Q4 2024 MasterCraft Boat Holdings Inc Earnings Call

Ladies and gentlemen, thank you for standing by, and welcome to the Mastercraft Bolt Holdings Inc. fiscal fourth quarter in full year 2024 on his conference call. Please be advised that today's conference is being recorded. I will now again hand the conference over to your speaker today. Sam Oxley, Chief Financial Officer, please go ahead sir.

Unknown Executive: Fiscal fourth quarter in full year 2020 for Ernie's conference call. Please be advised that today's conference is being recorded.

Unknown Executive: I will now hand the conference over to your speaker today, Tim Oxley, Chief Financial Officer. Please go ahead, sir.

Timothy Oxley: Thank you, operator, and welcome everyone. Thank you for joining us today as we discuss Masscraft's fiscal fourth quarter and full year performance for 2024. As a reminder, today's call has been webcast live.

Sam Oxley: Thank you, operator and welcome everyone. Thank you for joining us today as we discuss mass-craft fiscal fourth quarter and a full year of performance for 2024.

Timothy Oxley: We'll also be archived on our website for future listening with me on this morning's call as Brad Nelson, Chief Executive Officer. We will begin with an overview of our operational performance from the fourth quarter and full year. I will then discuss our financial performance. The impact will provide some closing remarks before we open the call for questions.

Speaker Change: As a reminder, today's call is being webcast-like, and will also be archived on our website for future listening. With me on this morning's call is Brad Nelson Chief Executive Officer.

Speaker Change: We will begin with an overview of our operational performance from the fourth quarter and four-year. I will then discuss our financial performance. The impact will provide some closing remarks before we open the call for questions.

Timothy Oxley: Before we begin, we'd like to remind participants that the information contained in this call is current only as of today, August 29th, 2020. The company assumes no obligation to date any statements, including four looking statements, statements that are not historical facts or four looking statements and subject to the safe harbor disclaimer and today's press release. Additionally, on this conference call, we would discuss non-GAAP measures that include or exclude items not indicative of our ongoing operations. For each non-gat measure, we also provide the most correctly comparable gat measure and state press release. Which include the reconciliation of these non-gat measures toward gat results.

Speaker Change: Before you begin, we'd like to remind participants that the information contained in this call is current only as of today August 29, 2024. The commission's no obligation to date any statements, including four looking statements.

Speaker Change: State is an autostorical fact for looking statements, and subject to the safe Harvard Disclamement, State's best release.

Speaker Change: Additionally, on this conference call, we would discuss non-gap measures that include or exclude items not indicative of wrongling operations.

Speaker Change: for each non-gat measure we also provide the most correctly comparable gat measure in state's press release, which include the reconciliation of these non-gat measures toward gap results. There's also a slide-to-ex summarizing our financial results in the best or sector of our website.

Unknown Executive: There's also a slide deck summarizing our financial results in the investor section of our website.

Timothy Oxley: As a reminder, unless otherwise noted, the following commentaries made on a continuing operation spaces, but that'll turn the call over to Brad.

Speaker Change: As a reminder and let's otherwise noted, the following commentary is made on a continuing operation spaces, but that'll turn the call over to Brad.

Bradley Nelson: Thank you, Tim, and good morning, everyone. Mastercraft delivered results ahead of our latest expectations while continuing to navigate a challenging economic environment and highly competitive retail landscape. Entering fiscal 2024, our focus was to proactively navigate market headwinds and execute our strategic and operational priorities to generate value for our stakeholders. Our efforts were centered around destocking field inventory levels, advancing consumer and dealer centric initiatives, and returning capital to shareholders while optimizing profitability and cash flow. Throughout the year, market conditions put downward pressure on retail and wholesale demand. In anticipation of this softness, we took early action to adjust production plans.

Brad Nelson: Thank you to Tim and good morning everyone.

Brad Nelson: Mastercraft delivered results ahead of our latest expectations while continuing to navigate a challenging economic environment and highly competitive retail landscape.

