MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
−Removed: The following discussion and analysis should be read together with the sections entitled “Risk Factors” and the financial statements and the accompanying notes included elsewhere in this Form 10-K.
+Added: The following discussion and analysis should be read together with the sections entitled “Risk Factors”
+Added: and the financial statements and the accompanying notes included elsewhere in this Form 10-K.
In addition, the statements in this discussion and analysis regarding the performance expectations of our business, anticipated financial results, liquidity and the other non-historical statements are forward-looking statements.
−Removed: These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in “Cautionary Note Regarding Forward-Looking Statements” and in “Risk Factors” above.
+Added: These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in “Cautionary Note Regarding Forward-Looking Statements”
+Added: and in “Risk Factors”
Our actual results may differ materially from those contained in or implied by any forward-looking statements.
This section generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
−Removed: Discussions of 2020 items and year-to-year comparisons between 2021 and 2020 are not included in this Annual Report on Form 10-K and can be found in Item 7 of the Company’s Annual Report on Form 10-K for the year ended June 30, 2021 , which was filed with the SEC on September 2, 2021.
+Added: Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 are not included in this Annual Report on Form 10-K and can be found in Item 7 of the Company’s Annual Report on Form 10-K for the year ended June 30, 2022 , which was filed with the SEC on September 9, 2022.
Key Performance Measures
−Removed: From time to time we use certain key performance measures in evaluating our business and results of operations and we may refer to one or more of these key performance measures in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These key performance measures include:
−Removed: Unit sales volume — We define unit sales volume as the number of our boats sold to our dealers during a period.
−Removed: Net sales per unit — We define net sales per unit as net sales divided by unit sales volume.
−Removed: Gross margin — We define gross margin as gross profit divided by net sales, expressed as a percentage.
−Removed: Net income (loss) margin — We define net income (loss) margin as net income (loss) divided by net sales, expressed as a percentage.
−Removed: Adjusted EBITDA — We define Adjusted EBITDA as earnings before interest expense, income taxes, depreciation, and amortization (“EBITDA”), as further adjusted to eliminate certain non-cash charges and unusual items that we do not consider to be indicative of our core/ongoing operations.
−Removed: For a reconciliation of EBITDA to Adjusted EBITDA, see “Non-GAAP Measures” below.
−Removed: Adjusted EBITDA margin — We define Adjusted EBITDA margin as Adjusted EBITDA divided by net sales, expressed as a percentage.
−Removed: For a reconciliation of Adjusted EBITDA margin to net income margin, see “Non-GAAP Measures” below.
−Removed: Adjusted Net Income — We define Adjusted Net Income as net income (loss) adjusted to eliminate certain non-cash charges and other items that we do not consider to be indicative of our core/ongoing operations and adjusted for the impact to income tax expense (benefit) related to non-GAAP adjustments.
−Removed: For a reconciliation of net income (loss) to Adjusted Net Income, see “Non-GAAP Measures” below.
+Added: From time to time we use certain key performance measures in evaluating our business and results of operations and we may refer to one or more of these key performance measures in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
+Added: These key performance measures include:
+Added: Unit sales volume —
+Added: We define unit sales volume as the number of our boats sold to our dealers during a period.
+Added: Net sales per unit —
+Added: We define net sales per unit as net sales divided by unit sales volume.
+Added: Gross margin —
+Added: We define gross margin as gross profit divided by net sales, expressed as a percentage.
+Added: Net income margin —
+Added: We define net income margin as net income from continuing operations divided by net sales, expressed as a percentage.
+Added: Adjusted EBITDA —
+Added: We define Adjusted EBITDA as net income from continuing operations, before interest, income taxes, depreciation, and amortization (“EBITDA”), as further adjusted to eliminate certain non-cash charges and unusual items that we do not consider to be indicative of our core/ongoing operations.
+Added: For a reconciliation of EBITDA to Adjusted EBITDA, see “Non-GAAP Measures”
+Added: Adjusted EBITDA margin —
+Added: We define Adjusted EBITDA margin as Adjusted EBITDA divided by net sales, expressed as a percentage.
+Added: For a reconciliation of Adjusted EBITDA margin to net income margin, see “Non-GAAP Measures”
+Added: Adjusted Net Income —
+Added: We define Adjusted Net Income as net income from continuing operations, adjusted to eliminate certain non-cash charges and other items that we do not consider to be indicative of our core/ongoing operations and adjusted for the impact to income tax expense related to non-GAAP adjustments.
+Added: For a reconciliation of net income from continuing operations to Adjusted Net Income, see “Non-GAAP Measures”
+Added: Discontinued Operations
+Added: On September 2, 2022, the Company completed the sale of its NauticStar business.
+Added: This business, which was previously reported as the Company's NauticStar segment until fiscal 2023, is being reported as discontinued operations for all periods presented.
+Added: The Company's results for all periods presented, as discussed in Management's Discussion and Analysis, are presented on a continuing operations basis with prior year amounts recast to provide comparability.
+Added: See Note 3 in Notes to Consolidated Financial Statements for more information on Discontinued Operations.
Fiscal 2023 Overview
−Removed: In fiscal 2022, the Company achieved record net sales of $707.9 million, an increase of 34.6 percent from fiscal 2021.
−Removed: Consolidated unit sales volume increased to 8,217 units, up 14.2 percent from the prior year.
−Removed: Gross profit increased to $162.4 million, up 24.9 percent from $130.0 million in fiscal 2021.
−Removed: Despite our increased costs in operating expenses, selling, general, and administrative expenses as a percentage of sales in fiscal 2022 decreased compared to the prior-year period.
−Removed: Macroeconomic Events
−Removed: We are actively monitoring the impact of changing macroeconomic conditions on our business, including geopolitical events, disrupted global supply chains, and inflation.
−Removed: The impact of these factors has affected many manufacturers across various industries including ours.
−Removed: Supply chain challenges continue to evolve, driven by increased demand, labor shortages, logistical constraints, and rising prices to our suppliers, creating inefficiencies and shipping delays.
−Removed: Rapidly increasing material and overhead costs are outpacing price increases as we try to mitigate the impact.
−Removed: The full extent of the impact on our business, operations, and financial results will depend on evolving factors that we cannot predict.
−Removed: See Part I – Item 1A.
−Removed: Risk Factors.
−Removed: NauticStar Impairment Activity and Sale Subsequent to Yearend
−Removed: Despite ongoing efforts to improve operational efficiency and throughput at our NauticStar reporting unit in order to improve sales volumes and yield more favorable margins, including the engagement of third-party consulting resources beginning in the third quarter, the NauticStar reporting unit recorded unplanned negative operating results in the fourth quarter.
−Removed: These results, combined with the outlook for further supply chain disruptions, labor challenges, and higher costs from inflationary pressures, resulted in an impairment trigger in the fourth quarter related to the NauticStar reporting unit’s intangible and other long-lived assets.
