11 unchanged sentences
In order to better align the Company’s reported results with the internal metrics used by the Company's management to evaluate business performance as well as to provide better comparisons to prior periods and peer data, non-GAAP measures exclude the impact of purchase accounting amortization related to business acquisitions.
−Removed: COVID-19 Pandemic
−Removed: Demand for the Company’s products has been strong and, as a result of our employee’s committed efforts, disruptions to the Company’s production have been minimal since resuming operations in May 2020.
−Removed: However, we continue to be subject to risks and uncertainties as a result of the COVID-19 pandemic.
−Removed: The extent of the impact of the COVID-19 pandemic on our business remains uncertain and difficult to predict, as the response to the COVID-19 pandemic is still evolving in many countries, including the United States and other markets where we and our suppliers operate.
−Removed: Impact to Operations
−Removed: To balance wholesale production with the anticipated impacts to retail demand caused by the economic impacts of the COVID-19 pandemic, we reduced production in February 2020 and, in late March 2020, temporarily suspended manufacturing operations at all of our facilities to protect the health of our employees and comply with governmental mandates.
−Removed: We resumed operations at reduced production levels at our manufacturing facilities by mid-May 2020.
−Removed: Since that time, our facilities have increased production rates above their pre-COVID-19 levels.
−Removed: We achieved the highest wholesale unit volume in the history of the Company during the third quarter of fiscal 2021, and we are planning for further increases to production rates in order to meet the continuing strong retail demand.
−Removed: MasterCraft, NauticStar and Crest have each achieved a steady increase in production during fiscal 2021.
−Removed: Although all of our segments made progress, NauticStar’s performance lagged behind our other brands during the first and second quarters of fiscal 2021.
−Removed: In August 2020, we announced that Scott Womack had been named President of NauticStar.
−Removed: NauticStar is benefiting from Mr.
−Removed: Womack’s years of executive leadership, manufacturing experience and proven dedication to operational excellence, as evidenced by NauticStar’s returning to profitability for the third quarter of fiscal 2021, and we believe NauticStar’s operating performance will continue to improve.
−Removed: Impact to Liquidity and Capital Resources
−Removed: During March 2020, we drew $35.0 million on our Revolving Credit Facility as a precautionary measure in order to increase our cash position and preserve financial flexibility in light of uncertainty in the global markets resulting from the COVID-19 pandemic.
−Removed: Additionally, on May 7, 2020, we entered into Amendment No.
−Removed: 3 (the “Amendment”) to the Fourth Amended & Restated Credit and Guarantee Agreement (the “Credit Facility”) to strengthen our financial flexibility.
−Removed: Among other things, the changes effected by the Amendment provide temporary relief under our financial covenants.
−Removed: See Note 7 in Notes to Unaudited Condensed Consolidated Financial Statements for more information regarding these changes, including the sunsetting of the temporary relief provisions.
−Removed: The performance of the business and our cash management activities provided the flexibility to repay the entire Revolving Credit Facility as of October 4, 2020.
−Removed: Since that time, our strong operating performance has continued which has allowed our cash balance to build to $29.0 million as of April 4, 2021.
−Removed: In addition, we were in compliance with all of our financial covenants as of April 4, 2021.
−Removed: We believe strong marine retail demand, coupled with abnormally low retail inventory levels for all our brands have created a growth opportunity for fiscal 2021 and potentially into future years.
−Removed: Our facilitites are now running at production rates above their pre-COVID-19 levels, with further increases to production rates planned.
−Removed: We expect this ramp up phase to continue through fiscal 2021 in order to meet strong wholesale demand as our dealers seek to satisfy current retail order flow and replenish their stock inventory.
−Removed: As we navigate the unprecedented confluence of demand and disruption precipitated by the COVID-19 pandemic, our production rates going forward will depend, in large part, on our suppliers’ capacity.
+Added: The COVID-19 pandemic has facilitated strong marine retail demand as consumers have taken advantage of more flexible work schedules allowing for more leisure time and marine product usage.
+Added: This strong retail demand has created historically low dealer inventory levels which, in turn, has increased wholesale demand for our products.
+Added: Despite the rise in demand for our products, which led to a 38.8 percent increase in net sales year over year, supply chain disruption, production inefficiencies, and inflationary pressures impacted first quarter 2022 results.
+Added: Supply Chain Disruptions.
Demand for raw materials and components used in the production of our products has surged.
−Removed: At the same time, severe and unprecedented events, including the February 2021 ice storm, which impacted much of the United States, have recently disrupted the global supply chain.
−Removed: As a result, some of the materials and components that we use, including certain resins, fiberglass, and plywood, are in short supply.
−Removed: Additionally, our ability to grow and retain a high-performing workforce will be critical to meeting our production objectives.
−Removed: Although the consumer responses to the COVID-19 pandemic have thus far resulted in strong demand for our products, significant uncertainty exists in the economy as a result of the unpredictable outlook for the COVID-19 pandemic.
−Removed: The ultimate impact of the COVID-19 pandemic on our business is uncertain and will depend on a number of factors, including the duration, spread and severity, the remedial action and stimulus measures adopted by local, state and federal governments, the effects of the pandemic on our consumers, dealers, suppliers and workforce, and the extent to which normal economic and operating conditions can resume and be sustained within the general economy.
