that to silly is now producing all three of the or models the ab thirty two the a be thirty six in ab forty were busy optimizing production and ramping up that facility dumped can meet continued strong retail man rbs retail performance continues to exceed our lofty expectations as almost every other yara produced so far has already been sold at retail be or a dealer and as of the end of two thousand and twenty one is virtually nonexistent as consumers continue to appreciate the brand's progressive style elevated control modern comfort and quality details which are unmatched in the luxury day not segment today while increase in overhead due to the new merritt island facility will have a dilute of near term impact on margins and profitability the additional capacity will set the brand up for many years of future growth and sales and profits we are excited that this excess capacity will allow us to expand ib or as model line up the capitalize on the brand substantial addressable market and growth opportunities we look for to shared additional details of ah be years by a mile expansion in the future a craft weeks periods continued strength in retail performance during the fourth quarter underscoring the attractiveness of the crest bram the value it delivers and an attainable price point in the easy to use a new voter friendly nature the pontoon segment since we choir crest and october of two thousand eighteen or focus has been on expanding throughput to meet the increasing demand for the brand and to drive margin expansion in a fourth or crests continue the exceptional execution of it's operating a strategic priorities delivering an outstanding quarter crest wholesale unit by himself another quarterly record by shipping the most units have any fourth quarter in the company's history crest also said a fourth quarter record for gross margin which increased me were nearly five hundred and ninety basis points year over year this marks the third consecutive quarter in which crests achieve gross margin in excess of our twenty percent target
spk_1: and not xr although he experienced robust retail the man had it not been for cute engine shortages during the fourth quarter we would have experienced even greater growth subsequent to the court and engine supply continues to be an issue adversely affecting sales and we are working diligently to improve it
spk_4: although temporarily hampered at the end of the year not extorted group throughput for the quarter and the full year with wholesale unit shipments for the quarter up over one hundred and twenty percent year over year and sixty percent for the full you gross margin for the quarter was up more than nine hundred and twenty basis points year over year and up two hundred and sixty basis points for the full year additionally nordic start generated positive adjusted even up for the whole year we expect continued expansion of both gross margin and adjusted even a margin for fiscal two thousand and twenty two we believe our turnaround plan continues to progress with initiatives in place the for the ramp up production improve overall quality and enhance the product off ring and our master crap ram retail performance during the fourth quarter continued down an incredible pace that was only limited by historically low dealer inventories for the fourth quarter the mask crap ran again set net sales and unit shipment record for any quarter in the brand's history importantly we will continue to emphasize quality to further differentiate master crap from the competition dealer commitments for model year two thousand and twenty to continue to exceed our aggressive expectations as robots retail demand continues to be a strong tailwind our financial basis excluding the impact of ah the or up the mask crap rants or increase net sales and wholesale unique growth for the fourth quarter additionally mask crap achieved a strong fourth quarter gross margin which contributed to the brand achieving the highest for your gross margin in the history of the company driven by seemingly insatiable retail the man dealer inventories across all our brands are at historically low levels and a consolidated basis as of the ended june we believe that are dealer inventories are under him a tory by twenty five hundred units with nearly half of the shortfall at mask crap alone the shortfalls directly attributable to the strong retail the man with experience combined with a persistent supply chain disruption which continues to be a headwind to production as a result we believe it will be well on the calendar two thousand and twenty three before dealer inventories reach optimal levels combined with the current supply and demand dynamic and our industry this provides us with unprecedented wholesale growth visibility while our facilities currently have a capacity above and beyond what we are producing today
spk_1: supply chain logistics and covert related disruptions continue to be the primary getting factor poop for production process all the brands
spk_6: in addition to support our aggressive growth plans we have identified and are pursuing targeted capital projects at master crap not it's dark and crests to ramp up production past current production capacity levels
spk_1: looking back on the year or progress and our strategic priorities business fundamentals and the strength of our brands lot of to deliver a record setting fiscal year two thousand twenty one we will look to build upon their success in fiscal twenty two as we remain committed to making investments to further strengthen our competitive position roller categories deliver shareholder value guided by our long term focus and strategic priorities judging by our talented employees and experience leadership team responded to the challenges of two thousand and twenty one we are confident that we will continue to deliver superior performance in fiscal two thousand and twenty two and when i'll turn the call or to camp will provide more color on our financial results temp thanks bread looking at the top line net sales for the full year for a record five hundred twenty five point eight million may increase of one hundred sixty two point seven million or forty four point eight percent compared to three hundred sixty three million for the pay our year his increase was primarily a result of higher whole self unifying and though already or sentence as recall the man has remained robust this favorability was partially offset by the impact of segment mix for the how context regarding our except from performances here like compared to test gop twenty nine teen which was our previous record net sales increased by fifty nine point four million or twelve point seven percent as for admission this was the most proper we're in the company's history gross