What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2024-08-30 compared with 2023-08-30 · 153 added, 176 removed, 223 unchanged (60% of the section changed)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

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.

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.

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.

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”

Our actual results may differ materially from those contained in or implied by any forward-looking statements.

This section generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.

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.

Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 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, 2023 , which was filed with the SEC on August 30, 2023.

Key Performance Measures

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:

Unit sales volume —

We define unit sales volume as the number of our boats sold to our dealers during a period.

Net sales per unit —

We define net sales per unit as net sales divided by unit sales volume.

Gross margin —

We define gross margin as gross profit divided by net sales, expressed as a percentage.

Net income margin —

We define net income margin as net income from continuing operations divided by net sales, expressed as a percentage.

Adjusted EBITDA —

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.

For a reconciliation of EBITDA to Adjusted EBITDA, see “Non-GAAP Measures”

Adjusted EBITDA margin —

We define Adjusted EBITDA margin as Adjusted EBITDA divided by net sales, expressed as a percentage.

For a reconciliation of Adjusted EBITDA margin to net income margin, see “Non-GAAP Measures”

Adjusted Net Income —

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.

For a reconciliation of net income from continuing operations to Adjusted Net Income, see “Non-GAAP Measures”

Discontinued Operations

On September 2, 2022, the Company completed the sale of its NauticStar business.

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.

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.

See Note 3 in Notes to Consolidated Financial Statements for more information on Discontinued Operations.

• Unit sales volume — We define unit sales volume as the number of our boats sold to our dealers during a period.

• Net sales per unit — We define net sales per unit as net sales divided by unit sales volume.

• Gross margin — We define gross margin as gross profit divided by net sales, expressed as a percentage.

• Net income margin — We define net income margin as net income from continuing operations divided by net sales, expressed as a percentage.

• Adjusted EBITDA — 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.

For a reconciliation of EBITDA to Adjusted EBITDA, see “Non-GAAP Measures” below.

• Adjusted EBITDA margin — We define Adjusted EBITDA margin as Adjusted EBITDA divided by net sales, expressed as a percentage.

For a reconciliation of Adjusted EBITDA margin to net income margin, see “Non-GAAP Measures” below.

• Adjusted Net Income — 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.

For a reconciliation of net income from continuing operations to Adjusted Net Income, see “Non-GAAP Measures” below.

Fiscal 2024 Overview

Net sales were up slightly during fiscal 2023 when compared to fiscal 2022.

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.

We achieved our goal of rebalancing dealer inventories;

however, due to a slowing retail environment, the number of wholesale units sold were lower when compared to prior year.

Model mix trended towards smaller-sized models as more boats were sold as inventory stock versus retail-sold boats.

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.

Gross margin declined during fiscal 2023 when compared to fiscal 2022.

Offsetting the increased net sales discussed above were increased expenses related to material, labor and overhead inflation.

Other contributory expenses included increased insurance premiums and warranty-related costs.

Overall, including the impact of dealer incentives in net sales noted above, the gross margin percentage declined 60 basis points.

Operating expenses slightly increased during fiscal 2023 when compared to fiscal 2022.

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.

As anticipated, general market volatility and economic headwinds created uncertainty and softness in the retail environment for fiscal 2024.

As previously disclosed, because of the anticipated softness in retail demand, the Company approached its wholesale production plan for fiscal 2024 with a prudent level of caution and a focus on rebalancing dealer inventories consistent with the expected retail demand.

As a result, we experienced lower cost absorption and decreased sales volume, leading to lower net sales and gross margin compared to the prior fiscal year.

On March 4, 2024, Frederick Brightbill, Chief Executive Officer (“CEO”) and Chairman of the Board announced his retirement as CEO of the Company, effective March 18, 2024, and as Chairman effective June 30, 2024.

In connection with Mr.

Brightbill’s retirement, the Company appointed Brad Nelson as CEO, effective March 18, 2024.

Nelson also joined the Board at that time.

Roch Lambert, the Company’s former Lead Independent Director, assumed the role of Chairman of the Board, effective July 1, 2024.

Brightbill will serve as a consultant to the Company through June 30, 2025.