−Removed: Our future results of operations, cash flows, and liquidity could be adversely impacted by supply chain or workforce disruptions, uncertain demand, additional manufacturing suspensions, additional other intangible asset impairment charges, and the impact of any initiatives that we may undertake to address financial and operational challenges faced by us and our consumers, dealers, and suppliers.
−Removed: Overview of Consolidated Results of Operations
−Removed: Net sales were $147.9 million for the third quarter of 2021, which represented an increase of 44.2 percent as compared to the third quarter of 2020, which was impacted by, among other things, the COVID-19 pandemic.
−Removed: The increase was primarily a result of achieving the highest single quarter wholesale unit volume in the history of the Company and lower dealer incentives, partially offset by the impact of model mix.
−Removed: Net sales were $370.3 million for the nine months ended April 4, 2021, which represented an increase of 18.7 percent as compared to the COVID-19 impacted nine months ended March 29, 2020.
−Removed: The increase was primarily the result of higher sales volumes and lower dealer incentives, partially offset by the impact of model mix.
−Removed: Gross margin increased by 450 basis points to 25.2 percent for the third quarter of 2021 from 20.7 percent for the prior year period primarily attributable to lower dealer incentives, favorable overhead absorption driven by higher sales volume, and higher prices, partially offset by costs associated with the transition of Aviara to our Merritt Island facility and higher labor costs.
−Removed: G ross margin in creased by 320 basis points to 25.0 percent for the nine months ended April 4 , 2021 from 21.8 percent for the prior year period primarily due to lower dealer incentives, and higher prices, partially offset by costs associated with the transition of Aviara to our Merritt Island facility and higher labor costs .
−Removed: Net income was $17.6 million for the third quarter of 2021, compared to net loss of $36.7 million for the third quarter of 2020.
−Removed: Diluted earnings per share was $0.93, compared to diluted loss per share of $(1.96) for the prior year period.
−Removed: Net income was $39.6 million for the nine months ended April 4, 2021, compared to net loss of $21.2 million for the prior year period.
−Removed: Diluted earnings per share was $2.09, compared to diluted loss per share of $(1.13) for the prior year period.
−Removed: Merritt Island Facility and Aviara Transition
−Removed: On October 26, 2020, we completed the purchase of certain real property located in Merritt Island, Florida, including an approximately 140,000 sq.
−Removed: boat manufacturing facility, (the “Merritt Island Facility”) for a purchase price of $14.2 million.
−Removed: We expanded our overall boat building capacity by moving all Aviara production to the Merritt Island Facility.
−Removed: While this additional capacity will help facilitate Aviara’s long-term growth, importantly, removing Aviara production from our Vonore, Tennessee facility provided for an immediate increase in capacity and productivity for our MasterCraft brand.
−Removed: We began producing Aviara in the Merritt Island Facility in December 2020 and shipments from the new facility commenced in the third quarter of fiscal 2021.
+Added: As a result, some of the materials and components that we use are in short supply.
+Added: To reduce the impact of supply chain disruptions on production, we have increased our raw materials safety stock where possible.
+Added: Additionally, work in process has increased as a result of supply chain shortages delaying our ability to finish production units.
+Added: Production Inefficiencies .
+Added: Business processes have been altered to address completion of boats waiting on parts while maintaining normal production lines, resulting in increased labor costs.
+Added: Absenteeism and implementing COVID-19 mitigating procedures also burdened our work force as we continue to focus on ramp-up of production to meet unprecedented demand.
+Added: Inflationary Pressures.
+Added: Inflationary pressures have increased the costs of raw materials and components used to build our products, negatively impacting our margins during the first quarter of 2022.
+Added: New model year price increases took effect for fiscal 2022;
+Added: however, these price increases did not fully offset the increased material costs caused by inflation.
+Added: In response to worsening inflationary pressures, we announced additional mid-cycle price increases that will be implemented during the second quarter and expect the price increases to offset the impact of inflation for the full year.
+Added: As we continue to navigate the unprecedented confluence of demand and disruption precipitated by the COVID-19 pandemic, our production rates and results going forward will depend, in large part, on our and our suppliers’ capacity and ability to alleviate ongoing and changing risks.
+Added: We will continue to actively monitor the impact of the COVID-19 pandemic and may take further actions to alter business operations as may be required by government authorities, or that are determined to be in the best interest of our employees, dealers, suppliers, and stakeholders.
+Added: The full extent of the impact of the COVID-19 pandemic on our business, operations, and financial results will depend on evolving factors that we cannot predict.
+Added: See “Risk Factors — Risks Relating to Our Business — Actual or potential public health emergencies, epidemics, or pandemics, such as the current coronavirus (“COVID-19”) pandemic, could have a material adverse effect on our business, results of operations, or financial condition” set forth in our 2021 Annual Report on Form 10-K.
