What changed in this filing

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Item 1A. Risk Factors

2023-08-30 compared with 2022-09-09 · 117 added, 97 removed, 267 unchanged (44% of the section changed)

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In times of economic uncertainty or recession, consumers tend to have less discretionary income and to defer significant spending on non-essential items, which may adversely affect our financial performance.

Although portions of the marine industry have experienced positive trends as a result of the unique consumer environment resulting from the COVID-19 pandemic, these trends may not continue, and the economic uncertainty caused by (i) general economic conditions, (ii) the impact of inflation, (iii) labor shortages, (iv) supply chain disruptions, (v) the conflict between Russia and Ukraine, (vi) the ongoing COVID-19 pandemic and (vii) actions and stimulus measures adopted by local, state and federal governments may lead to unfavorable business outcomes.

The economic uncertainty caused by (i) general economic conditions, (ii) the impact of inflation and rising interest rates, (iii) labor shortages, (iv) supply chain disruptions, (v) regional or global conflicts, (vi) public health crises, pandemics, or national emergencies and (vii) actions and stimulus measures adopted by local, state and federal governments may lead to unfavorable business outcomes.

We continue to develop our portfolio of brands, but our business remains cyclical and sensitive to consumer spending on new boats.

Deterioration in general economic conditions that in turn diminishes consumer confidence or discretionary income may reduce our sales, or we may decide to lower pricing for our products, which could adversely affect our financial results, including increasing the potential for future impairment charges.

Further, our products are recreational, and consumers’ limited discretionary income in times of economic hardship may be diverted to other activities that occupy their time, such as other forms of recreational, religious, cultural, or community activities.

Further, our products are recreational, and consumers’

limited discretionary income in times of economic hardship may be diverted to other activities that occupy their time, such as other forms of recreational, religious, cultural, or community activities.

In addition, economic uncertainty may also increase certain costs of operation, such as financing costs, energy costs and insurance premiums, which in turn may impact our results of operations.

We cannot predict the strength of global economies or the timing of economic recovery, either globally or in the specific markets in which we compete.

Inflation could adversely affect our financial results.

Inflation and rising interest rates could adversely affect our financial results.

The market prices of certain materials and components used in manufacturing our products, especially resins that are made with hydrocarbon feedstocks, fiberglass, aluminum, lumber, and steel, can be volatile.

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Should inflation and increased interest rates continue to occur, prospective consumers may choose to forego or delay their purchases or buy a less expensive boat in the event credit is not available to finance their boat purchases.

In addition, as discussed in more detail below, rising interest rates could also incentivize dealers to reduce their inventory levels in order to reduce their interest exposure.

Rising interest rates may also increase the borrowing costs on new debt, which could affect the fair value of our investments.

Fiscal concerns and policy changes may negatively impact worldwide economic and credit conditions and adversely affect our industry, business, and financial condition.

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Consumers often finance purchases of our products, and as interest rates rise, the cost of financing the purchase also increases.

While credit availability is adequate to support demand, interest rates began to rise significantly in the second half of fiscal 2022.

While credit availability is adequate to support demand, interest rates began to rise significantly in the second half of fiscal 2022, and continued to rise throughout fiscal 2023.

If credit conditions worsen and adversely affect the ability of consumers to finance potential purchases at acceptable terms and interest rates, it could result in a decrease in sales or delay improvement in sales.

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Borrowings under our revolving credit facility and term loans are at variable rates of interest and expose us to interest rate risk.

Reference rates used to determine the applicable interest rates for our debt began to rise significantly in the second half of fiscal 2022.

If interest rates continue to increase, the debt service obligations on our indebtedness will continue to increase even if the amount borrowed remains the same, and our net income and cash flows, including cash available for servicing our indebtedness, will correspondingly decrease.

Please see Part II, Item 7A, “Quantitative and Qualitative Disclosures about Market Risk” for discussion of our market risk related to interest rates.

In addition, our variable rate indebtedness may use LIBOR as a benchmark for establishing the rate.