During fiscal 2024, we recognized $1.7 million of CEO transition costs in General and administrative expense within the consolidated statements of operations.

CEO transition costs include amounts paid to the former CEO under the terms of his retirement agreements and related legal fees.

Also included are recruiting and relocation costs related to the new CEO.

Aviara Impairment Activity

During the fourth quarter of fiscal 2024, the Company identified an indication of impairment related to its Aviara segment’s property, plant, equipment and inventory.

After performing a recoverability test, the Company recognized an impairment charge of $9.8 million, which adjusted the related assets to their estimated fair value.

See Notes 5 and 6 for further information related to the impairment analysis.

Subsequent to year-end, the Company announced that it had entered into an asset exchange agreement under which it will transfer rights to its Aviara brand of luxury dayboats and certain related assets to a third party.

The Aviara Transaction is subject to customary closing conditions and is expected to close in the first quarter of fiscal 2025.

Following consummation of the Aviara Transaction, we intend to close the Merritt Island facility and offer the property for open market sale.

The Company intends to classify Aviara as discontinued operations beginning in the first quarter of fiscal 2025.

Results of Operations

9 unchanged sentences

Amortization of other intangible assets

Goodwill impairment

Total operating expenses

12 unchanged sentences

Consolidated net sales per unit

Net Sales increased 3.2 percent for fiscal 2023 when compared to fiscal 2022.

The increase was a result of higher prices, partially offset by decreased sales volumes, increased dealer incentives, and less favorable model mix.

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.

Net Sales decreased 44.6 percent for fiscal 2024 when compared to fiscal 2023.

The decrease was a result of lower unit volume, an increase in dealer incentives, and unfavorable model mix and options, partially offset by higher prices.

Dealer incentives

include higher floor plan financing costs from higher dealer inventories entering the year and higher interest rates, as well as rebate programs and other measures taken by the Company to assist dealers as the retail environment remains competitive.

Gross Margin.

Gross Margin percentage declined 730 basis points during fiscal 2024 when compared to fiscal 2023.

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.

Lower margins were the result of lower cost absorption due to planned decreased unit volume and higher dealer incentives, partially offset by higher prices.

Operating Expenses .

Operating expenses increased 1.5 percent during fiscal 2023 when compared to the same prior year period.

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

Consolidated Financial Statements.

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.

Operating expenses increased 12.6 percent during fiscal 2024 when compared to the same prior year period due to non-cash impairment charges of $9.8 million recorded in our Aviara segment and CEO transition costs, partially offset by decreased compensation related expenses.

Interest Expense.

1 unchanged sentence

Interest Income.

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.

Interest income increased $2.4 million during fiscal 2024 primarily due to fiscal 2024 benefiting from a full year of investment income, compared to a partial year in fiscal 2023.

Income Tax Expense.

9 unchanged sentences

Net sales per unit

Net sales increased 0.6 percent during fiscal 2023, when compared to fiscal 2022.

The increase was primarily driven by higher selling prices, partially offset by decreased sales volumes, less favorable model mix, and increased dealer incentives.

Net sales decreased 43.9 percent during fiscal 2024, when compared to fiscal 2023.

The decrease was primarily driven by lower unit volume and increased dealer incentives, partially offset by higher prices and favorable model mix and options.

Operating income decreased 70.8 percent during fiscal 2024, when compared to the same prior year period.

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.

Purchases of property, plant, and equipment increased $10.8 million during fiscal 2023, when compared to fiscal 2022.

The increase was due to capital spending focused on facility enhancements, strategic initiatives, and information technology.

Crest Segment

The following table sets forth Crest segment results for the fiscal years ended:

The overall decrease was driven by decreased sales volume, higher dealer incentives, and CEO transition costs, partially offset by higher prices, favorable model mix and options, decreased compensation related expenses, and decreased sales and marketing expenses.

Purchases of property, plant, and equipment decreased $9.5 million during fiscal 2024, when compared to fiscal 2023.

For fiscal 2024, capital spending was focused on facility enhancements, tooling, and information technology.

Pontoon Segment

The following table sets forth Pontoon segment results for the fiscal years ended:

(Dollar amounts in thousands)

Operating income

Operating income (loss)

Purchases of property, plant and equipment

1 unchanged sentence

Net sales per unit

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.