Results of Operations
1 unchanged sentence
Three Months Ended
−Removed: (Dollars in thousands)
Consolidated statements of operations :
4 unchanged sentences
Amortization of other intangible assets
−Removed: Goodwill and other intangible asset impairment
+Added: Goodwill impairment
Total operating expenses
−Removed: OPERATING INCOME (LOSS)
+Added: OPERATING INCOME
OTHER EXPENSE:
Interest expense
−Removed: INCOME (LOSS) BEFORE INCOME TAX EXPENSE
−Removed: INCOME TAX EXPENSE (BENEFIT)
−Removed: NET INCOME (LOSS)
+Added: INCOME BEFORE INCOME TAX EXPENSE
+Added: INCOME TAX EXPENSE
Additional financial and other data:
4 unchanged sentences
Consolidated net sales per unit
−Removed: Three Months Ended April 4, 2021 Compared to the Three Months Ended March 29, 2020
−Removed: Net Sales for the third quarter were $147.9 million , an increase of $45.3 million, or 44.2 percent, compared to $102.6 million for the prior-year period.
−Removed: The increase was primarily due to:
−Removed: a $28.9 million increase for the MasterCraft segment driven by a 32.0 percent increase in sales volume, lower dealer incentives, higher prices, and options favorablility, partially offset by the impact of model mix.
−Removed: a $12.5 million increase for the Crest segment resulting from a 58.6 percent increase in sales volume, lower dealer incentives, higher prices and options favorability, and
−Removed: a $3.9 million increase for the NauticStar segment primarily due to a 36.1 percent increase in sales volume , partially offset by the impact of model mix .
−Removed: In addition, NauticStar’s sales volume during the quarter was constrained as a result of the February 2021 ice storm which impacted much of the United States and caused NauticStar to lose approximately one week of production.
−Removed: Gross Profit and Gross Margin.
−Removed: Gross profit increased $16.0 million, or 75.0 percent, to $37.2 million compared to $21.3 million for the prior-year period.
−Removed: The increase was primarily a result of higher sales volumes, lower dealer incentives, and higher prices at each reportable segment and favorable options at MasterCraft and Crest.
−Removed: The increase was partially offset by the impact of model mix, Aviara transition costs and higher labor costs at each reportable segment.
−Removed: We expect to realize higher labor costs for the full fiscal year due to changes implemented in the first quarter of fiscal 2021 to our production employee compensation packages.
−Removed: Gross margin increased due to lower dealer incentives, favorable overhead absorption driven by higher sales volume, and higher prices, partially offset by Aviara transition costs and higher labor costs.
−Removed: Operating Expenses.
−Removed: Operating expenses decreased $53.8 million, or 78.6 percent, compared to the prior-year period primarily driven by the recognition of $56.4 million of goodwill and other intangible asset impairment charges in the prior-year and lower selling and marketing costs primarily due to the impacts of the COVID-19 pandemic.
−Removed: This decrease was partially offset by higher general and administrative expenses resulting from higher incentive compensation costs and additional investment related to product development and information technology.
−Removed: Interest Expense.
−Removed: Interest expense decreased $0.3 million, or 30.5 percent due to lower effective interest rates and lower average outstanding debt balances during the quarter compared to the prior-year period.
−Removed: Income Tax Expense (Benefit).
−Removed: Our consolidated interim effective income tax rate decreased to 19.4 percent for the third quarter of 2021 from 23.9 percent for the prior-year period.
−Removed: Nine Months Ended
−Removed: (Dollars in thousands)
−Removed: Consolidated statements of operations :
−Removed: COST OF SALES
−Removed: OPERATING EXPENSES:
−Removed: Selling and marketing
−Removed: General and administrative
−Removed: Amortization of other intangible assets
−Removed: Goodwill and other intangible asset impairment
−Removed: Total operating expenses
−Removed: OPERATING INCOME (LOSS)
−Removed: OTHER EXPENSE:
−Removed: Interest expense
−Removed: INCOME (LOSS) BEFORE INCOME TAX EXPENSE
−Removed: INCOME TAX EXPENSE (BENEFIT)
−Removed: NET INCOME (LOSS)
−Removed: Additional financial and other data:
+Added: Three Months Ended October 3, 2021 Compared to the Three Months Ended October 4, 2020
+Added: Consolidated Results
+Added: Net sales were $144.0 million for first quarter 2022, which represented an increase of 38.8 percent as compared to first quarter 2021.
+Added: Net sales in each segment benefited from increased volume as our dealers look to restock their inventories, which have been depleted by strong consumer demand for boats.
+Added: Higher prices, favorable model mix, and higher option sales were also favorable compared to the prior period.
+Added: Gross margin declined 440 basis points to 20.9 percent when compared to first quarter 2021 as supply chain disruption and inflationary pressures drove materials and labor costs higher, and overhead from the new Aviara facility created unfavorable overhead absorption.
+Added: Higher prices from model year changeover partially offset these headwinds.
+Added: Operating expenses were $16.1 million for the first quarter, up $3.3 million from the prior-year period.
+Added: Selling and marketing expense increased due to the timing of prior year expenses being impacted by the COVID-19 pandemic, resulting in lower costs for the first quarter of fiscal 2021.
+Added: General and administrative expense increased as we continued to make investments in research and development and information technology.
+Added: Additionally, an impairment charge related to the allocated goodwill associated with the Aviara segment was recorded in the first quarter of fiscal 2022, as discussed in Note 4 to the Unaudited Condensed Consolidated Financial Statements.