In March 2021, the U.K.

Financial Conduct Authority (“FCA”) publicly announced the transition dates of certain LIBOR settings.

Included in that, it was announced that 1-month, 3-month and 6-month U.S.

Dollar LIBOR settings will cease to be provided immediately after June 30, 2023.

There is no assurance that dates announced by the FCA will not change or that the administrator of LIBOR and/or regulators will not take further action that could impact the availability, composition, or characteristics of LIBOR or the currencies and/or tenors for which LIBOR is published .

Uncertainty as to the nature of alternative reference rates and as to potential changes or other reforms to LIBOR may adversely impact the availability and cost of borrowings.

An increase in energy costs, including as a result of the ongoing conflict between Russia and Ukraine, may materially adversely affect our business, financial condition, and results of operations.

Reference rates used to determine the applicable interest rates for our debt began to rise significantly in the second half of fiscal 2022, and continued to rise throughout fiscal 2023.

indebtedness, will correspondingly decrease.

Please see Part II, Item 7A, “Quantitative and Qualitative Disclosures about Market Risk”

for discussion of our market risk related to interest rates.

An increase in energy costs may materially adversely affect our business, financial condition, and results of operations.

Our results of operations can be directly affected, positively and negatively, by volatility in the cost and availability of energy, which is subject to global supply and demand and other factors beyond our control.

The ongoing conflict between Russia and Ukraine has impacted global energy markets, particularly in Europe, leading to high volatility and increasing prices for crude oil, natural gas and other energy supplies.

Prices for crude oil, natural gas and other energy supplies have been increasing and have been subject to high volatility, including as a result of geopolitical factors or otherwise.

Further, the global clean energy movement may also reduce the availability of fossil fuels, which may in turn cause increases to energy costs.

Higher energy costs result in increases in operating expenses at our manufacturing facilities, in the expense of shipping raw materials to our facilities, and in the expense of shipping products to our dealers.

In addition, increases in energy costs may adversely affect the pricing and availability of petroleum-based raw materials, such as resins and foams that are used in our products.

Higher fuel prices may also have an adverse effect on demand for our boats, as they increase the cost of boat ownership and possibly affect product use.

Higher fuel prices may also have an adverse effect on demand for our boats, as they increase cost of boat ownership and possibly affect product use.

Higher fuel prices may also have an effect on consumer preferences causing a shift from traditional fuel-powered boats to electric boats.

Fluctuations in foreign currency exchange rates could adversely affect our results.

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Risks Relating to Our Business

Actual or potential public health emergencies, epidemics, or pandemics, such as the COVID-19 pandemic, could have a material adverse effect on our business, results of operations, or financial condition.

The impact of actual or potential public health emergencies, epidemics, or pandemics on the Company, our suppliers, dealers, and consumers, and the general economy could be wide-ranging and significant, depending on the nature of the issue, governmental actions taken in response, and the public reaction.

The impact of the current COVID-19 pandemic includes illness, quarantines, cancellation of events and travel, business and school shutdowns, reduction in economic activity, widespread unemployment, and supply chain interruptions, which collectively have caused significant disruptions to global economies and financial markets.

Despite the COVID-19 pandemic, demand for our products increased versus prior periods, but the pandemic could result in future significant volatility in demand, positively or negatively, for our products.

Demand volatility may be caused by, among other things:

the temporary inability of consumers to purchase our products due to illness, quarantine, or other travel restrictions;

dealership closures due to illness or government restrictions;

a reduction in boating activity as a result of governmental actions or self-quarantine measures;

shifts in demand away from discretionary products;

and reduced options for marketing and promotion of products or other restrictions in connection with COVID-19.

If such events occurred over a prolonged period, they could increase our costs and difficulty of operating our business, including accurately planning and forecasting for our operations and inventory levels, which may adversely impact our results.

The COVID-19 pandemic has resulted in, and may continue to result in, disruption, uncertainty, and volatility in the global financial and credit markets.