Operating income increased 1.1 percent during fiscal 2023, when compared to the same prior year period.

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.

Purchases of property, plant, and equipment increased $3.0 million during fiscal 2023, when compared to the same prior-year period.

The increase was primarily due to capital spending focused on capacity expansion.

Net sales decreased 57.8 percent during fiscal 2024, when compared to fiscal 2023, as a result of decreased unit volume, increased dealer incentives, and unfavorable model mix and options, partially offset by higher prices.

Operating loss was $2.1 million during fiscal 2024, compared to operating income of $20.1 million in fiscal 2023.

The change was primarily due to decreased net sales, as discussed above, and lower cost absorption.

Purchases of property, plant, and equipment decreased $4.5 million during fiscal 2024, when compared to fiscal 2023.

For fiscal 2024, capital spending was focused on facility enhancements and tooling.

Aviara Segment

2 unchanged sentences

Operating loss

Goodwill impairment

Purchases of property, plant and equipment

1 unchanged sentence

Net sales per unit

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.

Operating loss decreased 50.0 percent for fiscal 2023, when compared to fiscal 2022.

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.

Additionally, a goodwill impairment charge was recorded during the first quarter of fiscal 2022.

Purchases of property, plant, and equipment increased $4.3 million during fiscal 2023, when compared to fiscal 2022.

The increase was due to capital spending focused on capacity expansion and tooling.

Net sales decreased 15.2 percent during fiscal 2024, when compared to fiscal 2023, mainly due to unfavorable model mix and options and higher dealer incentives, partially offset by higher prices.

Operating losses increased 339.5 percent for fiscal 2024, when compared to fiscal 2023.

The change was a result of non-cash impairment charges of $9.8 million primarily related to property, plant, equipment and inventory, as well as inefficiencies related to the ramp up of new product launches, higher dealer incentives, and unfavorable model mix and options, partially offset by higher prices and reduced warranty costs.

See Notes 5 and 6 for further information related to the impairment charges.

Non-GAAP Measures

2 unchanged sentences

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.

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.

For the periods presented herein, these adjustments include non-cash impairment charges, share-based compensation, CEO transition costs, and business development consulting costs, as described in more detail below.

We define EBITDA margin and Adjusted EBITDA margin as EBITDA and Adjusted EBITDA, respectively, expressed as a percentage of Net sales.

1 unchanged sentence

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.

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.

For the periods presented herein, these adjustments include non-cash impairment charges, other intangible asset amortization, share-based compensation, CEO transition costs, and business development consulting costs.

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.

6 unchanged sentences

GAAP measures alone.

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.

We believe Adjusted Net Income and Adjusted Net Income per share assists our Board, 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.

3 unchanged sentences

• The Non-GAAP Measures do not reflect changes in, or cash requirements for, our working capital needs;

The Non-GAAP Measures do not reflect our tax expense or any cash requirements to pay income taxes;

The Non-GAAP Measures do not reflect interest expense, or the cash requirements necessary to service interest payments on our indebtedness;

• Certain Non-GAAP Measures do not reflect our tax expense or any cash requirements to pay income taxes;

• Certain Non-GAAP Measures do not reflect interest expense, or the cash requirements necessary to service interest payments on our indebtedness;

• The Non-GAAP Measures do not reflect the impact of earnings or charges resulting from matters we do not consider to be indicative of our core and/or ongoing operations, but may nonetheless have a material impact on our results of operations.

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.

Due to the effects of discontinued operations, as discussed above in “Part I, Item 1.

Business,”

the Company's non-GAAP financial measures are presented on a continuing operations basis, for all periods presented.

The following table presents a reconciliation of net income from continuing operations as determined in accordance with U.S.

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:

(Dollar amounts in thousands)

Net income from continuing operations

3 unchanged sentences

Depreciation and amortization

Share-based compensation

Business development consulting costs (a)

Goodwill impairment (b)

Aviara transition costs (c)

Debt refinancing charges (d)

Impairments (a)

Share-based compensation (b )

CEO transition costs (c)

Business development consulting costs (d)

Adjusted EBITDA

(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.

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.