+Added: Interest expense decreased $0.6 million due to lower effective interest rates and lower average outstanding debt balances during the quarter compared to the prior-year period.
+Added: Segment Results
+Added: Beginning with the first quarter of fiscal 2022 and as discussed in Note 1, our CODM began to manage our business, allocate resources, and evaluate performance based on the reportable segments of MasterCraft, Crest, NauticStar, and Aviara.
+Added: MasterCraft Segment
+Added: The following table sets forth MasterCraft segment results for the three months ended:
+Added: Three Months Ended
+Added: Operating income
+Added: Purchases of property, plant and equipment
Unit sales volume
−Removed: Consolidated unit sales volume
−Removed: Consolidated net sales
Net sales per unit
−Removed: Consolidated net sales per unit
−Removed: Nine Months Ended April 4, 2021 Compared to the Nine Months Ended March 29, 2020
−Removed: Net Sales for the nine months ended April 4, 2021 were $370.3 million, an increase of $58.3 million, or 18.7 percent, compared to $312.0 million for the prior-year period.
−Removed: The increase was primarily due to:
−Removed: a $44.4 million increase for the MasterCraft segment driven by a 9.6 percent increase in sales volume, a favorable mix of higher-priced and higher-contented models, lower dealer incentives, and higher parts sales volume,
−Removed: a $16.3 million increase for the Crest segment resulting from a 25.0 percent increase in sales volume, lower dealer incentives, higher prices, and options favorability, and
−Removed: a $2.4 million decrease for the NauticStar segment primarily due to model mix and partially offset by higher volume and prices.
−Removed: NauticStar’s sales volume during the nine months ended April 4 , 2021 was constrained as a result of the February 2021 ice storm which impacted much of the United States and caused NauticStar to lose approximately one week of production.
−Removed: Gross Profit and Gross Margin.
−Removed: Gross profit increased $24.8 million, or 36.5 percent, to $92.7 million compared to $67.9 million for the prior-year period.
−Removed: The increase was primarily a result of lower dealer incentives, higher unit volume, higher prices, favorable options mix and higher parts sales volume.
−Removed: These increases were partially offset by higher labor costs for each reportable segment, and higher incentive compensation costs and costs associated with the transition of Aviara to our Merritt Island facility.
−Removed: We expect to realize higher labor costs for the full fiscal year due to changes implemented in the first quarter of fiscal 2021 to our production employee compensation packages.
−Removed: Gross margin increased due to lower dealer incentives and higher prices, partially offset by Aviara transition costs and higher labor costs.
−Removed: Operating Expenses.
−Removed: Operating expenses decreased $52.3 million, or 56.8 percent, compared to the prior-year period due to the same reasons described above for the quarterly period.
−Removed: Interest Expense.
−Removed: Interest expense decreased $1.0 million, or 27.9 percent primarily due to the same reasons described above for the quarterly period.
−Removed: Income Tax Expense (Benefit).
−Removed: Our consolidated interim effective income tax rate decreased to 21.2 percent for the nine months ended April 4, 2021 from 23.7 percent for the prior-year period.
+Added: Net sales increased $22.4 million, or 32.2 percent, to $92.0 million for first quarter 2022 compared to $69.6 million for the prior year period, primarily driven by an increase in sales volume.
+Added: Additionally, net sales benefited from higher prices, favorable model mix, and higher options sales.
+Added: Operating income for first quarter 2022 was $16.2 million, an increase of $1.8 million, compared to $14.4 million for first quarter 2021 driven by higher net sales, partially offset by the production inefficiencies from supply chain disruption, inflationary pressures, and higher sales and marketing costs compared to the COVID-impacted first quarter 2021.
+Added: Crest Segment
+Added: The following table sets forth Crest segment results for the three months ended:
+Added: Three Months Ended
+Added: Operating income
+Added: Purchases of property, plant and equipment
+Added: Unit sales volume
+Added: Net sales per unit
+Added: Net sales were $32.8 million for first quarter 2022, compared to $18.0 million for first quarter 2021, an increase of $14.7 million, or 81.7 percent as a result of higher sales volumes and higher prices.
+Added: Operating income increased 128.6 percent as compared to the prior year primarily as a result of higher net sales, partially offset by higher costs from supply chain disruption and inflationary pressures.
+Added: NauticStar Segment
+Added: The following table sets forth NauticStar segment results for the three months ended:
+Added: Three Months Ended
+Added: Operating loss
+Added: Purchases of property, plant and equipment
+Added: Unit sales volume
+Added: Net sales per unit
+Added: Net sales increased by $1.0 million, or 8.2 percent, to $13.4 million for first quarter 2022 compared to $12.3 million for first quarter 2021 due to higher option sales, higher prices, and increased volume.
+Added: Operating loss was $2.3 million for first quarter 2022 compared to an operating loss of $1.6 million for the prior year period.
+Added: Higher costs from inflationary pressures, supply chain disruptions, and labor challenges offset higher net sales.
+Added: Aviara Segment
+Added: The following table sets forth Aviara segment results for the three months ended:
+Added: Three Months Ended
+Added: Operating loss
+Added: Purchases of property, plant and equipment
+Added: Unit sales volume
+Added: Net sales per unit
+Added: Net sales increased $2.1 million, or 55.2 percent to $5.9 million for first quarter 2022 compared to $3.8 million for the prior year period due to an increase in unit sales volume attributed to increased capacity from the new Merritt Island facility.
+Added: During first quarter 2022, all Aviara boats were manufactured in our 140,000 square foot Merritt Island, Florida facility, which we purchased in October 2020 for $14.2 million.
+Added: During first quarter 2021, Aviara boats were produced in our MasterCraft facility in Vonore, Tennessee.
+Added: As a result of this transition to Merritt Island, overhead costs attributable to Aviara increased significantly which creates a dilutive near-term impact on Aviara’s margins and profitability.
+Added: Operating loss was $3.6 million for first quarter 2022 compared to an operating loss of $1.0 million for first quarter 2021 as a result of ramp up related inefficiencies in the Merritt Island facility, including higher overhead costs associated with the new facility and a goodwill impairment charge.
+Added: See Note 4 in Notes to Unaudited Condensed Consolidated Financial Statements for more information on the impairment charge.
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.
−Removed: For the periods presented herein, these adjustments include goodwill and other intangible asset impairment, COVID-19 shutdown costs, Aviara transition costs, Aviara (new brand) startup costs, and non-cash share-based compensation.
+Added: For the periods presented herein, these adjustments include Aviara transition costs and certain non-cash items including goodwill impairment and share-based compensation.
We define Adjusted EBITDA margin as Adjusted EBITDA expressed as a percentage of Net sales.
Adjusted Net Income and Adjusted Net Income Per Share
−Removed: We define Adjusted Net Income and Adjusted Net Income per share as net income (loss) adjusted to eliminate certain non-cash charges or other items that we do not consider to be indicative of our core and/or ongoing operations and adjusted for the impact to income tax expense related to non-GAAP adjustments.
−Removed: For the periods presented herein, these adjustments include goodwill and other intangible asset impairment, COVID-19 shutdown costs, Aviara transition costs, Aviara (new brand) startup costs, and certain non-cash items including other intangible asset amortization and share-based compensation.
−Removed: EBITDA, Adjusted EBITDA, Adjusted EBITDA m argin, Adjusted Net Income, and Adjusted Net Income per share, which we refer to collectively as the Non-GAAP Measures, are not measures of net income (loss) or operating income (loss) as determined under accounting principles generally accepted in the United States, or U.S.
+Added: We define Adjusted Net Income and Adjusted Net Income per share as net income 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 adjusted for the impact to income tax expense related to non-GAAP adjustments.
+Added: For the periods presented herein, these adjustments include Aviara transition costs and certain non-cash items including goodwill impairment, other intangible asset amortization, and share-based compensation.
+Added: EBITDA, Adjusted EBITDA, Adjusted EBITDA m argin, Adjusted Net Income, and Adjusted Net Income per share, which we refer to collectively as the Non-GAAP Measures, are not measures of net income or operating income as determined under accounting principles generally accepted in the United States, or U.S.
The Non-GAAP Measures are not measures of performance in accordance with U.S.
5 unchanged sentences
GAAP measures alone.
−Removed: We believe Adjusted Net Income and Adjusted Net Income per share assists our board of directors, management, investors, and other users of the financial statements in comparing our net income 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 adjust s for the impact to income tax expense (benefit) related to non-GAAP adjustments .
+Added: We believe Adjusted Net Income and Adjusted Net Income per share assists our board of directors, management, investors, and other users of the financial statements in comparing our net income on a consistent basis from period to period because it removes certain non-cash items and other items that we do not consider to be indicative of our core and/or ongoing operations and adjust s for the impact to income tax expense related to non-GAAP adjustments .
The Non-GAAP Measures have limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under U.S.
7 unchanged sentences
In addition, because not all companies use identical calculations, our presentation of the Non-GAAP Measures may not be comparable to similarly titled measures of other companies, including companies in our industry.
−Removed: The following table presents a reconciliation of net income (loss) as determined in accordance with U.S.
−Removed: GAAP to EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin for the periods indicated:
+Added: The following table presents a reconciliation of net income as determined in accordance with U.S.
+Added: GAAP to EBITDA, and Adjusted EBITDA, and net income margin (expressed as a percentage of net sales) to Adjusted EBITDA Margin (expressed as a percentage of net sales) for the periods indicated:
Three Months Ended
−Removed: Nine Months Ended
−Removed: Net income (loss)
−Removed: Income tax expense (benefit)
+Added: Income tax expense
Interest expense
Depreciation and amortization
−Removed: Goodwill and other intangible asset impairment (a)
−Removed: COVID-19 shut-down costs (b)
−Removed: Aviara start-up costs (c)
+Added: Goodwill impairment (a)
Share-based compensation
−Removed: Aviara transition costs (d)
+Added: Aviara transition costs (b)
Adjusted EBITDA
−Removed: Represents non-cash charges recorded in the NauticStar and Crest segments for impairments of goodwill and trade name.
−Removed: See Note 5 in Notes to Unaudited Condensed Consolidated Financial Statements for more information regarding these impairment charges.
−Removed: Represents costs associated with the COVID-19 pandemic.
−Removed: Costs include lump sum severance payments and temporary continuation of healthcare benefits for laid off employees.
−Removed: Represents start-up costs associated with Aviara, a completely new boat brand in an industry category previously not served by the Company.
−Removed: We began selling the brand’s first two models, the AV32 and the AV36, during the first and second quarters of fiscal 2020, respectively.
−Removed: We expect to begin selling one additional model, the AV40, after the Aviara transition of production to the new Merritt Island Facility in Florida.
−Removed: Start-up costs presented for fiscal 2020 are related to the AV36 and AV40 models.
+Added: Represents a non-cash charge recorded in the Aviara segment for impairment of goodwill.
+Added: See Note 4 for more information on the goodwill impairment charge.
Represents costs to transition production of the Aviara brand from Vonore, Tennessee to Merritt Island, Florida.
Costs include duplicative overhead costs and costs not indicative of ongoing operations (such as training and facility preparation).
−Removed: We expect to incur such costs until Aviara production is fully transitioned, which we expect will be completed during fiscal 2021.
−Removed: The following table presents a reconciliation of net income (loss) as determined in accordance with U.S.
+Added: The following table presents a reconciliation of net income as determined in accordance with U.S.
GAAP to Adjusted Net Income for the periods indicated:
Three Months Ended
−Removed: Nine Months Ended
−Removed: (Dollars in thousands)
−Removed: Net income (loss)
−Removed: Income tax expense (benefit)
−Removed: Goodwill and other intangible asset impairment (a)
−Removed: COVID-19 shut-down costs (b)
+Added: (Dollars in thousands, except per share data)
+Added: Income tax expense
+Added: Goodwill impairment (a)
Amortization of acquisition intangibles
−Removed: Aviara start-up costs (c)
Share-based compensation
−Removed: Aviara transition costs (d)
+Added: Aviara transition costs (b)
Adjusted Net Income before income taxes
−Removed: Adjusted income tax expense (e)
+Added: Adjusted income tax expense (c)
Adjusted Net Income
3 unchanged sentences
Diluted Adjusted Net Income per share
−Removed: Represents non-cash charges recorded in the NauticStar and Crest segments for impairments of goodwill and trade name.
−Removed: See Note 5 in Notes to Unaudited Condensed Consolidated Financial Statements for more information regarding these impairment charges.
−Removed: Represents costs associated with the COVID-19 pandemic.
−Removed: Costs include lump sum severance payments and temporary continuation of healthcare benefits for laid off employees.
−Removed: Represents start-up costs associated with Aviara, a completely new boat brand in an industry category previously not served by the Company.
−Removed: We began selling the brand’s first two models, the AV32 and the AV36, during the first and second quarters of fiscal 2020, respectively.
−Removed: We expect to begin selling one additional model, the AV40, after the Aviara transition of production to the new Merritt Island Facility in Florida.
−Removed: Start-up costs presented for fiscal 2020 are related to the AV36 and AV40 models.
+Added: Represents a non-cash charge recorded in the Aviara segment for impairment of goodwill.
+Added: See Note 4 for more information on the goodwill impairment charge.
Represents costs to transition production of the Aviara brand from Vonore, Tennessee to Merritt Island, Florida.
Costs include duplicative overhead costs and costs not indicative of ongoing operations (such as training and facility preparation).
−Removed: We expect to incur such costs until Aviara production is fully transitioned, which we expect will be completed during fiscal 2021.
Reflects income tax expense at an income tax rate of 23.0% for each period presented.
−Removed: The following table presents the reconciliation of net income (loss) per diluted share to Adjusted Net Income per diluted share for the periods presented:
+Added: The following table presents the reconciliation of net income per diluted share to Adjusted Net Income per diluted share for the periods presented:
Three Months Ended
−Removed: Nine Months Ended
−Removed: Net income (loss) per diluted share
+Added: Net income per diluted share
Impact of adjustments:
−Removed: Income tax expense (benefit)
−Removed: Goodwill and other intangible asset impairment (a)
−Removed: COVID-19 shut-down costs (b)
+Added: Income tax expense
+Added: Goodwill impairment (a)
Amortization of acquisition intangibles
−Removed: Aviara start-up costs (c)
Share-based compensation
−Removed: Aviara transition costs (d)
+Added: Aviara transition costs (b)
Adjusted Net Income per diluted share before income taxes
−Removed: Impact of adjusted income tax expense on net income per diluted share before income taxes (e)
+Added: Impact of adjusted income tax expense on net income per diluted share before income taxes (c)
Adjusted Net Income per diluted share
−Removed: Represents non-cash charges recorded in the NauticStar and Crest segments for impairments of goodwill and trade name.
−Removed: See Note 5 in Notes to Unaudited Condensed Consolidated Financial Statements for more information regarding these impairment charges.
−Removed: Represents costs associated with the COVID-19 pandemic.
−Removed: Costs include lump sum severance payments and temporary continuation of healthcare benefits for laid off employees.
−Removed: Represents start-up costs associated with Aviara, a completely new boat brand in an industry category previously not served by the Company.