Brad Nelson: Henry in fiscal 2024, our focus was to proactively navigate market headwinds and execute our strategic and operational priorities to generate value for our stakeholders.

Brad Nelson: Our efforts were centered around destocking, filled inventory levels.

Brad Nelson: Advancing Consumer and Dealer Centric Initiatives.

Brad Nelson: and returning capital to shareholders, while optimizing profitability and cash flow.

Brad Nelson: Throughout the year, market conditions put downward pressure on retail and wholesale demand. In anticipation of this softness, we took early action to adjust production plans.

Bradley Nelson: Our proactive approach to wholesale proved to be prudent as we work to alleviate pressures our dealers are facing. In the summer selling season, we experienced a general slowdown in demand from retail customers across our brands, consistent with the majority of the marine industry. This combined with continued economic uncertainty, elevated interest rates, and lingering competitor dealer disruptions has driven up inventory carrying costs for dealers, contributing to caution throughout the dealer network. Field inventories have improved by approximately 20% from fiscal 2023, which was near the low end of our targeted range. We're pleased with our progress to date, but filled inventories remain higher than optimal based on recent retail trends.

Brad Nelson: are proactive approach to wholesale, prove to be prudent as we work to alleviate pressures, our dealers are facing.

Brad Nelson: In the summer selling season, we experienced a general slowdown in demand from retail customers across our brands, consistent with the majority of the marine industry. This combined with continued economic uncertainty elevated interest rates and lingering competitor dealer disruptions.

Brad Nelson: has driven up inventory carrying costs for dealers, contributing to caution throughout the dealer network.

Brad Nelson: Filmed inventories have improved by approximately 20% from fiscal 2023, which was near the low end of our targeted range.

Brad Nelson: We're pleased with our progress to date, but Phil's inventory is remain higher than off the mold based on recent retail trends.

Bradley Nelson: We continue to incentivize our dealers to sell through inventory in a judicious manner. Although these conditions have short-term implications for wholesale shipments, our inventory rebalancing efforts are positive for long-term dealer health. Pipeline management remains a primary focus as we move forward, positioning us well for the market recovery ahead.

Speaker Change: We continue to incentivize our dealers to sell through inventory in a judicious manner. Although these conditions have short-term implications for wholesale shipments, our inventory rebalancing efforts are positive for long-term dealer health.

Speaker Change: Pipeline Management remains a primary focus as we move forward, positioning us well for the market recovery ahead.

Bradley Nelson: Before we turn to fiscal 2025, I would like to discuss the announcement we issued earlier this month relating to the divestiture of the Aviara business. After a thorough review of our strategic plans, we determine that exiting this business would best position us to extend our leadership position in our Mastercraft, Crest, and Beliefs brands. This focus also allows us to optimize our cost structure and direct resources towards other long-term initiatives to drive sustainable and profitable long-term growth. As part of the asset exchange agreement, we are transferring the rights of the Aviara brand to Cruiser Yachts, a subsidiary of MarineMax, the brand's primary retail partner.

Speaker Change: Before we turn to fiscal 2025, I would like to discuss the announcement we issued earlier this month relating to the divestiture of the Aviyara business.

Speaker Change: After a thorough review of our strategic plans, we determined that exiting this business would best position us to extend our leadership position in our massacraft, crest, and belief brands.

Speaker Change: This focus also allows us to optimize our cost structure and direct resources towards other long-term initiatives to drive sustainable and profitable long-term growth.

Speaker Change: As part of the asset exchange agreement, we are transferring the rights of the OVR brand to cruiser yachts, a subsidiary of Marine Max, the brand's primary retail partner.

Bradley Nelson: We anticipate the transaction to close during our fiscal first quarter. We are winding down operations at our Merit Island, Florida facility and have begun marketing the site for sale. In Q1 of fiscal 2025, we will begin reporting the financial results of the Aviara segment as discontinued operations. The hard work and dedication of our strong Aviara team quickly enabled this product line to become a blue chip brand in boating. Decisions that impact our employees are always difficult, but we are fully committed to supporting them through this transition. We appreciate the contributions of all who have been involved with the operation.

