MasterCraft’s Q2 Beats — And the Real Game Changer Isn’t Earnings

Date of Call: Feb 5, 2026

Financials Results

• Revenue: $71.8M, up 13.2% YOY
• EPS: $0.29 per diluted share, compared to $0.10 in the prior year
• Gross Margin: 21.6%, up 440 basis points YOY

Guidance:

• Consolidated net sales for fiscal '26 expected to be between $300M and $310M.
• Adjusted EBITDA expected to be between $36M and $39M.
• Adjusted earnings per share expected to be between $1.45 and $1.60.
• Capital expenditures expected to be approximately $9M for the year.
• Q3 net sales expected to be approximately $75M with adjusted EBITDA of approximately $9M.
• Q3 adjusted earnings per share expected to be approximately $0.35.

Business Commentary:

Strong Financial Performance in Q2 2026:

• MasterCraft Boat Holdings reported net sales of $71.8 million for Q2 2026, up 13% year-over-year, and an adjusted EBITDA of $7.5 million, a margin improvement of 480 basis points.
• The growth was driven by favorable model mix, higher volumes, and pricing strategies, along with operational efficiencies.

Strategic Expansion through Acquisition:

• MasterCraft announced a definitive agreement to combine with Marine Products Corporation, aiming to strengthen its marine platform with complementary brands and an expanded dealer network.
• The acquisition is expected to bring additional revenue streams and cost synergies, enhancing the company's market reach and product development capabilities.

Innovation and Product Development:

• MasterCraft is introducing new products like the redesigned X24 and XStar, and the new X22 model, which are expected to improve product mix and drive demand.
• The focus on innovation is part of the company's strategy to enhance product offerings and maintain a competitive edge in the market.

Dealer Network and Inventory Management:

• Pipeline inventory levels ended the quarter 25% improved from the prior year, indicating effective inventory management.
• The company is entering the season with rightsized dealer inventories, which is expected to support optimized production and better alignment with demand fluctuations.

Sentiment Analysis:

Overall Tone: Positive

• Management stated 'We delivered results that exceeded our expectations, and we are building momentum as we head into boat shows...' and 'We are raising our full year guidance for net sales, earnings and adjusted earnings per share...' The tone is optimistic about new product launches and the strategic combination, describing it as 'an exciting next chapter' and 'a move that strengthens our marine platform.'

Q&A:

• Question from Joseph Altobello (Raymond James & Associates, Inc.): Can you dive into some of the additional synergies either on the cost or revenue side from expanded distribution and accelerating the innovation pipeline?
  Response: Beyond $6M in cost savings, synergies include faster innovation, manufacturing best practices, sourcing scale, vertical integration opportunities, and leveraging complementary dealer networks.

• Question from Joseph Altobello (Raymond James & Associates, Inc.): Is there still more destocking to be done in the back half of fiscal '26, and what does Marine Products field inventories look like?
  Response: Destocking for MasterCraft is largely over; inventory levels are improved. Marine Products also manages inventory tightly and is in good shape.

• Question from Craig Kennison (Robert W. Baird & Co. Incorporated): Can you shed any light on the process that led to the acquisition price being below Marine Products' closing price?
  Response: The mix of cash and stock was appealing to Marine Products shareholders, offering them upside participation. The deal meets MasterCraft's strict capital allocation criteria and is seen as highly strategic.

• Question from Craig Kennison (Robert W. Baird & Co. Incorporated): Does having a larger portfolio unlock new innovation and vertical integration investments that were previously limited by scale?
  Response: Yes, the combination provides commonization opportunities, integration of tech stacks, and increased speed of innovation, enhancing efficiencies and expanding product offerings.

• Question from Craig Kennison (Robert W. Baird & Co. Incorporated): Was this a competitive process initiated by Marine Products, or did it come about differently?
  Response: The process details are not specified, but the deal emerged from mutual evaluation of opportunities; both companies are complementary with no debt and similar dealer treatment, making it an attractive fit.

• Question from Eric Wold (Texas Capital Securities): Are there early expectations for shifts in Marine Products model mix or focus once integrated, or does their current lineup make the most sense?
  Response: Both companies have strong portfolios. The focus is on accelerating innovation and adding 'special sauce' across the combined 65-model roadmap, with Marine Products operating as an independent segment.

• Question from Eric Wold (Texas Capital Securities): With the combined dealer network of 500+, what is the opportunity to expand distribution for both brands?
  Response: There is a thorough plan identified for cross-synergy growth, including adding brands in specific markets, but execution will be market-by-market and not a simple dealer-by-dealer push.

• Question from Anna Glaessgen (B. Riley Securities, Inc.): Can you bridge the gap between Marine Products' reported $17M EBITDA and the pro forma $30M contemplated in the combined entity's EBITDA?
  Response: The increase includes forward-looking estimates, adjustments for EBITDA differences, and the immediate $6M in synergies from eliminating corporate and public company costs.

• Question from Anna Glaessgen (B. Riley Securities, Inc.): What can MasterCraft do differently to apply to Marine Products to lift its margin over time?
  Response: Sharing best practices in sourcing, manufacturing, and innovation platforms, along with vertical integration opportunities, provides a roadmap for margin improvement.

• Question from Gregory Miller (Truist Securities, Inc.): How much does the regional geography of Marine Products' heavy concentration in the Gulf Coast and East Coast play into the decision-making?
  Response: The geographic distribution is an added strength, more than doubling market reach and providing access to a $12B addressable market across coastal and inland regions.