Such volatility could impact our access to capital resources and liquidity in the future, including making credit difficult to obtain or only available on less favorable terms.

The COVID-19 pandemic may continue to have an impact on our operations, which could be material.

For example, many of our facilities have experienced absenteeism caused by illness or quarantine measures.

The continuing impact on our business operations could include, but are not limited to, significant numbers of employees contracting COVID-19;

facility closures as a result of state and local "shelter-in-place" orders, safety precautions, employee illness, or self-quarantine measures;

reductions in our operating effectiveness as our employees work from home or as a result of new workplace safety measures;

unavailability of key personnel necessary to conduct our business activities;

project delays;

and supply chain or distribution interruptions and constraints.

Additionally, we rely on original equipment manufacturers, dealers, and distributors to market and sell most of our products, and effects on their businesses or financial condition as a result of the COVID-19 pandemic could result in various adverse operational impacts including, but not limited to, lower sales, delayed cash payments, interrupted customer warranty service, and increased credit risk.

Our efforts to manage, mitigate, and remedy these impacts may prove unsuccessful as the ultimate impact of the COVID-19 pandemic depends on factors beyond our knowledge or control, including the duration and severity of the pandemic, public safety actions taken by government authorities, long-term economic recovery, and resulting consumer response.

Our ability to adjust for demand in a rapidly changing environment may adversely affect our results of operations.

The seasonality of retail demand for our products, together with our goal of balancing production throughout the year, requires us to manage our manufacturing and allocate our products to our dealer network to address anticipated retail demand and manage demand fluctuations caused by macroeconomic conditions and other factors.

In addition, our dealers must manage seasonal changes in consumer demand and inventory.

Our business may experience difficulty in adapting to rapidly changing production and sales volumes.

We may not be able to recruit or maintain sufficient skilled labor or our suppliers may not be able to deliver sufficient quantities of parts and components for us to match production with rapid changes in forecasted demand.

In addition, consumers may pursue other recreational activities if dealer pipeline inventories fall too low and it is not convenient to purchase our products, consumers may purchase from competitors, or our fixed costs may grow in response to increased demand.

A failure to adjust dealer pipeline inventory levels to meet demand could adversely impact our results of operations.

In addition, if our dealers reduce their inventories in response to weakness in retail demand, we could be required to reduce our production, resulting in lower rates of absorption of fixed costs in our manufacturing and, therefore, lower margins.

As a result, we must balance the economies of level production with seasonal retail sales patterns experienced by our dealers and other macroeconomic conditions.

Failure to adjust manufacturing levels adequately may have a material adverse effect on our financial condition and results of operations.

We have a fixed cost base that will affect our profitability if our sales decrease.

The fixed cost levels of operating a powerboat manufacturer can put pressure on profit margins when sales and production decline.

Our profitability depends, in part, on our ability to spread fixed costs over a sufficiently large number of products sold and shipped, and if we make a decision to reduce our rate of production, gross or net margins could be negatively affected.

Consequently, decreased demand or the need to reduce production can lower our ability to absorb fixed costs and materially impact our financial condition or results of operations.

We may not be able to execute our manufacturing strategy successfully, which could cause the profitability of our products to suffer.

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Moving production to a different plant and expanding capacity at an existing facility involves risks, including difficulties initiating production within the cost and timeframe estimated, supplying product to customers when expected, integrating new products, and attracting sufficient skilled labor to handle additional production demands.

If we fail to meet these objectives, it could adversely affect our ability to meet customer demand for products and increase the cost of production versus projections, both of which could result in a significant adverse impact on operating and financial results.

If we fail to meet these objectives, it could adversely affect our ability to meet customer demand for products and

increase the cost of production versus projections, both of which could result in a significant adverse impact on operating and financial results.

Additionally, plant expansion can result in manufacturing inefficiencies, additional expenses, including higher wages or severance costs, and cost inefficiencies, which could negatively impact financial results.

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Catastrophic events, including natural and environmental disasters, acts of terrorism, or civil unrest, could have a negative effect on our operations and financial results.