profit for the for year increased fifty four point six million to what hadn't three million compared to seventy five point four million for the prior year period press we grabbed driven by herself biomes know the or in cinemas and higher prices they say reveal that he was partially offset by her material cost cost associate with the transitional ave era to our new mayor around facility and haircut session cost gross margin was twenty four point seven percent for the full year an increase of three hundred ninety basis points compared to the prior year period the increase was primarily attributable to lower the weren't cent of fable overhead absorption driven by the higher sales volume and higher prices partially offset by costs associated with the transition about the era to our new mayor our facility and our labor cost compared to fiscal twenty nine teen arkansas day gross margin was that more than forty base operating expenses were fifty four million for the full year a decrease of forty seven point nine million or forty seven percent compared to the prior year period the take decrease was primarily driven by goodwill and other intangible assets impairment charges a fifty six point four million related or not extorted crests segments record in fiscal twenty twenty and addition the company had lower selling and marking cost notice what twenty twenty one primarily due to the lab lack of in person both shows and the strength of organic retail the man the decrease was partially offset by her general and mess rate of expenses resulting from have a conversation cost and additional investments related product development and information technology despite our continued investment apply the bellman other areas of se ne for the full year as soon as as dna as a percentage of net sales was the lowest on record since we became a public company trying to the bottom line i just didn't come for the full year increased to a record sixty two point eight million or thirty three hours and thirty one cents per diluted share computed using the company's estimated annual effective tax rate for approximately twenty three percent this compares to know just didn't combos twenty five point one million or one dollar thirty four cents per diluted share in a prayer year period and fifty three million or two hours and eighty two cents per diluted share the fiscal twain i team i just city but i was a record nine two point eight million for the full year compared to forty four point three million for the prior year period just the by a margin with seventeen point six percent up five hundred but forty basis points from twelve point two percent in the prior year period compared to fiscal twenty nineteen adjust the but i was up nearly seventeen percent and just the of our margin was that more than sixty basis points as for the fourth quarter results net sales profitability and earnings all benefited for the robot retail demand environment and our delivery of eyes wholesale unit volume for any fourth quarter in the history the company net sales were a record one hundred fifty five point five million an increase of fifty one million or two hundred four percent compared to the covert impacted prior year period primarily as a result record sales by gross profit for the quarter was a record thirty seven point two million and are gross margin was twenty three point nine percent increase and of nine hundred forty basis points this gross margin improvement lists presley driven by fable overhead absorption from higher sales volume lower why already cost and lower the or incentives and partially offset by hair material costs costs associated with the new mayor i have facility and her labor cost the have a juror costs were primarily driven by inflation of the supply chain and logistics disruptions
spk_15: adjusted net income increased eighteen point six million for the quarter or ninety eight cents per diluted share computed using the company as made annual effective tax rate of approximately twenty three percent
spk_1: this compares to adjusted net loss of one point eight million or ten cents per diluted share in the prior year period trying to balance sheet illiquidity liquidity and june we closed on a new one hundred sixty million dollar credit facility his credit facility which replaced the company's previous credit facility will provide us with additional liquidity and a financial flexibility to continue to execute on or consumer centric growth strategy and capital allocation objectives through the new facility we increased or accessed revolving credit from thirty five million two hundred million and dish and are strong operating performance and oppression and wholesale demand disability enabled us to push are effective interest rates lower which we expect will yield and receiving over the term with the new the a silly driven by strong operating cash flow we ended the year with thirty nine point three million of cash despite funding substantial growth oriented projects during the year when we add this we add add that cash to the sixty six million of availability our new revolving credit facility lee in a beer with over one hundred and five million in total liquidity and yet leverage was point six times to just leave it off at the end of year we also announced that aboard records has authorize a new sheriff purchase program under which we may repurchase up to fifty million dollars worth of outstanding common comstock the boards authorization this program reflects the confidence we have our company our growth strategy a comprehensive portfolio brands and our ability execute on what we believe to be a tremendous opportunity before us we maintain a discipline and thoughtful approach to capital allocation through which we prioritize balance sheet resiliency and growth while looking for present opportunities to return capital to shareholders we believe the company's recent share price represents a great doubt investors and we look forward to be able to opportunistically utilize this program to create additional value for shareholders or first opportunity to be in a market under this program will be later this month for the full year fiscal twenty twenty two thousand net sales growth is expected to be up in a high teens percent range with just the but i margins flat here rear adjusted earnings per share grow up in the high teens percent range year over year driven by growth oriented projects we expect capital expenditures to be between twenty five million thirty million for the for year this guy's represents another record here it is all organic
