What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-08-27 compared with 2024-08-30 · 125 added, 152 removed, 224 unchanged (55% of the section changed)

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• 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.

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

• Adjusted EBITDA — We define Adjusted EBITDA as 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.

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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

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.

• Adjusted Net Income — We define Adjusted Net Income as 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 income from continuing operations to Adjusted Net Income, see “Non-GAAP Measures” below.

• Free cash flow — We define Free cash flow from continuing operations as net cash from operating activities less purchases of property, plant, and equipment.

For a reconciliation of net cash provided by operating activities of continuing operations to Free cash flow, see “Non-GAAP Measures” below.

Discontinued Operations

On October 18, 2024, the Company completed the Aviara Transaction and on December 23, 2024, the Company completed the Aviara Facility Sale.

In fiscal 2023, the Company sold its NauticStar business.

The Company's results for all periods presented, as discussed in Management's Discussion and Analysis, are presented on a continuing operations basis.

Results related to our Aviara and NauticStar reporting units are reported as discontinued operations for all periods presented.

See Notes 1 and 3 in Notes to Consolidated Financial Statements for more information on discontinued operations.

Leadership Transition

On April 7, 2025 Timothy M.

Oxley, Chief Financial Officer (“CFO”) of the Company, announced his retirement from the Company, effective December 31, 2025.

Prior to his retirement, Mr.

Oxley stepped down as CFO, effective June 30, 2025, at which time, Mr.

Oxley began serving as a Special Advisor.

Scott Kent, Vice President of Finance, succeeded Mr.

Oxley as CFO, effective July 1, 2025.

Tariff and Trade Environment

The recently imposed U.S.

tariffs did not materially impact our fiscal 2025 results, but their effects and the potential imposition of modified or additional tariffs may, among other things, create new trade barriers that disrupt supply chains, raise costs, weaken consumer confidence and impact consumer demand for our products, and impact our ability to export our products, all of which could have an adverse effect on our business and financial results.

The extent of the impact of tariffs on the Company’s business is highly uncertain and difficult to predict.

We are closely monitoring the rapidly evolving tariff landscape and are working diligently with key suppliers to mitigate risks.

For additional information regarding the potential impacts of tariffs on our business and results of operations, see Item 1A “Risk Factors — Risks Relating to Our Regulatory, Accounting, Legal, and Tax Environment.”

Results of Operations

Fiscal 2025 was impacted by anticipated market and economic uncertainty.

Net sales decreased primarily due to planned lower unit volumes aimed at aligning dealer inventories with retail demand.

Gross margin declined due to lower cost absorption driven by decreased production volume.

We derived the consolidated statements of operations for the fiscal years ended June 30, 2025 and 2024 from our audited consolidated financial statements and related notes included elsewhere in this Form 10-K.

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INCOME TAX EXPENSE

NET INCOME FROM CONTINUING OPERATIONS

INCOME FROM CONTINUING OPERATIONS

Additional financial and other data:

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Net Sales decreased 11.8 percent for fiscal 2025 when compared to fiscal 2024.

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.

The decrease was a result of planned lower unit volumes and changes in price, partially offset by favorable model mix related to new product introductions, favorable option sales, and decreased dealer incentives.

Gross Margin.

Gross Margin percentage declined 220 basis points during fiscal 2025 when compared to fiscal 2024.

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

Lower margins were the result of lower cost absorption due to decreased production volume, material and overhead inflation, and changes in sales price.

Operating Expenses .

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.

Operating expenses increased 3.4 percent during fiscal 2025 when compared to the same prior year period mainly due to increased variable compensation costs.

Interest Expense.

Interest expense increased $0.6 million primarily due to higher effective interest rates.

Interest expense decreased $2.1 million primarily due to all outstanding borrowings under the Credit Agreement being repaid during the first six months of fiscal 2025.

Interest Income.

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.

Interest income decreased $2.3 million during fiscal 2025 primarily due to certain investment securities being sold to repay outstanding borrowings under the Revolving Credit Facility during the second quarter of fiscal 2025.

Income Tax Expense.

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Net sales decreased 8.4 percent during fiscal 2025, when compared to fiscal 2024.

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

The decrease was primarily driven by lower unit volumes and changes in price, partially offset by favorable model mix, decreased dealer incentives, and favorable option sales.

Operating income decreased 30.1 percent during fiscal 2025, when compared to the same prior year period.

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.

The overall decrease was driven by decreased net sales, as discussed above, increased materials and overhead inflation, and increased variable compensation costs.

Pontoon Segment

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(Dollar amounts in thousands)

Operating income (loss)

Purchases of property, plant and equipment

Unit sales volume

Net sales per unit

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

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

(Dollar amounts in thousands)

Operating loss

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Net sales per unit

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.

Net sales decreased 27.1 percent during fiscal 2025, when compared to fiscal 2024, as a result of decreased unit volume and increased dealer incentives, partially offset by favorable model mix and favorable option sales.

Operating loss was $9.4 million during fiscal 2025, compared to $2.1 million in fiscal 2024.

The change was primarily due to decreased net sales, as discussed above, and increased labor and materials cost.

Non-GAAP Measures

EBITDA, Adjusted EBITDA, EBITDA Margin, and Adjusted EBITDA Margin

We define EBITDA as net income from continuing operations, before interest, income taxes, depreciation and amortization.

We define EBITDA as 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.

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.

For the periods presented herein, these adjustments include share-based compensation, senior leadership transition and organizational realignment 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.

Adjusted Net Income and Adjusted Net Income Per Share

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 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.

We define Adjusted Net Income and Adjusted Net Income per share as 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, senior leadership transition and organizational realignment costs, and business development consulting costs.

Free Cash Flow

We define Free Cash Flow from continuing operations as net cash flows from operating activities less purchases of property, plant, and equipment.

EBITDA, Adjusted EBITDA, EBITDA margin, Adjusted EBITDA margin, Adjusted Net Income, Adjusted Net Income per share, and Free Cash Flow, which we refer to collectively as the Non-GAAP Measures, are not measures of net income, operating income, or net cash flows 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.

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• Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and the Non-GAAP Measures do not reflect any cash requirements for such replacements;

• The Non-GAAP Measures do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments;

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

• Certain Non-GAAP Measures do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments;

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

• 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.

• Certain 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.

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:

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

GAAP to EBITDA and Adjusted EBITDA, and 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

Income from continuing operations

Income tax expense

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Depreciation and amortization

Impairments (a)

Share-based compensation (b )

CEO transition costs (c)

Business development consulting costs (d)

Share-based compensation

Senior leadership transition and organizational realignment costs (a)

Business development consulting costs (b)

Adjusted EBITDA

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

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

GAAP to Adjusted Net Income for the periods indicated:

(Dollar amounts in thousands, except per share data)

Net income from continuing operations

Income from continuing operations

Income tax expense

Impairments (a)

Amortization of acquisition intangibles

Share-based compensation (b)

CEO transition costs (c)

Business development consulting costs (d)

Share-based compensation

Senior leadership transition and organizational realignment costs (a)

Business development consulting costs (b)

Adjusted Net Income before income taxes

Adjusted income tax expense (e)

Adjusted income tax expense (c)

Adjusted Net Income

Adjusted Net Income per share:

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

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

Basic Adjusted Net Income per share

Diluted Adjusted Net Income per share

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:

Net income from continuing operations per diluted share

The following table presents the reconciliation of income from continuing operations per diluted share to Adjusted net income per diluted share for the periods presented:

Income from continuing operations per diluted share

Impact of adjustments:

Income tax expense

Impairments (a)

Amortization of acquisition intangibles

Share-based compensation (b)

CEO transition costs (c)

Business development consulting costs (d)

Share-based compensation

Senior leadership transition and organizational realignment costs (a)

Business development consulting costs (b)

Adjusted Net Income per diluted share before income taxes

Impact of adjusted income tax expense on net income per diluted share before income taxes (e)

Impact of adjusted income tax expense on net income per diluted share before income taxes (c)

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.

The following table presents a reconciliation of net cash flows by operating activities of continuing operations as determined in accordance with U.S.

GAAP to Free Cash Flow for the periods presented:

Net cash provided by operating activities of continuing operations

Purchases of property, plant and equipment

Free cash flow

(a) Represents amounts paid for legal fees and recruiting costs associated with the CEO and CFO transitions, as well as non-recurring severance costs incurred as part of the Company's strategic organizational realignment undertaken in connection with the transitions.

(b) 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.

(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.

(d) 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 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 $78.8 million as of June 30, 2024, a decrease of $12.8 million from $91.6 million as of June 30, 2023.

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

Our principal sources of liquidity are our cash balance, short-term investments, cash generated from operating activities, our revolving credit agreement and the refinancing and/or new issuance of long-term debt.

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.

Cash and cash equivalents totaled $28.9 million as of June 30, 2025, an increase of $21.5 million from $7.4 million as of June 30, 2024.

Short-term investments totaled $50.5 million as of June 30, 2025, a decrease of $28.3 million from $78.8 million as of June 30, 2024.

Net changes in Cash and cash equivalents and Short-term investments include proceeds from short-term investments being used to repay outstanding amounts under the Revolving Credit Facility and $26.1 million in net proceeds from the Aviara Facility Sale.

Refer to Note 3 — Discontinued Operations and Note 4 — Short-term investments in the Notes to Consolidated Financial Statements for further details.

Total debt as of June 30, 2024 was $49.3 million, with no amounts outstanding as of June 30, 2025.

As of June 30, 2025, 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.

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.

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

As of June 30, 2025, $25.9 million remained available under the new authorization.

During fiscal 2025 and fiscal 2024, the Company repurchased 531,970 shares and 750,943 shares of common stock for $9.5 million and $16.3 million, respectively, in cash, including related fees and expenses.

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:

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Fiscal 2025 Cash Flow from Continuing Operations

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.

Net cash provided by operating activities was $38.2 million, primarily due to net income and favorable working capital changes.

sheets, excluding the impact of acquisitions and non-cash adjustments.

Favorable changes in working capital primarily consisted of a decrease in inventories, accounts receivable, other assets, prepaid expenses and other current assets, and an increase in income tax payable, partially offset by a decrease in accounts payable.

Inventories decreased due to timing of sales at the end of the period compared to the end of the prior-year and planned raw materials reduction due to lower unit production volume.

Accounts receivable decreased due to timing of sales at the end of the period compared to the end of the prior-year period.

Income tax payable increased due to timing of estimated payments.

Prepaid expenses and other current assets decreased mainly due to lower general insurance premiums.

Accounts payable decreased due to a reduction in raw material purchases and timing of purchases at the end of the period compared to the prior-year period.

Net cash provided by investing activities was $20.0 million, which included net proceeds of $29.2 million from available-for-sale securities, partially offset by $9.2 million in capital expenditures.

Our capital spending was primarily focused on information technology, tooling and machinery and equipment.

Net cash used in financing activities was $60.1 million, which included share repurchases totaling $9.5 million, excluding related fees and expenses, and $49.5 million used to repay outstanding borrowings of the Term Loan.

Drawn amounts on the Revolving Credit Facility were fully repaid as of June 30, 2025.

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 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.

Accrued expenses and other current liabilities increased as a result of an increase in warranty costs and dealer incentives.

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.

Net cash provided by operating activities was $12.2 million, primarily due to net income, partially offset by changes in working capital as defined above.

Changes in working capital primarily consisted of a decrease in accrued expenses and other current liabilities, accounts payable, and income tax payable, partially offset by a decrease in inventories and accounts receivable.

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

Accounts payable decreased as a result of decreased production levels.

Prepaid and other current assets increased primarily as a result of higher general insurance premiums.

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.

Our capital spending was focused on tooling, capacity expansion, strategic initiatives, and information technology.

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.

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

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

Accounts receivable decreased due to reduced unit volumes.

Net cash provided by investing activities was $4.1 million, due to net proceeds in short-term investments of $14.6 million, partially offset by $10.5 million of capital expenditures.

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

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 share repurchases.

Off-Balance Sheet Arrangements

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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, 2025, the Company is committed to purchasing $2.8 million of engines.

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In the application of these policies, certain estimates are made that may have a material impact on our financial condition and results of operations.

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

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.

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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.

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, 2025, only the MasterCraft reporting unit has a goodwill balance.

The fair value of this reporting unit substantially exceeds its carrying value.

The Company performed a qualitative assessment and concluded the fair value of the MasterCraft reporting unit is “more likely than not” greater than its carrying value.

Other Intangible Assets

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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.

The dealer network intangible asset within our Pontoon reporting unit that is subject to amortization is evaluated for impairment using a process similar to that used to evaluate long-lived assets as described below.

Intangible assets not subject to amortization, including trade names, are assessed for impairment at least annually, at June 30, 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.

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

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.

These charges are included in the loss from discontinued operations.

During the fiscal 2025 fourth quarter, the Company determined certain indicators of potential impairment existed for the Crest brand intangible assets, resulting in an undiscounted cash flows analysis for the Crest dealer network and a discounted cash flows analysis for the Crest trade name.

The analysis concluded both the undiscounted cash flows and fair value exceeded their related carrying values, respectively, resulting in no impairment.

Long-Lived Assets

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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.

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.

These charges are included in the loss from discontinued operations.

In conjunction with the impairment assessment as discussed above, the Company determined certain indicators of potential impairment existed for the Crest brand asset group, resulting in an undiscounted cash flow analysis.

The analysis concluded the undiscounted cash flows exceeded the carrying value of the asset group, resulting in no impairment.

Product Warranties — The Company offers warranties on the sale of certain products generally for periods of between one and ten years from the date of retail sale, and provides a limited lifetime warranty on certain parts, as noted in the warranty.

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

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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.

For fiscal 2025 and 2024, our effective tax rate differs from the statutory rate, primarily due to the inclusion of the state tax rate and uncertain tax positions, partially offset by the benefit from tax credits.

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

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Dealers earn wholesale rebates based on purchase volume commitments and achievement of certain performance metrics.

The Company estimates the amount of wholesale rebates based on historical achievement, forecasted volume, and assumptions regarding dealer behavior.

The Company estimates the amount of wholesale rebates based on historical achievement, forecasted volume, and assumptions regarding dealer

Rebates that apply to boats already in dealer inventory are referred to as retail rebates.

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 from six to 12 months.

Other Revenue Recognition Matters

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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 2025, 2024, or 2023.

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

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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.

As of June 30, 2024, we had $49.5 million of long-term debt outstanding, bearing interest at the effective interest rate of 6.69%.

See Note 9 in Notes to Consolidated Financial Statements for more information regarding our long-term debt.

A hypothetical 1% increase or decrease in interest rates would have resulted in a $0.5 million change to our interest expense for fiscal 2024.

FINANCIAL STATEMENT S AND SUPPLEMENTARY DATA.

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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