We rely on the continuous operation of our manufacturing facilities in Vonore, Tennessee, Merritt Island, Florida, Armory, Mississippi, and Owosso, Michigan for the production of our products.

We rely on the continuous operation of our manufacturing facilities in Vonore, Tennessee, Merritt Island, Florida, and Owosso, Michigan for the production of our products.

Any natural disaster or other serious disruption to our facilities due to fire, snow, flood, earthquake, pandemics, civil insurrection or social unrest or any other unforeseen circumstance could adversely affect our business, financial condition, and results of operations.

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Furthermore, we must continue to meet or exceed consumers' expectations regarding product quality and after-sales service or our operating results could suffer.

Our ability to meet demand in a rapidly changing environment may adversely affect our results of operations.

Production and sales levels throughout fiscal 2022, 2021, and 2020 fluctuated due to general economic conditions and the ongoing COVID-19 pandemic.

In addition, our dealers must manage seasonal changes in consumer demand and inventory.

Our business may experience difficulty in

adapting to the rapidly changing production and sales volumes.

A failure to adjust dealer pipeline inventory levels to meet demand could adversely impact our results of operations.

Our financial results may be adversely affected by our third-party suppliers' increased costs or inability to meet required production levels due to increased demand or global supply chain disruptions.

Our financial results may be adversely affected by our third-party suppliers' increased costs or inability to adjust for our required production levels due to changes in demand or global supply chain disruptions.

We rely on a complex global supply chain of third parties to supply raw materials used in the manufacturing process, including resins, fiberglass, aluminum, lumber and steel, as well as product parts and components.

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Similarly, if a critical supplier were to close its operations, cease manufacturing, or otherwise fail to deliver an essential component necessary to our manufacturing operations, that could detrimentally affect our ability to manufacture and sell our products, resulting in an interruption in business operations and/or a loss of sales.

In addition, some components used in our manufacturing processes, including engines, boat windshields, towers, and surf tabs are available from a sole supplier or a limited number of suppliers.

In addition, engines used in the manufacturing processes of certain segments are available from a sole-source supplier.

Other components used in our manufacturing process, such as boat windshields, towers, and surf tabs may only be available from a limited number of suppliers.

Operational and financial difficulties that these or other suppliers may face in the future could adversely affect their ability to supply us with the parts and components we need, which could significantly disrupt our operations.

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Some additional supply chain disruptions that could impact our operations, impair our ability to deliver products to customers, and negatively affect our financial results include:

an outbreak of disease or facility closures due to the COVID-19 pandemic, or similar public health threat;

an outbreak of disease or facility closures due to public health threats;

a deterioration of our relationships with suppliers;

events such as natural disasters, power outages, or labor strikes;

financial or political instability, such as the ongoing conflict between Russia and Ukraine, in any of the countries in which our suppliers operate;

financial or political instability in any of the countries in which our suppliers operate;

financial pressures on our suppliers due to a weakening economy or unfavorable conditions in other end markets;

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These risks are exacerbated in the case of single-source suppliers, and the exclusive supplier of a key component could potentially exert significant bargaining power over price, quality, warranty claims, or other terms.

We continue to increase production;

consequently, our need for raw materials and supplies continues to increase.

Our suppliers must be prepared to ramp-up operations and, in many cases, hire additional workers and/or expand capacity in order to fulfill our orders and those of other customers.

Cost increases, defects, or sustained interruptions in the supply of raw materials, parts, or components due to delayed start-up periods our suppliers experience as they increase production efforts create risks to our operations and financial results.

We continue to evaluate and shift production;

consequently, our need for raw materials and supplies continues to fluctuate.

Our suppliers must be prepared to shift operations and, in some cases, hire additional workers and/or expand capacity in order to fulfill our orders and those of other customers.

Cost increases, defects, or sustained interruptions in the supply of raw materials, parts, or components due to delayed start-up periods, or sudden changes in requirements, our suppliers experience as they shift production efforts create risks to our operations and financial results.