(b) Represents a non-cash charge recorded in the Aviara segment for impairment of goodwill.

Costs include duplicative overhead costs and costs not indicative of ongoing operations (such as training and facility preparation).

(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.

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)

(Dollar amounts in thousands, except per share data)

Net income from continuing operations

Income tax expense

Impairments (a)

Amortization of acquisition intangibles

Share-based compensation

Business development consulting costs (a)

Goodwill impairment (b)

Aviara transition costs (c)

Debt refinancing charges (d)

Share-based compensation (b)

CEO transition costs (c)

Business development consulting costs (d)

Adjusted Net Income before income taxes

2 unchanged sentences

Adjusted Net Income per share:

Weighted average shares used for the computation of (e) :

Weighted average shares used for the computation of (f) :

Basic Adjusted Net Income per share

4 unchanged sentences

Income tax expense

Impairments (a)

Amortization of acquisition intangibles

Share-based compensation

Business development consulting costs (a)

Goodwill impairment (b)

Aviara transition costs (c)

Debt refinancing charges (d)

Share-based compensation (b)

CEO transition costs (c)

Business development consulting costs (d)

Adjusted Net Income per diluted share before income taxes

1 unchanged sentence

Adjusted Net Income per diluted share

(a) Represents non-cash charges recorded in the Aviara segment of $9.8 million primarily for impairment of property, plant, equipment and inventory in fiscal 2024 and $1.1 million for impairment of goodwill in fiscal 2022.

See Notes 5, 6, and 7 within the Notes to the Consolidated Financial Statements for more information on impairment charges.

(b) Included in share-based compensation are the impacts of accelerating expense recognition for equity awards related to the CEO transition.

(c) Represents amounts paid to the Company’s former CEO upon his departure under the terms of his transition agreements and legal fees incurred with the transition, but excluding amounts related to accelerating expense recognition for equity awards related to the CEO transition noted in (b).

Also included are recruiting and relocation costs related to the new CEO.

(d) 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.

(b) Represents a non-cash charge recorded in the Aviara segment for impairment of goodwill.

Costs include duplicative overhead costs and costs not indicative of ongoing operations (such as training and facility preparation).

(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.

(e) Reflects income tax expense at a tax rate of 23.0% for each period presented.

(e) Reflects income tax expense at a tax rate of 20.0% for 2024 and 23.0% for 2023 and 2022.

(f) 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.

Liquidity and Capital Resources

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.

Our primary liquidity and capital resource needs are to finance working capital, fund capital expenditures, service our debt, fund potential acquisitions, and fund our share repurchase program.

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 $7.4 million as of June 30, 2024, a decrease of $12.4 million from $19.8 million as of June 30, 2023.

Held-to-maturity securities totaled $91.6 million as of June 30, 2023.

As of June 30, 2022, there were no outstanding held-to-maturity securities.

Held-to-maturity securities totaled $78.8 million as of June 30, 2024, a decrease of $12.8 million from $91.6 million as of June 30, 2023.

As of June 30, 2024, we had no amounts outstanding under the Revolving Credit Facility, leaving $100.0 million of available borrowing capacity.

Total debt outstanding under the Term Loan as of June 30, 2024 and June 30, 2023 was $49.3 million and $53.7 million, respectively.

Refer to Note 9 —

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.

Subsequent to June 30, 2024, the Company was in discussions with its bank group regarding an amendment to the Credit Agreement.

The anticipated amendment entails obtaining the necessary consents and waivers to certain restrictions related to the Aviara asset exchange and plans to sell certain facility assets, in addition to a waiver to the covenant ratios in the Credit Agreement for certain future periods as a result of anticipated decreases in earnings.

The Company currently expects to complete the amendment process in the first quarter of fiscal 2025.

The amendment process remains subject to completion of final documentation and credit approval by the bank group and, accordingly, the Company cannot be certain that it will be able to complete the amendment process.

If the Company does not complete the amendment process, the Company has cash and held-to-maturity securities in excess of total debt and thus believes that it will have sufficient liquidity on hand to continue to fund operations and repay the borrowings outstanding under the Credit Agreement.

Refer to Note 9 — Long Term Debt in the Notes to Consolidated Financial Statements for further details.