−Removed: As a result of our impairment testing, we recognized impairment charges of $23.8 million at our NauticStar segment (see Note 5 to the Consolidated Financial Statements for more information related to impairment charges).
−Removed: Subsequent to fiscal yearend, we sold the NauticStar business.
−Removed: Pursuant to the terms of the purchase agreement, substantially all of the assets were sold, and certain liabilities of NauticStar were assumed by the purchaser, including product liability and warranty claims.
−Removed: The resulting loss on sale of the NauticStar business is estimated to be in a range of approximately $20.0 to $23.0 million.
−Removed: The results of the NauticStar business will be presented as discontinued operations in the Company’s fiscal 2023 first quarter.
−Removed: In conjunction with the purchase agreement, the Company entered into a joint employer services agreement and a transition services agreement which provide certain services to the purchaser for various periods of time after the sale.
−Removed: In addition, the Company amended its Credit Agreement and received certain consents and waivers under the Credit Agreement, as amended, related to the sale of the NauticStar business (see Note 13 for more information related to these agreements).
+Added: Net sales were up slightly during fiscal 2023 when compared to fiscal 2022.
+Added: The increase was primarily due to higher pricing to offset inflationary cost pressures, partially offset by a decrease in wholesale volume, dealer incentives and less favorable model mix.
+Added: We achieved our goal of rebalancing dealer inventories;
+Added: however, due to a slowing retail environment, the number of wholesale units sold were lower when compared to prior year.
+Added: Model mix trended towards smaller-sized models as more boats were sold as inventory stock versus retail-sold boats.
+Added: Also, because of increased dealer inventories, higher interest rates, and an increasingly competitive retail environment, dealer incentives, which include floor plan financing costs and other incentives, have increased.
+Added: Gross margin declined during fiscal 2023 when compared to fiscal 2022.
+Added: Offsetting the increased net sales discussed above were increased expenses related to material, labor and overhead inflation.
+Added: Other contributory expenses included increased insurance premiums and warranty-related costs.
+Added: Overall, including the impact of dealer incentives in net sales noted above, the gross margin percentage declined 60 basis points.
+Added: Operating expenses slightly increased during fiscal 2023 when compared to fiscal 2022.
+Added: Total selling, general and administrative expenses as a percentage of net sales remained relatively flat during fiscal 2023 when compared to the same prior year period.
Results of Operations
9 unchanged sentences
Amortization of other intangible assets
+Added: Goodwill impairment
Total operating expenses
OPERATING INCOME
−Removed: OTHER EXPENSE:
+Added: OTHER INCOME (EXPENSE):
Interest expense
−Removed: Loss on extinguishment of debt
+Added: Interest income
INCOME BEFORE INCOME TAX EXPENSE
INCOME TAX EXPENSE
+Added: NET INCOME FROM CONTINUING OPERATIONS
Additional financial and other data:
4 unchanged sentences
Consolidated net sales per unit
−Removed: Net Sales increased 34.6 percent for fiscal 2022 when compared to fiscal 2021 as a result of increased sales volumes, higher prices, favorable model mix, and higher option and content sales.
−Removed: Refer to Segment Results for further details on the drivers of net sales changes.
+Added: Net Sales increased 3.2 percent for fiscal 2023 when compared to fiscal 2022.
+Added: The increase was a result of higher prices, partially offset by decreased sales volumes, increased dealer incentives, and less favorable model mix.
+Added: Dealer incentives include higher floor plan financing costs as a result of increased dealer inventories and interest rates, and other incentives as the retail environment becomes more competitive.
Gross Margin.
Gross Margin percentage declined 60 basis points during fiscal 2023 when compared to fiscal 2022.
−Removed: Lower margins were the result of supply chain disruptions, labor challenges, and inflationary pressures that drove material and overhead costs higher,
−Removed: which were most pronounced at the NauticStar segment.
−Removed: Though we implemented mitigating procedures and phased in mid-cycle price increases to offset these headwinds, supply chain disruptions and inflationary pressures continued to impact our margins.
+Added: Lower margins were the result of higher costs related to material and overhead inflation, higher costs from dealer incentives, lower absorption due to decreased sales volumes, less favorable model mix, and increased warranty costs related to prior model year expenses, partially offset by higher prices and improved production efficiencies.
Operating Expenses .
−Removed: Operating expenses increased 56.4 percent for fiscal 2022 when compared to the same prior-year period.
−Removed: During fiscal 2022, a $1.1 million goodwill impairment charge was recorded in the Aviara segment and $23.8 million was recorded in the NauticStar segment for impairment of other intangible assets and fixed assets, as discussed in Notes 4 and 5 in the Notes to Consolidated Financial Statements.
−Removed: Additionally, general and administrative expense increased as a result of continued investments in information technology and product development.
−Removed: Moreover, third-party consulting fees were recognized at the NauticStar segment in an effort to improve operational efficiency and increase throughput.
−Removed: Selling and marketing expense increased due to prior-year expenses being impacted by the COVID-19 pandemic.
−Removed: Despite our increased costs, selling, general, and administrative expenses as a percentage of net sales in fiscal 2022 decreased compared to the prior-year period.
+Added: Operating expenses increased 1.5 percent during fiscal 2023 when compared to the same prior year period.
+Added: During fiscal 2022, a $1.1 million goodwill impairment charge was recorded in the Aviara segment, as discussed in Note 7 in the Notes to
+Added: Consolidated Financial Statements.
+Added: Selling, general and administrative expenses as a percentage of net sales were relatively flat during fiscal 2023 when compared to the same prior year period.
Interest Expense.
−Removed: Interest expense decreased $1.9 million driven by lower effective interest rates and lower average outstanding debt balances during fiscal 2022.
−Removed: Loss on Extinguishment of Debt.
−Removed: Loss on extinguishment of debt totaling $0.7 million was recognized upon refinancing the Company’s debt in fiscal 2021.
−Removed: The loss was comprised of unamortized debt issuance costs related to the previously existing credit facility.
+Added: Interest expense increased $1.2 million primarily due to higher effective interest rates.
+Added: Interest Income.
+Added: Interest income of $3.4 million during fiscal 2023 is derived from investments in fiscal 2023 in a portfolio of fixed income securities as part of the Company's cash management strategy.
Income Tax Expense.
−Removed: Our consolidated effective income tax rate increased to 23.8 percent for fiscal 2022 from 21.8 percent for fiscal 2021.
+Added: Our consolidated effective income tax rate decreased to 23.1 percent for fiscal 2023 from 23.3 percent for fiscal 2022.
See Note 10 in Notes to Consolidated Financial Statements for more information.
8 unchanged sentences
Net sales increased 0.6 percent during fiscal 2023, when compared to fiscal 2022.