The Company has experienced periodic supply shortages and increases in costs to certain materials.

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In the future, however, we may experience shortages, delayed delivery, and/or increased prices for key materials, parts, and supplies that are essential to our manufacturing operations.

We have a fixed cost base that will affect our profitability if our sales decrease.

The fixed cost levels of operating a powerboat manufacturer can put pressure on profit margins when sales and production decline.

Consequently, decreased demand or the need to reduce production can lower our ability to absorb fixed costs and materially impact our financial condition or results of operations.

Our business and operations are dependent on the expertise of our key contributors, our successful implementation of succession plans, and our ability to attract and retain management employees and skilled labor.

The talents and efforts of our employees, particularly key managers, are vital to our success.

We have observed an overall tightening and increasingly competitive labor market, which could inhibit our ability to recruit, train and retain employees we require at efficient costs and could lead to increased costs, such as increased overtime to meet demand and increased wage rates to attract and retain employees.

We have observed an overall tightening and increasingly competitive labor market in recent years, which could inhibit our ability to recruit, train and retain employees we require at efficient costs and could lead to increased costs, such as increased overtime to meet demand and increased wage rates to attract and retain employees.

Our management team has significant industry experience and would be difficult to replace.

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We may experience difficulty maintaining desired staffing levels due to increased competition for employees, higher employee turnover rates and low unemployment rates in many of the geographic areas in which we manufacture or distribute goods.

In fiscal 2022, all our facilities increased hiring of skilled hourly labor, and may need to continue to increase hiring of skilled hourly labor to meet increased demand for our products.

In the future, if we are not successful in these efforts, we may be unable to meet our operating goals and plans, which may impact our financial results.

We continually invest in automation and improve our efficiency, but availability and retention of skilled hourly workers remains critical to our operations.

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Although our management believes that the quality of our products in the premium performance sport, outboard boat, and sterndrive boat industries should permit us to maintain our relationships with our dealers and our market share position, there can be no assurance that we will be able to maintain or improve our relationships with our dealers or our market share position.

In addition, independent dealers in the powerboat industry have experienced significant consolidation in recent years, which could result in the loss of one or more of our dealers in the future if the surviving entity in any such consolidation purchases similar products from a competitor.

In addition, independent dealers in the

powerboat industry have experienced significant consolidation in recent years, which could result in the loss of one or more of our dealers in the future if the surviving entity in any such consolidation purchases similar products from a competitor.

A significant deterioration in the number or effectiveness of our dealers could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

Although at present we believe dealer health to be generally favorable, weakening demand for marine products could hurt our dealers’ financial performance.

Although at present we believe dealer health to be generally favorable, weakening demand for marine products could hurt our dealers’

financial performance.

In particular, reduced cash flow from decreases in sales and tightening credit markets could impair dealers' ability to fund operations.

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Many of our dealers have floor plan financing arrangements with third-party finance companies.

Many factors, including creditworthiness of our dealers and overall aging and level of pipeline inventories, continue to influence the availability and terms of financing that our dealers are able to secure, which could cause dealers to shift the timing of purchases or reduce the total amount purchased in a given period of time, adversely affecting sales of our products.

In addition, rising interest rates could also incentivize dealers to reduce their inventory levels in order to reduce their interest exposure, which may further adversely impact the sales of our products and our results of operations.

We may be required to repurchase inventory of certain dealers.

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Our failure to compete effectively with our current and future competitors would adversely affect our business, financial condition, and results of operations.

We compete with a variety of other activities for consumers’ scarce leisure time.

Our boats are used for recreational and sport purposes, and demand for our boats may be adversely affected by competition from other activities that occupy consumers’ leisure time and by changes in consumer lifestyle, usage pattern, or taste.

Similarly, an overall decrease in consumer leisure time may reduce consumers’ willingness to purchase and enjoy our products.

We compete with a variety of other activities for consumers’

scarce leisure time.