• Question from Gregory Miller (Truist Securities, Inc.): How similar or different is Marine Products' manufacturing process compared to MasterCraft's?
  Response: There are many similarities, especially in small-to-midsized boat production. Differences present opportunities for sharing best practices in materials, sourcing, and operations.

• Question from Noah Zatzkin (KeyBanc Capital Markets Inc.): Can you break down the incremental industry unit volume that Robalo and Chaparral unlock?
  Response: The deal adds roughly 8,000 units from the Gen Rec market and 20,000 units from the salt fish market annually, with zero cannibalization and complementary product categories.

• Question from Noah Zatzkin (KeyBanc Capital Markets Inc.): How did the wide price range of Robalo and Chaparral influence the acquisition thought process?
  Response: The expanded price range helps reach a wider consumer base, enhancing affordability and market reach while maintaining premium positioning.

• Question from Gerrick Johnson (Seaport Research Partners): Realistically, how long would it take to expand distribution given dealers typically carry multiple brands, and how do you address complementary market challenges?
  Response: It's not a cakewalk, but the scale and portfolio create opportunities for brand aggregation market-by-market. Work streams are ready post-close to target key markets.

• Question from Gerrick Johnson (Seaport Research Partners): How is the uptake on Balise going, and will it be put on the back burner post-deal?
  Response: Balise is ramping well with strong consumer interest. It continues to expand independently and has a halo effect on the broader pontoon segment.

• Question from Gerrick Johnson (Seaport Research Partners): Is there any risk in this not closing considering the Rollins Estate owns 2/3 of Marine Products' shares?
  Response: Management is excited about the deal, sees a compelling business case, and believes the process will work through, with advantages highlighted for both brands.

Contradiction Point 1

Retail Demand Outlook and Market Share Expectations

Expectations for full-year retail demand shift from a defined decline range to an unspecified but cautious outlook.

Are there still destocking efforts planned for the second half of fiscal 2026, and what are the current inventory levels for Marine Products? - Joseph Altobello (Raymond James)

2026Q2: The company expects wholesale and retail to become more balanced, but any change will be market-driven. - [Scott Kent](CFO)

Can you explain retail trends this quarter and October, and how marine consumers are responding to lower rates amid ongoing uncertainty? - Craig Kennison (Robert W. Baird)

2026Q1: The full-year retail expectation remains down between 5% and 10% for MasterCraft, unchanged from prior expectations. - [Scott Kent](CFO)

Contradiction Point 2

Financial Flexibility and M&A Capital Allocation

Guidance on using leverage for M&A shifts from a flexible, undisclosed framework to a specific, disclosed threshold.

Why was the deal priced below Marine Products' closing stock price? - Craig Kennison (Robert W. Baird)

2026Q2: The deal was evaluated through the company's capital allocation pipeline. It meets strict criteria due to its strategic, operational, and financial benefits... - [Bradley Nelson](CEO)

What is your comfort level with leverage for potential M&A, including the maximum threshold and expected repayment timeline? - Eric Wold (Texas Capital Securities)

2026Q1: The company maintains a flexible balance sheet... Specific leverage thresholds or timelines for debt reduction are not disclosed... - [Bradley Nelson](CEO)

Contradiction Point 3

Inventory Management Outlook

Contradiction on the scale and nature of expected inventory adjustments.

Is there remaining destocking in fiscal '26 and what are Marine Products' current field inventories? - Joseph Altobello (Raymond James)

2026Q2: Destocking for MasterCraft is largely over. Inventory levels are in a good place... The company expects wholesale and retail to become more balanced. - [Scott Kent](CEO)

How will the expected retail decline and potential destocking in FY26 impact unit growth? Is the destocking expected to be front-loaded or consistent throughout the year? - Anna Glaessgen (B. Riley Securities, Inc.)

2025Q4: The expected destocking in FY26 is forecast to be fairly modest and not as large a driver as FY25. Dealer health is better, and inventory aging profiles have improved. - [Bradley M. Nelson](CFO)

Contradiction Point 4

Dealer Network Strategy

Contradiction on the primary focus for dealer network expansion.

How many dealers in the combined 500+ network could carry both brands, expanding their distribution? - Eric Wold (Texas Capital Securities)

2026Q2: There is a thorough plan already identified for cross-synergy growth opportunities at the market level... The combined scale enables more effective market entry and expansion than either company could achieve alone. - [Bradley Nelson](CFO)

What are the recent dealer network wins and net gains? - Craig R. Kennison (Robert W. Baird & Co. Incorporated)

2025Q4: The company is focused on strengthening distribution in two areas: 1) Expanding into white space (new geographic coverage), and 2) Increasing density within existing geographies by adding rooftops to growing markets. - [Bradley M. Nelson](CFO)

Contradiction Point 5

Inventory Management Outlook

Contradiction on the status of inventory destocking and management discipline.

What remains for destocking in the back half of fiscal '26, and what do Marine Products' field inventories look like? - Joseph Altobello (Raymond James)

2026Q2: Destocking for MasterCraft is largely over. Inventory levels are in a good place, and the focus is on maintaining disciplined inventory management. - [Scott Kent](CFO)

What caused the full-year guidance to be revised down from $295M to $275M—initial optimistic assumptions or degradation in conditions? - Eric Wold (Texas Capital Securities)

2025Q3: The revision reflects increased caution from both retail and dealer stocking perspectives, not necessarily a significant change in underlying conditions. - [Tim Oxley](CFO)