On June 24, 2021, the Board authorized a share repurchase program that allowed for the repurchase of up to $50.0 million of our common stock during the three-year period ended June 24, 2024.

As of June 30, 2023, $1.6 million remained available under this program, all of which was fully utilized during the fiscal 2024 first quarter ended October 1, 2023.

On July 24, 2023, the Board authorized a new share repurchase program under which the Company may repurchase up to $50.0 million of its outstanding shares of common stock.

The new authorization became effective upon the completion of the Company’s prior $50.0 million stock repurchase authorization.

As of June 30, 2024, $35.4 million remained available under the new authorization.

During fiscal 2024 and fiscal 2023, the Company repurchased 750,943 shares and 872,055 shares of common stock for $16.3 million and $22.9 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.

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.

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

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.

The following table and discussion below relate to our cash flows from continuing operations for operating, investing, and financing activities:

(Dollar amounts in thousands)

Total cash provided by (used in):

2 unchanged sentences

Financing activities

Net change in cash from continuing operations

Net change in cash and cash equivalents from continuing operations

Fiscal 2024 Cash Flow from Continuing Operations

Net cash provided by operating activities was $136.8 million, primarily due to net income, as well as reductions of working capital.

Net cash provided by operating activities was $12.6 million, primarily due to net income, partially offset by working capital usage.

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.

Working capital usage primarily consisted of a decrease in accrued expenses and other current liabilities, accounts payable, and income tax payable, offset by a decrease in inventories.

Accrued expenses and other current liabilities decreased as a result of lower compensation related accruals, warranty costs as a result of reduced unit volume, and reduced volume rebates, offset by an increase in retail rebates.

Accounts payable decreased as a result of decreased production levels.

Income tax payable decreased due to the lower earnings compared to the prior year.

Inventories decreased as we continue to rebalance inventory levels to align with lower production levels.

Net cash used in investing activities was $1.8 million, which included $16.4 million in net capital expenditures, partially offset by net purchases and maturities of $14.6 million in held-to-maturity securities.

Our capital spending was primarily focused on facility enhancements, tooling, and information technology.

Net cash used in financing activities was $23.1 million, which included net payments of $4.5 million on long-term debt and $16.3 million of stock repurchases.

Fiscal 2023 Cash Flow from Continuing Operations

Net cash provided by operating activities was $136.8 million, primarily due to net income, as well as reductions of working capital as defined above.

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.

6 unchanged sentences

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.

Fiscal 2022 Cash Flow from Continuing Operations

Net cash provided by operating activities was $82.4 million, mainly due to net income, partially offset by working capital usage.

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.

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.

Accrued expenses and other

current liabilities increased due to an increase in warranty costs and dealer incentives.

Accounts payable increased as a result of increased production levels.

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.

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

As of June 30, 2023, the Company’s material cash obligations were as follows:

Long-Term Debt Obligations —

See Note 9 –

Long-Term Debt in the accompanying Notes to Consolidated Financial Statements for further information.

Interest on Long-Term Debt Obligations —

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.

As of June 30, 2024, the Company’s material cash obligations were as follows:

Long-Term Debt Obligations — See Note 9 – Long-Term Debt in the accompanying Notes to Consolidated Financial Statements for further information.

Interest on Long-Term Debt Obligations — As of June 30, 2024, the Company has estimated total interest payments on its outstanding long-term debt obligations of $6.1 million, of which $3.2 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, 2024 and holding them constant for the life of the instrument.

Purchase Commitments —

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.

Purchase Commitments — As of June 30, 2024, the Company is committed to purchasing $16.5 million of engines.

See Note 12 in the accompanying Notes to Consolidated Financial Statements for more information.

Repurchase Obligations —

The Company has reserves to cover potential losses associated with repurchase obligations based on historical experience and current facts and circumstances.

Repurchase Obligations — 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 2024, 2023, or 2022.

3 unchanged sentences

See Note 10 in Notes to Consolidated Financial Statements for more information.

Application of Critical Accounting Policies and Estimates

Critical Accounting Estimates

Significant accounting policies are described in the notes to the consolidated financial statements.

1 unchanged sentence

Actual results could differ from those estimates and cause our reported net income to vary significantly from period to period.