−Removed: The increase was primarily driven by increased sales volumes, higher prices, favorable model mix, and higher option and content sales.
−Removed: Operating income increased 43.6 percent during fiscal 2022, when compared to the same prior year period.
−Removed: The increase was driven by higher net sales, offset by inflationary pressures and production inefficiencies from supply chain disruptions and labor challenges.
−Removed: Additionally, Selling and marketing expense increased due to prior-year expenses being impacted by the COVID-19 pandemic.
−Removed: Also, General and administrative expenses increased as a result of continued investments in information technology and product development.
+Added: The increase was primarily driven by higher selling prices, partially offset by decreased sales volumes, less favorable model mix, and increased dealer incentives.
+Added: Operating income decreased 3.8 percent during fiscal 2023, when compared to the same prior year period.
+Added: The overall decrease was driven by higher costs from inflationary pressures, higher dealer incentives, less favorable model mix, decreased sales volumes, and increased warranty costs related to prior model year expenses, partially offset by favorable pricing.
+Added: Purchases of property, plant, and equipment increased $10.8 million during fiscal 2023, when compared to fiscal 2022.
+Added: The increase was due to capital spending focused on facility enhancements, strategic initiatives, and information technology.
Crest Segment
5 unchanged sentences
Net sales per unit
−Removed: Net sales increased 37.2 percent during fiscal 2022, when compared to fiscal 2021, as a result of higher sales volumes and higher prices.
−Removed: Operating income increased 46.2 percent during fiscal 2022, when compared to the same prior year period, primarily due to higher net sales, offset by inflationary pressures.
−Removed: Purchases of property, plant, and equipment increased $3.3 million during fiscal 2022, when compared to the same prior-year period due to investments in manufacturing capacity expansion and maintenance capital.
−Removed: NauticStar Segment
−Removed: The following table sets forth NauticStar segment results for the fiscal years ended:
−Removed: (Dollar amounts in thousands)
−Removed: Operating loss
−Removed: Purchases of property, plant and equipment
−Removed: Unit sales volume
−Removed: Net sales per unit
−Removed: Net sales increased 10.7 percent during fiscal 2022, when compared to fiscal 2021.
−Removed: The increase was primarily driven by higher prices, higher option sales, and favorable model mix, partially offset by decreased sales volumes.
−Removed: Operating loss was $38.3 million for fiscal 2022, compared to $2.7 million for fiscal 2021.
−Removed: Benefits from higher sales prices were offset by supply chain disruptions, labor challenges, and higher costs from inflationary pressures.
−Removed: Additionally, $23.8 million was recorded for impairment charges related to other intangible assets and fixed assets, as discussed in Notes 4 and 5 in Notes to Consolidated Financial Statements.
−Removed: Moreover, for fiscal 2022, $1.2 million in expense was recognized for third-party consulting fees in an effort to improve operational efficiency and increase throughput at the NauticStar segment.
+Added: Net sales increased 0.3 percent during fiscal 2023, when compared to fiscal 2022, as a result of higher prices, and favorable model mix and options, partially offset by decreased unit volume and increased dealer incentives.
+Added: Operating income increased 1.1 percent during fiscal 2023, when compared to the same prior year period.
+Added: The increase was primarily due to higher selling prices, and favorable model mix and options, partially offset by higher costs from inflationary pressures, decreased unit volume, and increased dealer incentives.
+Added: Purchases of property, plant, and equipment increased $3.0 million during fiscal 2023, when compared to the same prior-year period.
+Added: The increase was primarily due to capital spending focused on capacity expansion.
Aviara Segment
2 unchanged sentences
Operating loss
+Added: Goodwill impairment
Purchases of property, plant and equipment
1 unchanged sentence
Net sales per unit
−Removed: Net sales increased 178.6 percent during fiscal 2022, when compared to fiscal 2021, mainly due to an increase in sales volumes, higher prices, and favorable model mix.
−Removed: Operating loss was $9.0 million for fiscal 2022, compared to $8.3 million for fiscal 2021.
−Removed: Inflation, ramp up related inefficiencies at the Merritt Island facility, including higher overhead costs associated with the new facility, and a goodwill impairment charge recorded during the first quarter of fiscal 2022, offset the benefits from increased net sales.
−Removed: See Note 5 in Notes to Consolidated Financial Statements for more information on the impairment charge.
+Added: Net sales increased 50.2 percent during fiscal 2023, when compared to fiscal 2022, mainly due to increased sales volume and higher selling prices, partially offset by higher dealer incentives.
+Added: Operating loss decreased 50.0 percent for fiscal 2023, when compared to fiscal 2022.
+Added: The change was primarily a result of higher prices, improved production efficiencies, and increased sales volume, partially offset by higher costs from inflationary pressures, and increased dealer incentives.
+Added: Additionally, a goodwill impairment charge was recorded during the first quarter of fiscal 2022.
+Added: Purchases of property, plant, and equipment increased $4.3 million during fiscal 2023, when compared to fiscal 2022.
+Added: The increase was due to capital spending focused on capacity expansion and tooling.
Non-GAAP Measures
−Removed: EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin
−Removed: We define EBITDA as earnings before interest expense, income taxes, depreciation and amortization.
+Added: EBITDA, Adjusted EBITDA, EBITDA Margin, and Adjusted EBITDA Margin
+Added: We define EBITDA as net income from continuing operations, before interest, income taxes, depreciation and amortization.
We define Adjusted EBITDA as EBITDA further adjusted to eliminate certain non-cash charges or other items that we do not consider to be indicative of our core and/or ongoing operations.
−Removed: For the periods presented herein, these adjustments include impairment charges, share-based compensation, operational improvement initiative costs, Aviara transition costs, debt refinancing charges, Aviara startup costs, and COVID-19 shutdown costs.
−Removed: We define Adjusted EBITDA margin as Adjusted EBITDA expressed as a percentage of Net sales.
+Added: For the periods presented herein, these adjustments include share-based compensation, business development consulting costs, goodwill impairment, Aviara transition costs, and debt refinancing charges, as described in more detail below.
+Added: We define EBITDA margin and Adjusted EBITDA margin as EBITDA and Adjusted EBITDA, respectively, expressed as a percentage of Net sales.
Adjusted Net Income and Adjusted Net Income Per Share
−Removed: We define Adjusted Net Income and Adjusted Net Income per share as net income (loss) adjusted to eliminate certain non-cash charges or other items that we do not consider to be indicative of our core and/or ongoing operations and reflecting income tax expense on adjusted net income before income taxes at our estimated annual effective tax rate.
−Removed: For the periods presented herein, these adjustments include impairment charges, income tax expense (benefit), amortization of acquisition intangibles, share-based compensation, operational improvement initiative costs, Aviara transition costs, debt refinancing charges, Aviara startup costs, and COVID-19 shutdown costs.