Our boats are used for recreational and sport purposes, and demand for our boats may be adversely affected by competition from other activities that occupy consumers’

leisure time and by changes in consumer lifestyle, usage pattern, or taste.

Similarly, an overall decrease in consumer leisure time may reduce consumers’

willingness to purchase and enjoy our products.

Our sales may be adversely impacted by increased consumer preference for used boats or the supply of new boats by competitors in excess of demand.

During the economic downturn that commenced in 2008, we observed a shift in consumer demand toward purchasing more used boats, primarily because prices for used boats are typically lower than retail prices for new boats.

If this were to occur again, it could have the effect of reducing demand among retail purchasers for our new boats.

Also, while we have taken steps designed to balance production volumes for our boats with demand, our competitors could choose to reduce the price of their products, which could have the effect of reducing demand for our new boats.

During an economic downturn, we could experience a shift in consumer demand toward purchasing more used boats, primarily because prices for used boats are typically lower than retail prices for new boats.

If this were to occur, it could have the effect of reducing demand among retail purchasers for our new boats.

In addition, as previously mentioned, a shift from traditional fuel-powered boats to electric boats, alternative fuel-powered boats, or other technologies could reduce demand for our boats.

Reduced demand for new boats could lead to reduced sales by us, which could adversely affect our business, results of operations, and financial condition.

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If we fail to timely and successfully integrate new businesses into existing operations, we may see higher costs, lost sales, or otherwise diminished earnings and financial results.

Negative public perception of our products, our environmental, social and governance (ESG) practices or restrictions on the access or the use of our products in certain locations could materially adversely affect our business or results of operations.

Demand for our products depends in part on their acceptance by the public.

Public concerns about the environmental impact of our products or their perceived safety, or our ESG practices generally, could result in diminished public perception of the products we sell.

Government, media, or activist pressure to limit emissions could also negatively impact consumers’

perceptions of our products.

Any decline in the public acceptance of our products could negatively impact their sales or lead to changes in laws, rules and regulations that prevent access to certain locations or restrict use or manner of use in certain areas or during certain times, which could also negatively impact sales.

Any material decline in the public acceptance of our products could impact our ability to retain existing consumers or attract new ones which, in turn, could have a material adverse effect on our business, results of operations or financial condition.

Our business operations could be negatively impacted by an outage or breach of our information technology systems, network disruptions, or a cybersecurity event.

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A security breach might also lead to violations of privacy laws, regulations, trade guidelines or practices related to our customers and associates and could result in potential claims from customers, associates, shareholders, or regulatory agencies.

Any failure to maintain compliance with such laws, regulations, trade guidelines or practices may cause us to incur significant penalties and generate negative publicity, and may require us to change our business practices, increase our costs or otherwise adversely affect our business.

Such events could adversely impact our reputation, business, financial position, results of operations, and cash flows.

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Violation of those covenants, whether as a result of operating losses or otherwise, could result in our lenders restricting or terminating our borrowing ability under our credit facilities.

If our lenders reduce or terminate our access to amounts under our credit

facilities, we may not have sufficient capital to fund our working capital and other needs, and we may need to secure additional capital or financing to fund our operations or to repay outstanding debt under our credit facilities.

If our lenders reduce or terminate our access to amounts under our credit facilities, we may not have sufficient capital to fund our working capital and other needs, and we may need to secure additional capital or financing to fund our operations or to repay outstanding debt under our credit facilities.

We cannot provide assurance that we will be successful in ensuring the availability of amounts under our credit facilities or in raising additional capital, or that any amount, if raised, will be sufficient to meet our cash needs or will be on terms as favorable as those which have been available to us historically.

If we are not able to maintain our ability to borrow under our credit facilities, or to raise additional capital when needed, our business and operations will be materially adversely affected.

The impact of such events could include employee illness, quarantines, cancellation of events and travel, business and school shutdowns, reduction in economic activity, widespread unemployment, and supply chain interruptions, which collectively could cause significant disruptions to global economies and financial markets.