spk_4: for the first quarter of fiscal lightweight to consolidate net sales growth is expected it to be up in amid thirty percent range with adjusted ebitda margin in the low fourteen percent range and adjusted earnings per share growth up in a low twenty percent range euro we're importantly we face significant ongoing risen from supply chain disruptions in the impact of coven we may laser focused on the it again these headwinds all now from a call back over to fred
spk_7: thanks still to summarize my earlier comments were pleased by the progress we've made during fiscal two thousand and twenty one to accelerate production efficiently manage our supply chain to meet increase consumer demand crossed our brains and maintain our uncompromising quality standards
spk_0: this exceptional execution resulted in record organic growth in sales and earnings am based on the june two thousand twenty one data has led to market your games we continue to believe the increased retail momentum we have experienced for consumers seeking the boating lifestyle and or brands one door leading could have growth blow for our company
spk_8: as we managed through an unprecedented and dynamic business environment near term we remain committed to long term value creation for our shareholders and all stakeholders we will continue to be purpose driven business committed to our consumers dealer and partners and people operator you may now in line for questions
spk_4: thank you
spk_8: as a reminder to ask a question you you need to faster than one in your telephone kill was trial your question please press the pound key key survival we compile the q and a roster i first class incomes on the line of joe auto bailout what raymond james your life without open
spk_1: thanks to glass morning i'm sorry to those questions for at it you twenty five hundred unit gilliam a toy deficit i'd it does that assume deal it turns get back to pre cook at levels were you sitting turns remain elevated not a deal a land operate at lower the toy levels that assumes that we improve our efficiency of operate with lower even tory levels that are dealers and hired turnover i'm absolutely assumes a step up in performance god and it's second attempt to the guidance looks at me about have to debate this point decline in license in q want you ever hear of think sequentially that about three hundred basis points out can understand what's what's tragic down markings and one i guess how much confidence you have in the balance to the year
spk_8: and offset that that's the to get back the flat
spk_7: sure that that the head headlines are experiencing margin wise and starts with labour inefficiencies associate with a supply chain disruptions ah you know we're we're we're putting parts on the boats out of sequence ah were working overtime because part to come company and not later than that they have expected so that is i have a big driver to the
spk_0: a decrease in a margin we're talking about are we also have a mix of profits are coming from lower margin segments or during the core ah we have the effect of the are the or overhead ah but which is incremental to well compared the core of a year ago
spk_9: we've got a bit higher inflation ah than we originally anticipated we can we have established are or budget and net and gail keep in mind that that those things are partially offset by overhead absorption and offerings from as leverage
spk_4: okay thank you guys present
spk_1: thank you
spk_3: next question comes on the line of credit kenneth and with their you're honest now open
spk_4: take my picture taken my questions and thumbs i can't he got a better job of getting supply in the channel but you still in a well below where you want to be with respect to inventory so is there a way to think through how much retail you might be missing out on based on the level of demand vs white it actually see internet retail
spk_10: i'm you're one of the thing that i'm return to sort of george after make a brief comment one of things as important as we have consumers and are ordering
spk_4: and therefore you know we're wholesale shipments and immediately translating to retail sales the soon is a hit the dealer as a result the inventory isn't there on the floor but though
spk_11: we're still able to support that retail sales so i'm you know some extent we see to change in behavior well began
spk_9: what was best practice in terms of you know ordering ahead by consumers george
spk_11: yeah gregg i guess what i would add you know it's difficult to pinpoint but you know we were were saying and what we're hearing from our dealers or that retail continued to be robot consumers continue to be attracted to the boating lifestyle obviously with them you know that the resurgence of you will have the covered in the delta variant ah yelled consumers
spk_4: are recognizing that things are going to go back to normal any time soon and fell
spk_11: we've got many consumers that even if they don't have inventory on the ground today are putting and orders for both that they're they're already pre buying votes today for took next summer's that selling next summer's voting season so ah
spk_9: in our i think we're not losing much it's just are delaying that when the consumers get the both and now we're we're we're hearing from dealers that the a high percentage of the vote that they've already been allocated are pre sold on and so that that's encouraging to author and we think that momentum will continue enjoy is following up on that with with more pre sold units i assume there may be more customize does that mean your they're coming up with higher higher level of features and therefore may be a higher margin i er yes t kind of boat in the pre order book yeah that that absolutely right greg that we we experience that obviously last year with the high percentage of retail sold boats and we expect that trend the continue ah
spk_4: in particular as we continue to come out with new innovations and features is friend described on the call with our latest model your introductions ah we think that will continue to drive a additional i as be and margin growth and then lastly with respect to guidance it does the does the revenue guidance ah to is the cap on that your production capacity or is it some assumption about retail and inventory because it does seem like you know with such an urgent need for inventory and pretty strong demand that is probably demand for more than what your oven guidance applies oh person for most
spk_13: isn't that absolutely not retail in in the man
spk_0: we believe we've got a two year run way ahead of us were will be scrambling to satisfy of the man having said that when you talk about capacity it's capacity constrained by the supply chain in the coven a pandemic that continues to linger in you know rear it's head again in the delta forum so we have probably twenty five percent thirty percent more capacity today
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