−Removed: EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted Net Income per share, which we refer to collectively as the Non-GAAP Measures, are not measures of net income (loss) or operating income (loss) as determined under accounting principles generally accepted in the United States, or U.S.
+Added: We define Adjusted Net Income and Adjusted Net Income per share as net income from continuing operations adjusted to eliminate certain non-cash charges or other items that we do not consider to be indicative of our core and/or ongoing operations and reflecting income tax expense on adjusted net income before income taxes at our estimated annual effective tax rate.
+Added: For the periods presented herein, these adjustments include other intangible asset amortization, share-based compensation, business development consulting costs, goodwill impairment, Aviara transition costs, and debt refinancing charges.
+Added: EBITDA, Adjusted EBITDA, EBITDA margin, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted Net Income per share, which we refer to collectively as the Non-GAAP Measures, are not measures of net income or operating income as determined under accounting principles generally accepted in the United States, or U.S.
The Non-GAAP Measures are not measures of performance in accordance with U.S.
−Removed: GAAP and should not be considered as an alternative to net income (loss), net income (loss) per share, or operating cash flows determined in accordance with U.S.
+Added: GAAP and should not be considered as an alternative to net income, net income per share, or operating cash flows determined in accordance with U.S.
Additionally, Adjusted EBITDA is not intended to be a measure of cash flow.
3 unchanged sentences
GAAP measures alone.
−Removed: We believe Adjusted Net Income and Adjusted Net Income per share assists our board of directors, management, investors, and other users of the financial statements in comparing our net income (loss) on a consistent basis from period to period because it removes certain non-cash items and other items that we do not consider to be indicative of our core and/or ongoing operations and reflecting income tax expense on adjusted net income before income taxes at our estimated annual effective tax rate.
+Added: We believe Adjusted Net Income and Adjusted Net Income per share assists our board of directors, management, investors, and other users of the financial statements in comparing our net income on a consistent basis from period to period because it removes certain non-cash items and other items that we do not consider to be indicative of our core and/or ongoing operations and reflecting income tax expense on adjusted net income before income taxes at our estimated annual effective tax rate.
The Non-GAAP Measures have limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under U.S.
7 unchanged sentences
In addition, because not all companies use identical calculations, our presentation of the Non-GAAP Measures may not be comparable to similarly titled measures of other companies, including companies in our industry.
−Removed: The following table presents a reconciliation of net income (loss) as determined in accordance with U.S.
−Removed: GAAP to EBITDA and Adjusted EBITDA, and net income (loss) margin (expressed as a percentage of net sales) to Adjusted EBITDA margin (expressed as a percentage of net sales) for the periods indicated:
−Removed: Net income (loss)
−Removed: Income tax expense (benefit)
+Added: Due to the effects of discontinued operations, as discussed above in “Part I, Item 1.
+Added: Business,”
+Added: the Company's non-GAAP financial measures are presented on a continuing operations basis, for all periods presented.
+Added: The following table presents a reconciliation of net income from continuing operations as determined in accordance with U.S.
+Added: GAAP to EBITDA and Adjusted EBITDA, and net income from continuing operations margin (expressed as a percentage of net sales) to Adjusted EBITDA margin (expressed as a percentage of net sales) for the periods indicated:
+Added: Net income from continuing operations
+Added: Income tax expense
Interest expense
+Added: Interest income
Depreciation and amortization
−Removed: Impairments (a)
Share-based compensation
−Removed: Operational improvement initiative (b)
+Added: Business development consulting costs (a)
+Added: Goodwill impairment (b)
Aviara transition costs (c)
Debt refinancing charges (d)
−Removed: Aviara start-up costs (e)
−Removed: COVID-19 shutdown costs (f)
Adjusted EBITDA
−Removed: Represents non-cash charges of $1.1 million recorded in the Aviara segment for impairment of goodwill and $23.8 million recorded in the NauticStar segment for impairment of other intangible assets and fixed assets in fiscal 2022, and non-cash charges recorded in the NauticStar and Crest segments for impairment of goodwill and trade name intangible assets in fiscal 2020.
−Removed: See Notes 4 and 5 within the Notes to the Consolidated Financial Statements for more information on impairment charges.
−Removed: Represents third-party consulting fees associated with the operational improvement initiative at our NauticStar segment.
−Removed: Represents costs to transition production of the Aviara brand from Vonore, Tennessee to Merritt Island, Florida.
+Added: (a) Represents non-recurring third-party costs associated with business development activities, primarily relating to consulting costs for evaluation and execution of internal growth and other strategic initiatives.
+Added: The evaluation and execution of the internal growth and other strategic initiatives is a bespoke initiative, and the costs associated therewith do not constitute normal recurring cash operating expenses necessary to operate the Company's business.
+Added: (b) Represents a non-cash charge recorded in the Aviara segment for impairment of goodwill.
+Added: (c) Represents costs to transition production of the Aviara brand from Vonore, Tennessee to Merritt Island, Florida.
Costs include duplicative overhead costs and costs not indicative of ongoing operations (such as training and facility preparation).
−Removed: Represents loss recognized upon refinancing the Company’s debt in fiscal 2021.
+Added: (d) Represents loss recognized upon refinancing the Company’s debt in fiscal 2021.
The loss is comprised of unamortized debt issuance costs related to the previously existing credit facility and third-party legal costs associated with the refinancing.
−Removed: Represents start-up costs associated with Aviara, a completely new boat brand in an industry category previously not served by the Company.
−Removed: Start-up costs presented for fiscal 2020 are related to the AV36 and AV40 models.
−Removed: Represents lump sum severance payments and costs related to temporary continuation of healthcare benefits for certain laid off employees, in connection with the COVID-19 pandemic.
−Removed: The following table sets forth a reconciliation of net income (loss) as determined in accordance with U.S.
+Added: The following table sets forth a reconciliation of net income from continuing operations as determined in accordance with U.S.
GAAP to Adjusted Net Income for the periods indicated:
(Dollars in thousands, except per share)
−Removed: Net income (loss)
−Removed: Income tax expense (benefit)
−Removed: Impairments (a)
+Added: Net income from continuing operations
+Added: Income tax expense
Amortization of acquisition intangibles
Share-based compensation
−Removed: Operational improvement initiative (b)
+Added: Business development consulting costs (a)
+Added: Goodwill impairment (b)
Aviara transition costs (c)
Debt refinancing charges (d)
−Removed: Aviara start-up costs (e)
−Removed: COVID-19 shutdown costs (f)
Adjusted Net Income before income taxes
−Removed: Adjusted income tax expense (g)
+Added: Adjusted income tax expense (e)
Adjusted Net Income
Adjusted Net Income per share:
−Removed: Weighted average shares used for the computation of (h) :
+Added: Weighted average shares used for the computation of (e) :
Basic Adjusted Net Income per share
Diluted Adjusted Net Income per share
−Removed: Represents non-cash charges of $1.1 million recorded in the Aviara segment for impairment of goodwill and $23.8 million recorded in the NauticStar segment for impairment of other intangible assets and fixed assets in fiscal 2022, and non-cash charges recorded in the NauticStar and Crest segments for impairment of goodwill and trade name intangible assets in fiscal 2020.