In addition, these events could result in future significant volatility in demand, positively or negatively, for our products.

Demand volatility may be caused by, among other things:

the temporary inability of consumers to purchase our products due to illness, quarantine, or other travel restrictions;

dealership closures due to illness or government restrictions;

a reduction in boating activity as a result of governmental actions or self-quarantine measures;

shifts in demand away from discretionary products;

and reduced options for

marketing and promotion of products.

If such events occur over a prolonged period, they could increase our costs and difficulty of operating our business, including accurately planning and forecasting for our operations and inventory levels, which may adversely impact our results.

The COVID-19 pandemic resulted in disruption, uncertainty, and volatility in the global financial and credit markets, and similar future events could to the same.

Such volatility could impact our access to capital resources and liquidity in the future, including making credit difficult to obtain or only available on less favorable terms.

The impact on our operations could also be material.

For example, we could experience absenteeism caused by illness or quarantine measures.

Additionally, we rely on original equipment manufacturers, dealers, and distributors to market and sell most of our products, and effects on their businesses or financial condition as a result of future pandemics could result in various adverse operational impacts including, but not limited to, lower sales, delayed cash payments, interrupted customer warranty service, and increased credit risk.

Risks Relating to Intellectual Property

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we may be required to litigate to enforce our intellectual property rights, and we may not be successful.

Policing unauthorized use of our intellectual property is difficult and litigating intellectual property claims may result in substantial cost and divert management’s attention.

In addition, we may be required to defend our products against patent or other intellectual property infringement claims or litigation.

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If third parties claim that we infringe on their intellectual property rights, our financial condition could be adversely affected.

We face the risk of claims that we have infringed third parties’ intellectual property rights.

Any claims of patent or other intellectual property infringement, even those without merit, could be expensive and time consuming to defend, cause us to cease making, licensing, or using products that incorporate the challenged intellectual property, require us to redesign, reengineer, or rebrand our products, if feasible, divert management’s attention and resources, or require us to enter into royalty or licensing agreements in order to obtain the right to use a third party’s intellectual property.

We face the risk of claims that we have infringed third parties’

intellectual property rights.

Any claims of patent or other intellectual property infringement, even those without merit, could be expensive and time consuming to defend, cause us to cease making, licensing, or using products that incorporate the challenged intellectual property, require us to redesign, re-engineer, or re-brand our products, if feasible, divert management’s attention and resources, or require us to enter into royalty or licensing agreements in order to obtain the right to use a third party’s intellectual property.

Any royalty or licensing agreements, if required, may not be available to us on acceptable terms or at all.

A successful claim of infringement against us could result in our being required to pay significant

damages, enter into costly license or royalty agreements, or stop the sale of certain products, any of which could have a negative impact on our business, financial condition, and results of operations.

A successful claim of infringement against us could result in our being required to pay significant damages, enter into costly license or royalty agreements, or stop the sale of certain products, any of which could have a negative impact on our business, financial condition, and results of operations.

While we are not currently involved in any outstanding intellectual property litigation that we believe, individually or in the aggregate, will have a material adverse effect on our business, financial condition, or results of operations, we cannot predict the outcome of any pending litigation and an unfavorable outcome could have an adverse impact on our business, financial condition, or results of operations.

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While we believe that we are in compliance with applicable federal, state, local, and foreign regulatory requirements, and hold all licenses and permits required thereunder, we cannot provide assurance that we will, at all times, be able to continue to comply with applicable regulatory requirements.

Compliance with increasingly stringent regulatory and permit requirements may, in the future,

cause us to incur substantial capital costs and increase our cost of operations, or may limit our operations, all of which could have a material adverse effect on our business or financial condition.

Compliance with increasingly stringent regulatory and permit requirements may, in the future, cause us to incur substantial capital costs and increase our cost of operations, or may limit our operations, all of which could have a material adverse effect on our business or financial condition.

Our manufacturing processes involve the use, handling, storage, and contracting for recycling or disposal of hazardous substances and wastes.