For additional information regarding these policies, see Note 1 –

Significant Accounting Policies in Notes to Consolidated Financial Statements.

For additional information regarding these policies, see Note 1 – 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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

12 unchanged sentences

The costs of amortizable intangible assets, including dealer networks, are recognized over their expected useful lives, approximately ten years for the dealer networks, using the straight-line method.

Intangible assets that are subject to amortization are evaluated for impairment using a process similar to that used to evaluate long-lived assets as described below.

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.

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”

The dealer network intangible asset within our MasterCraft reporting unit is fully amortized.

The dealer network intangible asset within our Pontoon reporting unit that is subject to amortization is evaluated for impairment if events or changes in circumstances suggest that it may be impaired.

As part of the impairment test, the Company may perform a quantitative assessment to determine whether the dealer network intangible asset is impaired.

If the carrying value exceeds the fair value of the asset, an impairment loss is recognized for the amount by which the carrying value exceeds the fair value.

Intangible assets not subject to amortization, including trade names, 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.

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.

In performing this qualitative analysis, the Company considers various factors, including macroeconomic events, industry and market events and cost related events.

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.

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.

An impairment loss is recognized for the amount by which the carrying value exceeds the fair value of the asset.

6 unchanged sentences

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.

As discussed further in Note 6 to the Consolidated Financial Statements, during the year ended June 30, 2024, the Company recognized $6.9 million in long-lived asset impairment charges related to its Aviara reporting unit.

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.

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.

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.

These warranties require us or our dealers to repair or replace defective products during the warranty period at no cost to the consumer.

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.

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.

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.

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.

Income Taxes—

We are subject to income taxes in the United States of America and the United Kingdom.

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.

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.

Income Taxes— We are subject to income taxes in the United States of America and the United Kingdom.

For fiscal 2024, our effective tax rate differs from the statutory rate, primarily due to a state benefit for separate company losses and the relative impact of tax credits to the declines in pre-tax book income.

For fiscal 2023, our effective tax rate differs from the statutory rate, primarily due to a change in state taxes as a result of sell NauticStar.

See the components of our effective tax rate reconciliation in Note 10.

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.

Revenue Recognition —

The Company’s revenue is derived primarily from the sale of boats and trailers, marine parts, and accessories to its independent dealers.

Revenue Recognition — 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.

12 unchanged sentences

The Company estimates the amount of retail rebates based on historical data for specific boat models adjusted for forecasted sales volume, product mix, dealer and consumer behavior, and assumptions concerning market conditions.

The Company also utilizes various programs whereby it offers cash discounts or agrees to reimburse its dealers for certain floor plan interest costs incurred by dealers for limited periods of time, generally ranging up to nine months.

Other Revenue Recognition Matters

Dealers generally have no right to return unsold boats.

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.

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.

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 2024, 2023, or 2022.

See Note 12 in Notes to Consolidated Financial Statements for more information on repurchase obligations.

SEC Climate Disclosure Rule

In March 2024, the SEC issued its final climate disclosure rule, which requires the disclosure of material Scope 1 and Scope 2 greenhouse gas emissions and other climate-related topics in annual reports and registration statements.

Under the final rule, for accelerated filers, disclosure requirements will begin phasing in for fiscal years beginning on or after January 1, 2026, or fiscal 2027 for the Company.

However, on April 4, 2024, the SEC announced its decision to voluntarily stay the new rules pending judicial review of certain legal challenges filed requesting that the proposed rules be vacated.

As a result, the timing and scope of the new rules remains unknown.

However, the Company is continuing to evaluate the potential impact of the rules, as adopted in March 2024, on the Company’s consolidated financial statements and related disclosures.

New Accounting Pronouncements

See “Part II, Item 8.

Financial Statements and Supplementary Data —

Note 1 —

Significant Accounting Policies —

New Accounting Pronouncements.”

See “Part II, Item 8.

Financial Statements and Supplementary Data — Note 1 — Significant Accounting Policies — New Accounting Pronouncements.”

QUANTITATIVE AND QUALITATI VE DISCLOSURES ABOUT MARKET RISK.

12 unchanged sentences

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 7. Management’s Discussion and Analysis