−Removed: See Notes 4 and 5 within the Notes to the Consolidated Financial Statements for more information on impairment charges.
−Removed: Represents third-party consulting fees associated with the operational improvement initiative at our NauticStar segment.
−Removed: Represents costs to transition production of the Aviara brand from Vonore, Tennessee to Merritt Island, Florida.
−Removed: Costs include duplicative overhead costs and costs not indicative of ongoing operations (such as training and facility preparation).
−Removed: Represents loss recognized upon refinancing the Company’s debt in fiscal 2021.
−Removed: The loss is comprised of unamortized debt issuance costs related to the previously existing credit facility and third-party legal costs associated with the refinancing.
−Removed: Represents start-up costs associated with Aviara, a completely new boat brand in an industry category previously not served by the Company.
−Removed: Start-up costs presented for fiscal 2020 are related to the AV36 and AV40 models.
−Removed: Represents lump sum severance payments and costs related to temporary continuation of healthcare benefits for certain laid off employees, in connection with the COVID-19 pandemic.
−Removed: Reflects income tax expense at a tax rate of 23.0% for each period presented.
−Removed: Represents the Weighted Average Shares Used for the Computation of Basic and Diluted earnings (loss) per share as presented on the Consolidated Statements of Operations to calculate Adjusted Net Income per diluted share for all periods presented herein.
−Removed: The following table presents the reconciliation of net income (loss) per diluted share to Adjusted net income per diluted share for the periods presented:
−Removed: Net income (loss) per diluted share
+Added: The following table presents the reconciliation of net income from continuing operations per diluted share to Adjusted net income per diluted share for the periods presented:
+Added: Net income from continuing operations per diluted share
Impact of adjustments:
−Removed: Income tax expense (benefit)
−Removed: Impairments (a)
+Added: Income tax expense
Amortization of acquisition intangibles
Share-based compensation
−Removed: Operational improvement initiative (b)
+Added: Business development consulting costs (a)
+Added: Goodwill impairment (b)
Aviara transition costs (c)
Debt refinancing charges (d)
−Removed: Aviara start-up costs (e)
−Removed: COVID-19 shutdown costs (f)
Adjusted Net Income per diluted share before income taxes
−Removed: Impact of adjusted income tax expense on net income per diluted share before income taxes (g)
+Added: Impact of adjusted income tax expense on net income per diluted share before income taxes (e)
Adjusted Net Income per diluted share
−Removed: Represents non-cash charges of $1.1 million recorded in the Aviara segment for impairment of goodwill and $23.8 million recorded in the NauticStar segment for impairment of other intangible assets and fixed assets in fiscal 2022, and non-cash charges recorded in the NauticStar and Crest segments for impairment of goodwill and trade name intangible assets in fiscal 2020.
−Removed: See Notes 4 and 5 within the Notes to the Consolidated Financial Statements for more information on impairment charges.
−Removed: Represents third-party consulting fees associated with the operational improvement initiative at our NauticStar segment.
−Removed: Represents costs to transition production of the Aviara brand from Vonore, Tennessee to Merritt Island, Florida.
+Added: (a) Represents non-recurring third-party costs associated with business development activities, primarily relating to consulting costs for evaluation and execution of internal growth and other strategic initiatives.
+Added: The evaluation and execution of the internal growth and other strategic initiatives is a bespoke initiative, and the costs associated therewith do not constitute normal recurring cash operating expenses necessary to operate the Company's business.
+Added: (b) Represents a non-cash charge recorded in the Aviara segment for impairment of goodwill.
+Added: (c) Represents costs to transition production of the Aviara brand from Vonore, Tennessee to Merritt Island, Florida.
Costs include duplicative overhead costs and costs not indicative of ongoing operations (such as training and facility preparation).
−Removed: Represents loss recognized upon refinancing the Company’s debt in fiscal 2021.
+Added: (d) Represents loss recognized upon refinancing the Company’s debt in fiscal 2021.
The loss is comprised of unamortized debt issuance costs related to the previously existing credit facility and third-party legal costs associated with the refinancing.
−Removed: Represents start-up costs associated with Aviara, a completely new boat brand in an industry category previously not served by the Company.
−Removed: Start-up costs presented for fiscal 2020 are related to the AV36 and AV40 models.
−Removed: Represents lump sum severance payments and costs related to temporary continuation of healthcare benefits for certain laid off employees, in connection with the COVID-19 pandemic.
−Removed: Reflects income tax expense at a tax rate of 23.0% for each period presented.
+Added: (e) Reflects income tax expense at a tax rate of 23.0% for each period presented.
Liquidity and Capital Resources
−Removed: Our primary liquidity and capital resource needs are to finance working capital, fund capital expenditures, service our debt, and fund our stock repurchase program.
−Removed: Our principal sources of liquidity are our cash balance, cash generated from operating activities, our revolving credit agreement and the refinancing and/or new issuance of long-term debt.
+Added: Our primary liquidity and capital resource needs are to finance working capital, fund capital expenditures, service our debt, fund potential acquisitions, and fund our stock repurchase program.
+Added: Our principal sources of liquidity are our cash balance, held-to-maturity securities, cash generated from operating activities, our revolving credit agreement and the refinancing and/or new issuance of long-term debt.
Cash and cash equivalents totaled $19.8 million as of June 30, 2023, a decrease of $14.4 million from $34.2 million as of June 30, 2022.
−Removed: Total debt as of June 30, 2022 and June 30, 2021 was $56.5 million and $93.1 million, respectively.
−Removed: Our working capital was impacted by the $25.2 million increase in inventory during fiscal 2022 mainly due to an increase in raw materials to support higher production volumes and to increase safety stock to manage supply chain risk.
−Removed: As of June 30, 2022, we have repaid all amounts outstanding under the Revolving Credit Facility, leaving $100.0 million of available borrowing capacity.
−Removed: As of June 30, 2022, we had $56.5 million outstanding under the Term Loan.
−Removed: Refer to Note 7 — Long Term Debt in the Notes to Consolidated Financial Statements for further details.
+Added: Held-to-maturity securities totaled $91.6 million as of June 30, 2023.
+Added: As of June 30, 2022, there were no outstanding held-to-maturity securities.
+Added: As of June 30, 2023, we had no amounts outstanding under the Revolving Credit Facility, leaving $100.0 million of available borrowing capacity.