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These and other claims we may face could be costly to us and require substantial management attention.

The nature of our business exposes us to workers’ compensation claims and other workplace liabilities.

The nature of our business exposes us to workers’

compensation claims and other workplace liabilities.

Certain materials we use require our employees to handle potentially hazardous or toxic substances.

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Although we monitor changes in tax laws and work to mitigate the impact of proposed changes, such changes may negatively impact our financial results.

In addition, increases in individual income tax rates would negatively affect our potential consumers’ discretionary income and could decrease the demand for our products.

In addition, increases in individual income tax rates would negatively affect our potential consumers’

discretionary income and could decrease the demand for our products.

Risks Relating to Ownership of our Common Stock

The timing and amount of our stock repurchases are subject to a number of uncertainties.

Our board of directors has authorized the Company’s discretionary repurchase of outstanding common stock, to be systematically completed in the open market or through privately negotiated transactions.

The amount and timing of share repurchases are based on a variety of factors.

Important considerations that could cause us to limit, suspend, or delay future stock repurchases include:

unfavorable market and economic conditions;

the trading price of our common stock;

the nature and magnitude of other investment opportunities available to us from time to time;

the availability of cash.

Delaying, limiting, or suspending our stock repurchase program may negatively affect performance versus earnings per share targets, and ultimately our stock price.

Inefficient or ineffective allocation of capital could adversely affect our operating results and/or stockholder value.

We strive to allocate capital in a manner that enhances stockholder value, lowers our cost of capital, or demonstrates our commitment to return excess capital to stockholders, while maintaining our ability to invest in strategic growth opportunities.

In July 2023, the board of directors of the Company authorized a new share repurchase program under which the Company may repurchase up to $50 million of its outstanding shares of common stock.

The new authorization will become effective upon the expiration of the Company's existing $50 million share repurchase authorization.

The Company intends to purchase shares under the repurchase authorization from time to time on the open market at the discretion of management, subject to strategic considerations, market conditions, and other factors.

Repurchases under our share repurchase program will reduce the market liquidity for our stock, potentially affecting its trading volatility and price.

Future share repurchases will also diminish our cash reserves, which may impact our ability to pursue attractive strategic

opportunities.

Therefore, if we do not properly allocate our capital or implement a successful cash management strategy, including with respect to returning value to our stockholders through this share repurchase authorization, we may fail to produce optimal financial results and experience a reduction in stockholder value.

Shareholders may be diluted by future issuances of common stock in connection with our incentive plans, acquisitions, or otherwise;

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This ongoing dialogue can include certain divisive activist tactics, which can take many forms.

Some shareholder activism, including potential proxy contests, could result in substantial costs, such as legal fees and expenses, and divert management’s and our board of director’s attention and resources from our businesses and strategic plans.

Additionally, public shareholder activism could give rise to perceived uncertainties as to our future, adversely affect our relationships with dealers, distributors, or consumers, make it more difficult to attract and retain qualified personnel, and cause our stock price to fluctuate based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business.

These risks could adversely affect our business and operating results.

UNRESOLVED STAFF COMMENTS.

UNRESOLVE D STAFF COMMENTS.

As of June 30, 2023, all our MasterCraft boats and trailers are manufactured and lake-tested at our 310,000 square-foot manufacturing facility located on approximately 60 acres of lakefront land in Vonore, Tennessee.

We also lease a 3,000 square-foot warehouse facility in West Yorkshire, England for warehousing of parts.

All our Crest boats are manufactured in our 270,000 square-foot manufacturing facility located on approximately 63 acres in Owosso, Michigan.

All our Aviara boats are manufactured in our 130,000 square-foot manufacturing facility on approximately 38 acres in Merritt Island, Florida.

LEGAL PROCEEDINGS.

For a discussion of the Company’s legal proceedings, see Part IV –

Note 12 Commitments and Contingencies to the Company’s Consolidated Financial Statements.

MINE SAFE TY DISCLOSURES.

Not applicable.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors