Mastercraft Boat (NASDAQ:MCFT) reported fiscal second-quarter 2026 results that management said exceeded internal expectations, while also outlining a definitive agreement to combine with Marine Products Corporation in a transaction designed to broaden its brand portfolio and dealer footprint.
Fiscal Q2 results top internal expectations
Management said the company is heading into boat shows and the spring selling season with “right-sized” dealer inventories and continued focus on innovation, cost efficiencies, and disciplined production management. CEO Brad Nelson noted that while the company has not seen a “sustained breakout” in consumer demand, early boat show engagement and dealer feedback have been encouraging.
Gross margin improved to 21.6%, up 440 basis points year-over-year. Kent said the improvement reflected operating performance across both segments, favorable model mix and options, and pricing.
Operating expenses were $12.8 million, up $2.1 million from the prior year, driven by costs tied to implementation of a new ERP system, business development and consulting expenses related to the Marine Products transaction, and higher selling and marketing costs.
Adjusted net income was $4.7 million, or $0.29 per diluted share, compared with $1.7 million, or $0.10 per share, a year earlier. Kent said the quarter’s adjusted EPS reflected an effective tax rate of 23% in fiscal 2026 versus 20% in the prior-year period.
Adjusted EBITDA was $7.5 million, up from $3.5 million last year. Adjusted EBITDA margin improved to 10.4% from 5.6%, a 480 basis point increase.
Inventory stance and demand assumptions
Nelson said pipeline inventory levels ended the quarter 25% improved from the prior year, describing the company’s approach as balancing dealer health and inventory discipline. Management maintained its original full-year assumption that retail demand would be down 5% to 10%, though Nelson said recent trends for the MasterCraft segment were tracking toward the better end of that range.
In the Q&A, management said it did not have plans for further dealer destocking at MasterCraft, adding that “restocking… is largely over,” and that it expects wholesale and retail to be more equal as the company moves into next year. Kent also said Marine Products manages inventory tightly as well and is in “fine shape” from a pipeline perspective.
Brand and product commentary
Nelson said momentum within the MasterCraft brand is being supported by premium products with higher margins and advanced technology. He cited encouraging engagement at boat shows in Salt Lake City, Atlanta, Toronto, Cincinnati, and Kansas City. Management highlighted newly redesigned X24 and XStar models as leading the company’s boat show presence, and said it recently announced the all-new X22 to broaden the X family. Nelson said the company expects the X family to improve product mix in the back half of the year.
In the pontoon segment, Nelson said the company is focused on operational improvements, margin performance, and “sharpening” its pipeline, adding that it has taken “assertive actions” including portfolio enhancement, leadership changes, and increased dealer support. The company’s luxury pontoon brand, Balise, expanded its reach with the new Halo model, which management said will debut at upcoming boat shows.
Asked whether the Marine Products deal would change Balise’s trajectory, Nelson said Balise remains an important initiative and will continue to expand, describing it as an ultra-premium product that has drawn strong consumer interest and positive dealer feedback. He added that Balise has, in some cases, helped lead to Crest being picked up by dealers as well.
Guidance raised; outlook excludes Marine Products deal
Based on fiscal Q2 performance and current expectations, management raised full-year guidance (excluding any impact from the proposed Marine Products combination). For fiscal 2026, the company now expects:
- Net sales of $300 million to $310 million
- Adjusted EBITDA of $36 million to $39 million
- Adjusted EPS of $1.45 to $1.60
- Capital expenditures of approximately $9 million
For the fiscal third quarter of 2026, the company expects net sales of approximately $75 million, adjusted EBITDA of approximately $9 million, and adjusted EPS of approximately $0.35. Kent said production is expected to accelerate in the back half of the fiscal year to support new product initiatives and seasonal demand.
The company ended the quarter with $81.4 million in cash and short-term investments and no debt, Kent said.
Marine Products combination: structure, rationale, and expected synergies
Nelson said the combination with Marine Products Corporation would add Chaparral and Robalo to MasterCraft’s existing portfolio, expanding reach across coastal and inland markets and increasing the breadth of price points and boat categories offered. Management said the combined network would include more than 500 dealers globally and a unified manufacturing footprint across Tennessee, Michigan, and Georgia, totaling nearly 2 million square feet of production capacity.
Under the terms described on the call, Marine Products shareholders are expected to receive 0.232 shares of MasterCraft stock plus $2.43 in cash per Marine Products share, representing total cash consideration of $86 million. Based on MasterCraft’s closing share price of $23.12 on February 4, management said the consideration implies a value of $7.79 per Marine Products share and a total transaction value of $232.2 million.
Management said current MasterCraft shareholders are expected to own 66.5% of the combined company, with Marine Products shareholders owning 33.5%. The combined company will be named MasterCraft Boat Holdings, Inc. and continue trading on Nasdaq under MCFT, with headquarters in Vonore, Tennessee, while maintaining Chaparral and Robalo operations in Nashville, Georgia. The MasterCraft board would expand from seven to 10 directors, adding three new members, with Roch Lambert continuing as chair. Nelson said he would remain CEO and Kent would serve as CFO of the combined company.
Kent said the company expects to fund the deal with combined cash on hand and remain debt-free with “ample liquidity” after closing. On a pro forma basis at close, management expects:
- Cash balance of $40 million to $60 million
- Liquidity of $115 million to $135 million
- No debt and continued cash flow positivity
Management expects approximately $6 million in annual cost savings from eliminating Marine Products’ public company costs and corporate overhead, and said the deal is expected to be accretive to adjusted EPS in fiscal 2027 after adjusting for those expenses. In the Q&A, Kent also cited potential longer-term opportunities in sourcing and procurement, manufacturing best practices, vertical integration, and leveraging complementary dealer networks, while Nelson pointed to the potential for faster and broader technology and product development due to increased scale.
The transaction has been unanimously approved by both boards and is expected to close in calendar Q2 2026, subject to customary conditions including regulatory approvals and shareholder approvals.
About Mastercraft Boat (NASDAQ:MCFT)
MasterCraft Boat Holdings, Inc (NASDAQ: MCFT) is a designer, manufacturer and marketer of high-performance recreational powerboats. The company’s portfolio includes the MasterCraft®, Aviara®, Crest® Classic and Supra® brands, each of which features multiple model lines tailored for activities such as wakeboarding, waterskiing, cruising and luxury day boating. MasterCraft oversees the full product lifecycle from hull design and propulsion engineering to interior appointments and final assembly.
Founded in 1968 and headquartered in Vonore, Tennessee, MasterCraft has built a reputation for innovation in hull design, ballast systems and tower architecture to enhance wake performance and ride quality.