−Removed: We began selling the brand’s first two models, the AV32 and the AV36, during the first and second quarters of fiscal 2020, respectively.
−Removed: We expect to begin selling one additional model, the AV40, after the Aviara transition of production to the new Merritt Island Facility in Florida.
−Removed: Start-up costs presented for fiscal 2020 are related to the AV36 and AV40 models.
+Added: Represents a non-cash charge recorded in the Aviara segment for impairment of goodwill.
+Added: See Note 4 for more information on the goodwill impairment charge.
Represents costs to transition production of the Aviara brand from Vonore, Tennessee to Merritt Island, Florida.
Costs include duplicative overhead costs and costs not indicative of ongoing operations (such as training and facility preparation).
−Removed: We expect to incur such costs until Aviara production is fully transitioned, which we expect will be completed during fiscal 2021.
Reflects income tax expense at an income tax rate of 23.0% for each period presented.
−Removed: Change in Non-GAAP Financial Measure
−Removed: Prior to fiscal year-end 2020, the Company’s calculation of a diluted per share amount of Adjusted Net Income included an adjustment to fully dilute this non-GAAP measure for all outstanding share-based compensation grants.
−Removed: This additional dilution was incorporated by adjusting the GAAP measure, Weighted Average Shares Used for the Computation of Basic earnings per share, as presented on the Consolidated Statements of Operations, to include a dilutive effect for all outstanding RSAs, PSUs, and stock options.
−Removed: Beginning with the fiscal year-end 2020 presentation and for all subsequent periods, the Company will no longer include this additional dilution impact in its calculation of Adjusted Net Income per diluted share.
−Removed: The Company has instead utilized the Weighted Average Shares Used for the Computation of Basic and Diluted earnings per share as presented on the Consolidated Statements of Operations to calculate Adjusted Net Income per diluted share for all periods presented herein.
−Removed: The Company believes that, because its outstanding share-based compensation grants no longer result in a material amount of dilution of its earnings as was the case nearer to the date of our IPO, the adjustment methodology previously used no longer provides meaningful information to management or other users of its financial statements.
−Removed: This change resulted in an increase of $0.02 in the nine months ended March 29, 2020 in the amount of Adjusted Net Income per diluted share from what was previously reported.
Liquidity and Capital Resources
−Removed: Our primary liquidity and capital resource needs are to finance working capital, fund capital expenditures, and service our debt.
−Removed: Our principal sources of liquidity are our cash balance, cash generated from operating activities, our Revolving Credit Facility and the refinancing and/or new issuance of long-term debt.
−Removed: As of April 4, 2021, we had a cash balance of $29.0 million in addition to $35.0 million of available borrowing capacity under the Revolving Credit Facility.
−Removed: During October 2020, the Company completed the purchase of the Merritt Island Facility for a purchase price of $14.2 million.
−Removed: See Note 11 in Notes to Unaudited Condensed Consolidated Financial Statements for additional information regarding this transaction.
−Removed: We believe our cash balance, cash from operations, and availability under the Revolving Credit Facility will be sufficient to provide for our liquidity and capital resource needs.
−Removed: However, we are continuing to monitor the COVID-19 pandemic and its impact on our business, dealers, consumers and industry as a whole.
+Added: Our primary liquidity and capital resource needs are to finance working capital, fund capital expenditures, service our debt, and fund our stock repurchase program.
+Added: Our principal sources of liquidity are our cash balance, cash generated from operating activities, our revolving credit agreement and the refinancing and/or new issuance of long-term debt.
+Added: Cash and cash equivalents totaled $11.7 million as of October 3, 2021, a decrease of $27.6 from $39.3 million as of June 30, 2021.
+Added: Total debt as of October 3, 2021 and June 30, 2021 was $84.4 million and $93.1 million, respectively.
+Added: Our working capital was impacted by the $22.1 million increase in inventory during the first quarter of fiscal 2022 mainly due to an increase in raw materials to support higher production volumes and to increase safety stock to manage supply chain risk.
+Added: Work in process has increased due to supply chain disruptions.
+Added: As of October 3, 2021, we had $25.7 million outstanding under the Revolving Credit Facility, leaving $74.3 of available borrowing capacity.
+Added: Refer to Note 6—Long Term Debt in the Notes to Unaudited Condensed Consolidated Financial Statements for further details.
+Added: 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.
+Added: During the quarter ending October 3, 2021, the Company repurchased 58,379 shares of common stock for $1.5 million in cash, including related fees and expenses.
+Added: We are continuing to monitor the impact of supply chain disruptions, production inefficiencies, and inflationary pressures on our business.
+Added: However, we believe our cash balance, cash from operations, and our ability to borrow will be sufficient to provide for our liquidity and capital resource needs, including authorized stock repurchases.
The following table summarizes our cash flows from operating, investing, and financing activities:
−Removed: Nine Months Ended
+Added: Three Months Ended
(Dollars in thousands)
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Net change in cash
−Removed: Net cash provided by operating activities increased primarily due to higher operating income and more cash provided by working capital usage.
−Removed: Working capital is defined as Accounts receivable, Income tax receivable, Inventories, and Prepaid expenses and other current assets net of Accounts payable, Income tax receivable, and Accrued expenses and other current liabilities as presented in the unaudited condensed consolidated balance sheets.
−Removed: Cash flows from working capital changes increased $14.8 million compared to the prior year period and included:
−Removed: a $16.0 million increase attributable to Accounts payable driven by increasing production rates during the nine months ended April 4, 2021;
−Removed: a $11.3 million increase related to Accrued expenses and other current liabilities largely from lower cash used for variable compensation, higher customer deposits, and lower cash used for dealer incentives for the nine months ended April 4, 2021 compared to the nine months ended March, 29, 2020;
−Removed: a $9.4 million increase related to Income tax receivable primarily as a result of the receipt of a tax refund associated with fiscal 2020;
−Removed: a $13.3 million decrease attributable to Inventories mainly as a result of an increase in raw materials and work-in-process driven by increasing production during the nine months ended April 4, 2021;
−Removed: a $6.6 million decrease related to Accounts receivable primarily due to an improved collection cycle at Crest during the nine months ended March 29, 2020 as compared to the prior period, which has been sustained during the nine months ended April 4, 2021.
−Removed: Net cash used in investing activities increased $10.2 million due to higher capital expenditures, primarily related to the purchase of the Merritt Island Facility.
−Removed: Financing cash flow decreased primarily as the result of lower net borrowing from our Revolving Credit Facility during the nine months ended April 4, 2021 compared to the nine months ended March, 29, 2020.
−Removed: On March 20, 2020, the Company borrowed all available funds under its Revolving Credit Facility, $35.0 million, a precautionary measure in order to increase its cash position and preserve financial flexibility in light of the uncertainty in the global markets resulting from the COVID-19 pandemic.
−Removed: The Company repaid $25.0 million of this amount before the end of fiscal 2020.
−Removed: In addition, t he Company repaid net borrowings of $10.0 million on its Revolving Credit Facility and $7.0 million of scheduled principal repayments on its term loans during the nine months ended April 4, 2021, compared to $10.6 million of scheduled repayments during the nine months ended March, 29, 2020.
+Added: First Quarter 2022 Cash Flow
+Added: Net cash used in operating activities for first quarter 2022 was $13.6 million mainly due to working capital usage, partially offset by net income.
+Added: Working capital usage primarily consisted of an increase in inventory, accounts receivable, and a decrease in accrued expenses and other current liabilities.
+Added: Partially offsetting the working capital usage was an increase in accounts payable.
+Added: As discussed above, inventory increased $22.1 million for first quarter 2022.
+Added: Accounts receivables increased as a result of timing in customer payments.
+Added: Accrued expenses and other current liabilities decreased because of continued strong retail demand without the need for rebates and higher payments related to variable compensation costs.
+Added: Accounts payable increased mainly due to the increase in inventory safety stock.
+Added: Net cash used for investing activities was $3.6 million, which included capital expenditures.
+Added: Our capital spending was focused on expanding our capacity and maintenance capital.
+Added: Net cash used for financing activities was $10.4 and related to net payments of long-term debt of $8.8 million and funding of the stock repurchase program totaling $1.5 million.
+Added: First Quarter 2021 Cash Flow
+Added: Net cash provided by operating activities in first quarter 2021 totaled $7.3 million primarily due to net income and an increase in accounts payable, partially offset by an increase in inventory and accounts receivable.
+Added: Accounts payables and inventory increased due to increased production.
+Added: Accounts receivables increased due to an increase in sales.
+Added: Net cash used for investing activities was $2.0 million, which consisted of capital expenditures.
+Added: Net cash used for financing activities was $12.8 million and related primarily to payments of long-term debt.
Off Balance Sheet Arrangements
−Removed: The Company did not have any off balance sheet financing arrangements as of April 4, 2021.
−Removed: Emerging Growth Company
−Removed: We are currently an emerging growth company, as defined in the JOBS Act.
−Removed: We will continue to be an emerging growth company until June 30, 2021, which is the last day of our fiscal year following the fifth anniversary of the date of completion of our initial public offering.
−Removed: As a result, beginning with our annual reporting requirements related to fiscal 2021, we may no longer take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding stockholder advisory “say-on-pay” votes on executive compensation and stockholder advisory votes on golden parachute compensation.
−Removed: The JOBS Act also provides that an emerging growth company can utilize the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.
−Removed: Pursuant to Section 107 of the JOBS Act, we have irrevocably chosen to opt out of such extended transition period and, as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for companies that are not “emerging growth companies.”
+Added: The Company did not have any off balance sheet financing arrangements as of October 3, 2021.
Critical Accounting Policies
−Removed: As of April 4, 2021 there were no significant changes in or changes in the application of our critical accounting policies or estimation procedures from those presented in our Annual Report on Form 10-K for the fiscal year ended June 30, 2020, which was filed with the SEC on September 11, 2020 .
+Added: As of October 3, 2021 there were no significant changes in or changes in the application of our critical accounting policies or estimation procedures from those presented in our Annual Report on Form 10-K for the fiscal year ended June 30, 2021, which was filed with the SEC on September 2, 2021 .
QUANTITATIVE AND QUALITATI VE DISCLOSURES ABOUT MARKET RISK.
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