+Added: Total debt outstanding under the Term Loan as of June 30, 2023 and June 30, 2022 was $53.7 million and $56.5 million, respectively.
+Added: Refer to Note 9 —
+Added: Long Term Debt in the Notes to Consolidated Financial Statements for further details.
On June 24, 2021, the board of directors of the Company authorized a stock repurchase program that allows for the repurchase of up to $50.0 million of our common stock during the three-year period ending June 24, 2024.
−Removed: During fiscal 2022, the Company repurchased 975,161 shares of common stock for $25.5 million in cash, including related fees and expenses.
+Added: During fiscal 2023 and fiscal 2022, the Company repurchased 872,055 shares and 975,161 shares of common stock for $22.9 million and $25.5 million, respectively, in cash, including related fees and expenses.
As of June 30, 2023, there was $1.6 million of availability remaining under the stock repurchase program.
−Removed: We believe our cash balance, cash from operations, and our ability to borrow, will be sufficient to provide for our liquidity and capital resource needs, including authorized stock repurchases.
−Removed: The following table summarizes the cash flows from operating, investing, and financing activities:
+Added: On July 24, 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.
+Added: The new authorization will become effective upon the expiration of the Company's existing $50 million share repurchase authorization.
+Added: We believe our cash balance, investments, cash from operations, and our ability to borrow, will be sufficient to provide for our liquidity and capital resource needs.
+Added: The following table and discussion below relate to our cash flows from continuing operations for operating, investing, and financing activities:
Total cash provided by (used in):
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Financing activities
−Removed: Net change in cash
−Removed: Fiscal 2022 Cash Flow
−Removed: Net cash provided by operating activities was $73.3 million, mainly due to net income, partially offset by working capital usage.
+Added: Net change in cash from continuing operations
+Added: Fiscal 2023 Cash Flow from Continuing Operations
+Added: Net cash provided by operating activities was $136.8 million, primarily due to net income, as well as reductions of working capital.
Working capital is defined as accounts receivable, income tax receivable, inventories, and prepaid expenses and other current assets net of accounts payable, income tax payable, and accrued expenses and other current liabilities as presented in the consolidated balance sheets, excluding the impact of acquisitions and non-cash adjustments.
−Removed: Working capital usage primarily consisted of an increase in inventory, accounts receivable and prepaid expenses and other current assets, partially offset by an increase in accrued expenses and other current liabilities and accounts payable.
−Removed: As discussed above, inventory increased $25.2 million.
+Added: Favorable working capital change primarily consisted of an increase in accrued expenses and other current liabilities, and a decrease in accounts receivable, offset by a decrease in accounts payable, and an increase in prepaid expenses and other current assets.
+Added: Accrued expenses and other current liabilities increased as a result of an increase in warranty costs and dealer incentives.
+Added: Accounts receivable decreased primarily as a result of lower sales at the end of the period compared to the end of the prior-year period.
+Added: Accounts payable decreased as a result of decreased production levels.
+Added: Prepaid and other current assets increased primarily as a result of higher general insurance premiums.
+Added: Net cash used in investing activities was $120.9 million, due to net investments in held-to-maturity securities of $90.6 million and $30.3 million of capital expenditures.
+Added: Our capital spending was focused on tooling, capacity expansion, strategic initiatives, and information technology.
+Added: Net cash used in financing activities was $27.1 million, which included net payments of $3.0 million on long-term debt and $22.9 million of stock repurchases.
+Added: Fiscal 2022 Cash Flow from Continuing Operations
+Added: Net cash provided by operating activities was $82.4 million, mainly due to net income, partially offset by working capital usage.
+Added: Working capital usage primarily consisted of an increase in inventory, accounts receivable and prepaid and other current assets, partially offset an increase in accrued expenses and other current liabilities and accounts payable.
+Added: Inventory increased due to an increase in raw materials to support higher production volumes and to increase safety stock to manage supply chain risk.
Accounts receivable increased due to increased sales.
Prepaid and other current assets increased due to higher general insurance premiums.
−Removed: Accrued expenses and other current liabilities increased due to an increase in warranty costs and dealer incentives.
+Added: Accrued expenses and other
+Added: current liabilities increased due to an increase in warranty costs and dealer incentives.
Accounts payable increased as a result of increased production levels.
−Removed: Net cash used for investing activities was $15.8 million, which included capital expenditures.
+Added: Net cash used in investing activities was $12.3 million, which included capital expenditures.
Our capital spending was focused on expanding our capacity, maintenance capital, and investments in information technology.
−Removed: Net cash used for financing activities was $62.5 million, which included net payments of $36.7 million on long-term debt and stock repurchases totaling $25.5 million.
−Removed: Fiscal 2021 Cash Flow
−Removed: Net cash provided by operating activities in fiscal 2021 totaled $68.5 million versus $30.2 million in fiscal 2020.
−Removed: The increase is primarily due to higher net earnings, net of non-cash items, partially offset by changes in working capital that were affected by production ramp-up activities as we experienced an increase in retail demand.
−Removed: Accounts receivable increased $5.9 million primarily due to increased sales across all segments.
−Removed: Inventory increased $28.6 million, driven by increases to support higher production
−Removed: volumes and to increase safety stock to manage supply chain risk.
−Removed: Accounts payable increased $13.4 million primarily due to timing of payments and higher production activities.
−Removed: Accrued expenses and other current liabilities increased $12.2 million primarily driven by incentive -based compensation related to higher net earnings and higher warranty reserves for the increased sales volumes.
−Removed: Net cash used for investing activities was $27.8 million, which primarily included capital expenditures.
−Removed: Our capital spending was focused on expanding our capacity by purchasing the Merritt Island Facility for $14.2 million, capital related to the Aviara transition to the Merritt Island Facility, and maintenance capital.
−Removed: Net cash used for financing activities was $17.8 million and primarily related to net payments of long-term debt.
+Added: Net cash used in financing activities was $62.5 million, which included net payments of $36.7 million on long-term debt and $25.5 million of stock repurchases.
Off-Balance Sheet Arrangements
1 unchanged sentence
Contractual Obligations
−Removed: As of June 30, 2022, the Company’s material cash obligations were as follows:
−Removed: Long-Term Debt Obligations — See Note 7 – Long-Term Debt in the accompanying Notes to Consolidated Financial Statements for further information.
−Removed: Interest on Long-Term Debt Obligations — As of June 30, 2022, the Company has estimated total interest payments on its outstanding long-term debt obligations of $6.6 million, of which $1.8 million is due during the next 12 months.
+Added: As of June 30, 2023, the Company’s material cash obligations were as follows:
+Added: Long-Term Debt Obligations —
+Added: See Note 9 –
+Added: Long-Term Debt in the accompanying Notes to Consolidated Financial Statements for further information.
+Added: Interest on Long-Term Debt Obligations —
+Added: As of June 30, 2023, the Company has estimated total interest payments on its outstanding long-term debt obligations of $8.9 million, of which $4.0 million is due during the next 12 months.
Interest on variable rate debt instruments was calculated using interest rates in effect for our borrowings as of June 30, 2023 and holding them constant for the life of the instrument.
−Removed: Purchase Commitments — As of June 30, 2022, the Company is committed to purchasing $44.8 million of engines, of which $15.7 million is committed during the next 12 months.
+Added: Purchase Commitments —
+Added: As of June 30, 2023, the Company is committed to purchasing $28.5 million of engines, of which $19.5 million is committed during the next 12 months.
See Note 12 in the accompanying Notes to Consolidated Financial Statements for more information.
−Removed: Repurchase Obligations — The Company has reserves to cover potential losses associated with repurchase obligations based on historical experience and current facts and circumstances.
+Added: Repurchase Obligations —
+Added: The Company has reserves to cover potential losses associated with repurchase obligations based on historical experience and current facts and circumstances.
We incurred no material impact from repurchase events during fiscal 2023, 2022, or 2021.
6 unchanged sentences
In the application of these policies, certain estimates are made that may have a material impact on our financial condition and results of operations.
−Removed: Actual results could differ from those estimates and cause our reported net income (loss) to vary significantly from period to period.
−Removed: For additional information regarding these policies, see Note 1 – Significant Accounting Policies in Notes to Consolidated Financial Statements.
+Added: Actual results could differ from those estimates and cause our reported net income to vary significantly from period to period.
+Added: For additional information regarding these policies, see Note 1 –
+Added: Significant Accounting Policies in Notes to Consolidated Financial Statements.
Asset Impairment
The Company reviews goodwill for impairment at its annual impairment testing date, which is June 30, and whenever events or changes in circumstances indicate that the fair value of a reporting unit may be below its carrying value.
−Removed: As part of the impairment tests, the Company may perform a qualitative, rather than quantitative, assessment to determine whether the fair values of its reporting units are “more likely than not” to be greater than their carrying values.
+Added: As part of the impairment tests, the Company may perform a qualitative, rather than quantitative, assessment to determine whether the fair values of its reporting units are “more likely than not”
+Added: to be greater than their carrying values.
In performing this qualitative analysis, the Company considers various factors, including the effect of market or industry changes and the reporting units' actual results compared to projected results.
2 unchanged sentences
If the fair value exceeds the carrying value, goodwill is not considered impaired.
−Removed: If the carrying amount exceeds the fair value then the goodwill is considered impaired and an impairment loss is recognized in an amount by which the carrying value exceeds the reporting unit’s fair value, not to exceed the carrying amount of the goodwill allocated to that reporting unit.
+Added: If the carrying amount exceeds the fair value then the goodwill is considered impaired and an impairment loss is recognized in an amount by which the carrying value exceeds the reporting unit’s fair value, not to exceed the carrying amount of the goodwill allocated to that reporting unit.
The Company calculates the fair value of its reporting units considering both the income approach and market approach.
The income approach calculates the fair value of the reporting unit using a discounted cash flow method.
−Removed: Internally forecasted future cash flows, which the Company believes reasonably approximate market participant assumptions, are discounted using a weighted average cost of capital (“Discount Rate”) developed for each reporting unit.
−Removed: The Discount Rate is developed using market observable inputs, as well as considering whether or not there is a measure of risk related to the specific reporting unit’s forecasted performance.
−Removed: Fair value under the market approach is determined for each reporting unit by applying market multiples for comparable public companies to the reporting unit’s financial results.
−Removed: The key judgements in these calculations are the assumptions used in determining the reporting unit’s forecasted future performance, including revenue growth and operating margins, as well as the perceived risk associated with those forecasts in determining the Discount Rate, along with selecting representative market multiples.
−Removed: As discussed further in Note 5 to the Consolidated Financial Statements, during the years ended June 30, 2022 and 2020, the Company performed quantitative tests and recognized $1.1 million and $44.4 million in goodwill impairment charges related to its Aviara and its Crest and NauticStar reporting units, respectively.
+Added: Internally forecasted future cash flows, which the Company believes reasonably approximate market participant assumptions, are discounted using a weighted average cost of capital (“Discount Rate”) developed for each reporting unit.
+Added: The Discount Rate is developed using market observable inputs, as well as considering whether or not there is a measure of risk related to the specific reporting unit’s forecasted performance.
+Added: Fair value under the market approach is determined for each reporting unit by applying market multiples for comparable public companies to the reporting unit’s financial results.
+Added: The key judgements in these calculations are the assumptions used in determining the reporting unit’s forecasted future performance, including revenue growth and operating margins, as well as the perceived risk associated with those forecasts in determining the Discount Rate, along with selecting representative market multiples.
+Added: As discussed further in Note 7 to the Consolidated Financial Statements, during the year ended June 30, 2022, the Company performed a quantitative test and recognized a $1.1 million goodwill impairment charge related to its Aviara reporting unit.
As of June 30, 2023, only the MasterCraft reporting unit has a goodwill balance.
13 unchanged sentences
Intangible assets not subject to amortization are assessed for impairment at least annually and whenever events or changes in circumstances indicate that it is more likely than not that an asset may be impaired.
−Removed: As part of the annual test, the Company may perform a qualitative, rather than quantitative, assessment to determine whether each trade name intangible asset is “more likely than not” impaired.
+Added: As part of the annual test, the Company may perform a qualitative, rather than quantitative, assessment to determine whether each trade name intangible asset is “more likely than not”
In performing this qualitative analysis, the Company considers various factors, including macroeconomic events, industry and market events and cost related events.
−Removed: If the “more likely than not” criteria is not met, the impairment test for indefinite-lived intangible assets consists of a comparison of the fair value of the intangible asset with its carrying amount.
+Added: If the “more likely than not”
+Added: criteria is not met, the impairment test for indefinite-lived intangible assets consists of a comparison of the fair value of the intangible asset with its carrying amount.
An impairment loss is recognized for the amount by which the carrying value exceeds the fair value of the asset.
−Removed: As discussed further in Note 5 to the Consolidated Financial Statements, during the years ended June 30, 2022 and 2020, the Company performed quantitative tests related to its indefinite-lived intangible assets and, during the year ended June 30, 2022, the Company also performed a recoverability analysis related to its dealer network intangible asset within the NauticStar reporting unit which is subject to amortization.
−Removed: During the years ended June 30, 2022 and 2020, the Company recognized $18.5 million and $12.0 million in intangible asset impairment charges related to its NauticStar and to its Crest and NauticStar reporting units, respectively.
+Added: As discussed further in Note 3 to the Consolidated Financial Statements, during the year ended June 30, 2022, the Company recognized $18.5 million in intangible asset impairment charges related to its indefinite lived intangible asset and its dealer network intangible asset within the NauticStar reporting unit.
+Added: These charges are included in the loss from discontinued operations.
Long-Lived Assets
The Company assesses the potential for impairment of its long-lived assets if facts and circumstances, such as declines in sales, earnings, or cash flows or adverse changes in the business climate, suggest that they may be impaired.
−Removed: A current expectation that,
−Removed: more likely than not, a long-lived asset (asset group) will be sold or otherwise disposed of significantly before the end of its previously estimated useful life will also trigger a review for impairment.
−Removed: The Company performs its assessment by comparing the book value of the asset groups to the estimated future undiscounted cash flows associated with the asset group s.
+Added: A current expectation that, more likely than not, a long-lived asset (asset group) will be sold or otherwise disposed of significantly before the end of its previously estimated useful life will also trigger a review for impairment.
+Added: The Company performs its assessment by comparing the book value of the asset groups to the estimated future undiscounted cash flows associated with the asset groups.
If any impairment in the carrying value of its long-lived assets is indicated, the assets would be adjusted to an estimate of fair value.
−Removed: As discussed further in Notes 4 and 5 to the Consolidated Financial Statements, during the year ended June 30, 2022, the Company recognized $5.3 million in long-lived asset impairment charges related to its NauticStar reporting unit which adjusted the related assets to their estimated fair value.
−Removed: Product Warranties — The Company offers warranties on the sale of certain products for periods of between one and five years from the date of retail sale.
+Added: As discussed further in Note 3 to the Consolidated Financial Statements, during the year ended June 30, 2022, the Company recognized $5.3 million in long-lived asset impairment charges related to its NauticStar reporting unit.
+Added: Product Warranties —
+Added: The Company offers warranties on the sale of certain products for periods of between one and five years from the date of retail sale.
These warranties require us or our dealers to repair or replace defective products during the warranty period at no cost to the consumer.
−Removed: We estimate the costs that may be incurred under our basic limited warranty and record as a liability the amount of such costs at the time the product revenue is recognized.
+Added: We estimate the costs that may be incurred under our basic limited warranty and record as a liability the amount
+Added: of such costs at the time the product revenue is recognized.
The key judgements that affect our estimate for warranty liability include the number of units sold, historical and anticipated rates of warranty claims and cost per claim.
1 unchanged sentence
We also adjust our liability for specific warranty matters when they become known and exposure can be estimated.
−Removed: Future warranty claims may differ from our estimate of the warranty liability, which could lead to changes in the Company’s warranty liability in future periods.
−Removed: Income Taxes— We are subject to income taxes in the United States of America and the United Kingdom.
−Removed: Our effective tax rates differ from the statutory rates, primarily due to changes in non-deductible expenses and the valuation allowance, as further described in Note 8 in Notes to Consolidated Financial Statements.
+Added: Future warranty claims may differ from our estimate of the warranty liability, which could lead to changes in the Company’s warranty liability in future periods.
+Added: Income Taxes—
+Added: We are subject to income taxes in the United States of America and the United Kingdom.
+Added: Our effective tax rates differ from the statutory rates, primarily due to a change in state taxes as a result of selling NauticStar, as further described in Note 10 in Notes to Consolidated Financial Statements.
Significant judgment is required in evaluating our uncertain tax positions and determining our provision for income taxes.
3 unchanged sentences
The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate, as well as the related net interest.
−Removed: Revenue Recognition — The Company’s revenue is derived primarily from the sale of boats and trailers, marine parts, and accessories to its independent dealers.
+Added: Revenue Recognition —
+Added: The Company’s revenue is derived primarily from the sale of boats and trailers, marine parts, and accessories to its independent dealers.
The Company recognizes revenue when obligations under the terms of a contract are satisfied and control over promised goods is transferred to a customer.
15 unchanged sentences
Dealers generally have no right to return unsold boats.
−Removed: Occasionally, the Company may accept returns in limited circumstances and at the Company’s discretion under its warranty policy.
+Added: Occasionally, the Company may accept returns in limited circumstances and at the Company’s discretion under its warranty policy.
The Company may be obligated, in the event of default by a dealer, to accept returns of unsold boats under its repurchase commitment to floor plan financing providers, who are able to obtain such boats through foreclosure.
3 unchanged sentences
The Company accrues the estimated fair value of this obligation based on the age of inventory currently under floor plan financing and estimated credit quality of dealers holding the inventory.
−Removed: Inputs used to estimate this fair value include significant unobservable inputs that reflect the Company’s assumptions about the inputs that market participants would use and, therefore, this liability is classified within Level 3 of the fair value hierarchy.
+Added: Inputs used to estimate this fair value include significant unobservable inputs that reflect the Company’s assumptions about the inputs that market participants would use and, therefore, this liability is classified within Level 3 of the fair value hierarchy.
We incurred no material impact from repurchase events during fiscal 2023, 2022, or 2021.
1 unchanged sentence
New Accounting Pronouncements
−Removed: See “Part II, Item 8.
−Removed: Financial Statements and Supplementary Data — Note 1 — Significant Accounting Policies — New Accounting Pronouncements.”
+Added: See “Part II, Item 8.
+Added: Financial Statements and Supplementary Data —
+Added: Note 1 —
+Added: Significant Accounting Policies —
+Added: New Accounting Pronouncements.”
+Added: QUANTITATIVE AND QUALITATI VE DISCLOSURES ABOUT MARKET RISK.
+Added: Market risk represents the risk of changes in the value of market risk sensitive instruments caused by fluctuations in foreign exchange rates, interest rates, and commodity prices.
+Added: Changes in these factors could cause fluctuations in the results of our operations and cash flows.
+Added: In the ordinary course of business, we are primarily exposed to inflation and interest rate risks.
+Added: We rely on 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.
+Added: The prices for these raw materials, parts, and components fluctuate depending on market conditions and, in some instances, commodity prices or trade policies, including tariffs.
+Added: Substantial increases in the prices of raw materials, parts, and components would increase our operating costs, and could reduce our profitability if we are unable to recoup the increased costs through higher product prices or improved operating efficiencies.
+Added: As of June 30, 2023, we had $54.0 million of long-term debt outstanding, bearing interest at the effective interest rate of 6.50%.
+Added: See Note 9 in Notes to Consolidated Financial Statements for more information regarding our long-term debt.
+Added: A hypothetical 1% increase or decrease in interest rates would have resulted in a $0.6 million change to our interest expense for fiscal 2023.
+Added: FINANCIAL STATEMENT S AND SUPPLEMENTARY DATA.
+Added: The financial statements and supplementary financial information required to be filed under this Item 8 are presented in Part IV, Item 15 of this Form 10-K.
+Added: CHANGES IN AND DISAGREEMENTS WITH ACCOUN TANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
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.