Speaker Change: We anticipate the transaction to close during our fiscal first quarter. We are winding down operations at our Maryland Florida facility and have begun marketing the site for sale.

Speaker Change: In Q1 of Fiscal 2025, we will begin reporting the financial results of the OVR segment as discontinued operations.

Speaker Change: The hard work and dedication of our strong Aviyara team quickly enabled this product light to become a blue chip brand and boating.

Speaker Change: Decisions that impact our employees are always difficult, but we are fully committed to supporting them through this transition. We appreciate the contributions of all who have been involved with the operation.

Bradley Nelson: As we turn our focus to next year, we are encouraged by the market response to the launch of our new premium pontoon brand, Belize. Through cross collaborative efforts of our experienced mastercraft and crest teams, Belize will allow us to reach an affluent and resilient customer base in the pontoon segment. These products will be manufactured at Crest existing facility in Michigan, requiring minimal capital investment and leveraging an experienced team. The police lineup is being sold through a diverse and largely incremental dealer network. This brand brings accretive margins for our pontoon segment and will be profitable in year one.

Speaker Change: As we turn our focus to next year, we are encouraged by the market response to the launch of our new premium pontoon brand, Belize.

Speaker Change: through cross collaborative efforts of our experienced Mastercraft and Crest teams. Belize will allow us to reach an affluent and resilient customer base in the pontoon segment.

Speaker Change: These products will be manufactured at crests existing facility in Michigan, requiring minimal capital investment and leveraging an experienced team. The police lineup is being sold through a diverse and largely incremental dealer network.

Speaker Change: This brand brings a creative margins for our pontoon segment and will be profitable in year one.

Bradley Nelson: Today, the team has already onboarded 11 dealers with locations in 26 expensive markets. We will provide more details on this brand later in the call. As we enter fiscal 2025, we will continue to prioritize a healthy distribution network across all brands. Our production schedule aligns with current dealer sentiment and credit availability, and consequently, we plan to ship a higher number of boats in the second half of fiscal 2025 compared to the first half. The industry will benefit as other OEMs also take the necessary measures to rebalance dealer inventories in this challenging environment. We appreciate the support of our dealers, and we will work closely with them to capitalize on the opportunities ahead.

Speaker Change: Today, the team is already on board at 11 dealers with locations in 26 expansive markets. We will provide more details on this brand later in the call.

Speaker Change: As we enter fiscal 2025, we will continue to prioritize a healthy distribution network across all brands.

Speaker Change: A production schedule all eyes with current dealer sentiment and credit availability and consequently, we plan to ship a higher number of boats in the second half of fiscal 2025 compared to the first half.

Speaker Change: The industry will benefit as other OEMs also take the necessary measures to rebalance dealer inventories in this challenging environment. We appreciate the support of our dealers and we will work closely with them to capitalize on the opportunities ahead.

Bradley Nelson: Due to the economic and industry headwinds combined with the cautious deal of ordering patterns and elevated carrying costs, we expect the destocking trend to continue in fiscal 2025. To align with our production plans, we've taken measures to right size our cost structure while maintaining a healthy balance of continuous investment in our key long-term growth initiatives. Given our refined portfolio of strong brands and proactive cost control, we expect to generate positive free cash flow in fiscal 2025. This is particularly notable while being at or near the bottom of the cycle. Supported by our strong balance sheet of free cash flow generation, we have the flexibility to continue to fund long-term growth initiatives.

Speaker Change: Due to the economic and industry headwinds, combined with the cost of steward ordering patterns and elevated carrying costs, we expect the de-stocking trend to continue in fiscal 2025.

Speaker Change: To align with our production plans, we've taken measures to right-size our cost structure, while maintaining a healthy balance of continuous investment in our key long-term growth initiatives.

Speaker Change: Given our refined portfolio of strong brands and proactive cost control, we expect to generate positive free cash flow in fiscal 2025. This is particularly notable while being at or near the bottom of the cycle.

Speaker Change: Supported by our strong balance sheet at free cash flow generation, we have the flexibility to continue to fund long-term growth initiatives. This includes focused innovation and product and brand development.

Bradley Nelson: This includes focused innovation and product and brand development. Given near-term uncertainty in the marine environment, we will take a selective and disciplined approach to M&A. In addition to maintaining a resilient balance sheet and investing for the future, we will also maintain a flexibility to continue funding our share repurchase program.

Speaker Change: Given near-term uncertainty in the marine environment, we will take a selective and disciplined approach to M&A.

Speaker Change: In addition to maintaining resilient balance sheet and investing for the future, we will also maintain a flexibility to continue funding our Share Repurchase Program.

Timothy Oxley: Turning to our full year fiscal 2024 financial results, we concluded with net sales of $367 million, declining from last year's record of $662 million, primarily due to lower volume in a challenging market environment. Despite the net sales decline and the dilutive impact of Aviarra, we generated $33 million of adjusted EBITDA. Excluding Aviarra, we generated $40 million of adjusted EBITDA and positive free cash flow during the year. Our ability to proactively adjust to market conditions allows us to optimize profitability through planning and cost control efforts while also maintaining investments in our long-term growth initiatives. This execution provides us with a strong financial position as we continue to navigate through the current cycle.

Speaker Change: Turning to our full year fiscal 2024 financial results.

Speaker Change: We concluded with net sales of $367 million, declining from last year's record of $662 million.

Speaker Change: Primarily due to lower volume in a challenging market environment.

Speaker Change: Despite the net self decline, and the dilute of impact of Aviarra, we generated 33 million of adjusted EBITDA, excluding Aviarra, we generated 40 million of adjusted EBITDA, and pause the free cash flow during the year.

Speaker Change: Our ability to proactively adjust to market conditions allows us to optimize profitability through planning and cost control efforts, while also maintaining investments in our long-term growth initiatives.

Speaker Change: This execution provides us with a strong financial position as we continue to navigate through the current cycle.

Timothy Oxley: Let me now briefly review some of the latest developments across our brands. MasterCross model year 2025 lineup, which includes a range of new features of enhancements, has been well received by our dealers. The X and XT series received upgraded dashes and new software, and the XT series now has a stern thruster upgrade option, allowing maximum maneuverability. The new Elmore 5.3-lear GDI high output engine is now standard on NXT and XT, coupled with underwater exhaust, delivering a powerful, reliable, more fuel efficient, and quieter experience. Our diverse product lineup delivers top performance, superior comfort, unmatched quality and reliability, and industry-leading technology.

Speaker Change: Let me now briefly review some of the latest developments across our brands. MasterCraft's Model Year is 2025 lineup, which includes a range of new features that enhancements has been well received by our dealers.

Speaker Change: The X and XT series received upgraded dashes and new software, and the XT series now has a stirred processor of great option, allowing maximum maneuverability.

Speaker Change: The new film more 5.3-year GDI High-Output Engine is now standard on NXT and NXT, coupled with underwater exhaust delivering a powerful, reliable, more fuel-efficient and quieter experience.

Speaker Change: Our diverse product lineup delivers top performance, superior comfort, unmatched quality and reliability, and industry-leading technology.

Timothy Oxley: With a renewed focus on innovation, our team is preparing for an exciting product launch later in the year that will enhance our premium lineup.

Speaker Change: With a renewed focus on innovation, our team is preparing for an exciting product launch later in the year that will enhance our premium lineup.

Timothy Oxley: Turning to our pontoon segment, which includes both the Crest and Belize brands. Crest model year 2025 lineup includes two redesign models. and all new high performance Triton and a streamlined product portfolio. The redesigned classic model features a refreshed helm, all new interior, and superior styling. The lineup also includes a redesigned Caribbean model featuring a new luxury interior, new color options, and an updated exterior. Our tritons have received upgrades, including an extended rear deck that comes from standard, improved handling and performance, and an all around better budding experience. For our luxury pontoon brand Belize, we've been shipping our innovative Horizon and Helix models to dealers and targeted markets across the country in our fiscal fourth quarter.

Speaker Change: Turning to our pontoon segment, which includes both the crest and the least brands.

Speaker Change: Crest model year 2025 lineup concludes two redesigned models.

Speaker Change: and all new high performance tried to, and a streamlined product portfolio, the redesigned classic model features a refreshed helm, all new interior and superior styling.

Speaker Change: The lineup also includes a redesigned Caribbean model featuring a new luxury interior, new color options, and an updated exterior. Our Triton's have received upgrades including an extended rear deck that comes standard.

Speaker Change: and proved handling and performance in an all-around better-bodied experience.

Speaker Change: for our luxury pontoon brand, Belize, we've been shipping our innovative horizon and helix models to dealers and targeted markets across the country in our fiscal fourth quarter.

Timothy Oxley: Both models offer differentiated style and detail, as well as high-end standard features that prioritize on-water entertainment and relaxation. The Belize models offer the industry's most refined finishes, high-tech features, and luxurious comfort. Although standard bones come well equipped, upgradable options are available to take each model to the next level. Both models offer the ability to upgrade to the industry's first in-water power cooler, tube lighting, and underwater lighting. The ultra premium Helix model, both an innovative gas assist tower, an integrated premium bendy, and dual raised hills. The market response from dealers and consumers for both innovative pontoon brands has been encouraging and work confident in the future of this segment.

Speaker Change: Both models offer differentiated style and detail, as well as high-end standard features that prioritize on water entertainment and relaxation. The belief models offer the industry's most refined finishes, high-tech features, and luxurious comfort.

Speaker Change: Although standard bones come well equipped, upgradable options are available to take each model to the next level. Both models offer the ability to upgrade to the industry's first in-water power cooler, too blighting, and underwater lighting.

Speaker Change: The Ultra Premium He looks model, both an innovative gas assist tower, an integrated premium bending and door raised hells.

Speaker Change: The market response from dealers and consumers for both innovative pontoon brands have been encouraging and we're confident in the future of this segment.

Timothy Oxley: I'll now turn the call over to Tim, who will provide additional commentary on the year and a detailed discussion of our financial results. Thanks, Brad. Focusing on the top line net sales for the fifth year were 366, 366.6 million, a decrease of 295.5 million, or 45% from the prior year. This decrease was primarily due to lower unit sales volume and an increase in deodorant incentives, partially offset by higher prices.

Speaker Change: I'll now turn the call over to Tim, who will provide additional commentary on the year and a detailed discussion of our financial results. Tim, thanks Brad, focusing on the top line that sales for the fiscal year, or 366.

Tim: 366.6 million a decrease of 295.5 million or 45% from the prior year. This decrease was primarily due to lower unit sales volume and an increase in due percent of the current savings cost we all set by higher prices.

Timothy Oxley: For the year, our gross margin was 18.3%, compared to the prior year of 25.6%. Lower margins were the result of lower cost absorption from the plain decrease in the unit volume and higher deodorant incentives, partially offset by higher prices. Operating expenses were 59.5 million for the year, and an increase of 6.7 million compared to the prior year. This increase was put it only due to a 9.8 million non-cash impairment related to the obvious business, and partially offset by lower general administrative expenses. Excluding the non-cash impairment, operating expenses decreased during the year as we prudently managed cost.

Speaker Change: For the year, our gross margin was 18.3% compared to the prior year of 25.6%.

Speaker Change: Lower margins were the result of lower cost absorption from the plan to increase in uniboyant and higher endurance incentives, partially offset by higher prices.

Speaker Change: operating expenses were 59.5 million for the year, and increases 6.7 million when compared to the prior year.

Speaker Change: This increase was put only due to a 9.8 million non-cash impairment related to the obvious business. And as Parsley and was partially offset by lower general and administrative expenses.

Speaker Change: Exceeding the non-cation pyramid, operating expenses decreased during the year as we frequently managed to cost.

Timothy Oxley: Trends of the bottom line adjusted that income for the year was 20.9 million, or $1.22 per diluted share. Calculated using an estimated annual effective tax rate of 20%. This compared to compares to adjusted EBITDA, adjusted net income of 95 million, or $5.35 for the prior year. Calculated using the tax rate of 23%. I just need, but I was 32.9 million for the year compared to 131.5 million for the prior year. I just need, but our margin was 9% compared to 19.9% in the prior year.

Speaker Change: Trens of the bottom line, a chest and bed income for the year was $20.9 million, or $1.22 per diluted share. Calculated using an estimate annual effect of tax rate of 20%.

Speaker Change: This comparison compares to adjusted EBITDA, adjusted net income of $95 million or $5.35 for the prior year, calculated using the tax rate of 23%.

Speaker Change: A JSDB, but I was 32.9 million for the year, compared to 131.5 million for the prior year. A JSDB on margin was 9%, compared to 19.9% in the prior year.

Timothy Oxley: Our balance sheet positions us well as we ended the year with more than 86 million of cash and short-term investments. We have no net debt as our cash and short-term investments exceed, exceeded our debt by nearly 37 million. We maintain ample liquidity and financial strength to prioritize funding, key growth initiatives, and returning capital as shareholders. During the year, we spent approximately $16.3 million to repurchase more than 750,000 shares of our common stock. Since initiating our share repurchase program in June of 2021, we allocated nearly $65 million to repurchase approximately 2.6 million shares. These cumulative repurchases provided a 13% benefit to our full-year adjusted net income per share.

Speaker Change: Our balance sheet positions as well as we ended the year with an 86 million of cash and short-term investments.

Speaker Change: We have no net debt as our cash and short-term investments exceeded our debt by 30, nearly 37,000. We maintain ample liquidity and financial strength to prioritize funding key growth initiatives and returning capital as shareholders.

Speaker Change: During the year we spent approximately $16.3 million to repurchase more than 750,000 shares of our common stock.

Speaker Change: Since initiating our share repurchase program in June of 2021, we allocated nearly $65 million to repurchase approximately $2.6 million shares.

Speaker Change: These cumulative repurchases provided a 13% benefit to a four-year adjusted net income or share.

Timothy Oxley: At the end of fiscal 2024, we had more than $35 million remaining in our $50 million program authorized in July of 2023.

Speaker Change: At the end of fiscal 2024, we had more than $35 million remaining our $50 million program authorized in July of 2023.

Timothy Oxley: Now turning to our expectations for fiscal 2025, which consists of continuing operations only, we have developed plans for a wide range of potential market scenarios. Our guidance reflects an assumption of retail unit sales being down between 5 and 15%. This cautious approach is indicative of market uncertainties as we exit the summer selling season. Our guidance also considers that our competing with those things sold at liquidation prices due to certain competitor fewer disruptions. For fiscal year 2025, we expect consolidated net sales to be between $265 million and $300 million. With the gesture of EBITDA between $15 million and $26 million, the adjusted earnings per share between $36.87 per share.

Speaker Change: Now turning to our expectations for fiscal 2025, which consists of continuing operations only. We have developed cleanings for a wide range of potential markets and areas. Our guidance reflects an assumption of retail unit sales being down between 5 and 15%.

Speaker Change: This cautious approach is indicative of market uncertainties as we exit the summer-selling season. And guidance also considers that our dealers are competing with those being sold at liquidation prices to a certain competitor of dealer disruptions.

Speaker Change: for fiscal year 2025, we expect consolidating that sales to be between 265 million and 300 million.

Speaker Change: with a gesture of a EBITDA between 15,000 and 26,000 and a gesture of earnings per share between 36 cents and 87 cents per share.

Timothy Oxley: We expect capital expenditures to be approximately $12 million for the year. It is typical for us to have more wholesale shipments in the second half of our fiscal year compared to the first half. This dichotomy will be more pronounced this year as we prioritize dealer health coming out of the summer selling season.

Speaker Change: The Expec travel expenditure, the capital expenditures, to be approximately $12 million for the year.

Unknown Executive: Fiscal Fourth Quarter in full year, 2024 earnings conference call. Please be advised that today's conference is being recorded.

Speaker Change: is typical for us to have more wholesale shipments in the second half of our fiscal year compared to the first half. This dichotomy will be more pronounced this year as we prioritize de-were-health coming out of the summer cell and season.

Tim Oxley: I will now hand the conference over to your speaker today, Tim Oxley, Chief Financial Officer. Please go ahead, sir. Thank you, operator and welcome everyone. Thank you for joining us today as we discuss mass craft, fiscal fourth quarter and full year performance for 2024. As a reminder, today's call has been webcast live.

Timothy Oxley: For the first quarter of fiscal 2025, consolidated net sales is expected to be approximately 61 million, with the now turn of the call back to Brad Fritz closing remarks.

Speaker Change: For the first quarter of fiscal 2025, consolidated net sales is expected to be approximately 61 million with a gestity with other approximately 2 million, as gestorings per share of approximately 4 cents.

Bradley Nelson: Thanks, Tim.

Speaker Change: of now turn the call back to Brad Fris closing remarks.

Tim Oxley: We'll also be archived on our website for future listening with me on this morning's call as Brad Nelson, Chief Executive Officer.

Bradley Nelson: Despite the uncertain macroeconomic environment and the industry had with face during the fourth quarter and fiscal year 2024, we executed well against our strategic priorities and reduced dealer inventories. We considered exercise a disciplined approach to capital allocation. In the past three years, we've returned nearly $65 million of excess cash to our shareholders through our share repurchase program. Our strong balance sheet provides us with the financial flexibility to pursue our strategic growth initiative.

Brad: Thanks Tim!

Brad: Despite the uncertain macroeconomic environment in the industry head was faced during the fourth quarter and fiscal year 2024, we executed well against our strategic priorities and reduced dealer inventories. We continued to exercise the discipline approach to capital allocation.

Tim Oxley: We will begin with an overview of our operational performance from the fourth quarter and full year. I will then discuss our financial performance.

Tim Oxley: The impact will provide some closing remarks before we open the call for questions. Before we begin, we'd like to mine participants that the information contained in this call is current only as of today, August 29th, 2020. The company assumes no obligation to date any statements, including for looking statements, statements that are not historical facts or for looking statements and subject to the safe harbor disclaimer and today's press release. Additionally, on this conference call, we would discuss non-gap measures that include or exclude items, not indicative of our ongoing operations. For each non-gap measure, we also provide the most correctly comparable gap measure. And stays press release, which include the reconciliation of these non-gap measures toward gap results.

Speaker Change: Well, the past three years, we've returned nearly 65 million of excess cash to our shareholders to our share repurchase program. Our strong balance sheet provides us with the financial flexibility to pursue our strategic growth initiatives.

Bradley Nelson: The launch of the Belize brand and product enhancements and master craft and crest are examples of our forward commitment to innovation. As we look forward to fiscal 2025, we have developed business plans for a range of potential retail demand scenarios. Our highly variable business model allows us to proactively adjust to changes in demand. With the strong emphasis on pipeline management, we are positioning the business well. For the market upswing that lies ahead.

Speaker Change: The launch of the police brand and product enhancements and mastercraft and crests are examples of our forward commitment to innovation.

Speaker Change: As we look forward to fiscal 2025, we have developed business plans for a range of potential retail demands in areas.

Speaker Change: are highly, very well-business model allows us to proactively adjust to change his demand.

Speaker Change: With a strong emphasis on pipeline management, we are positioning the business well for the market up swing that lies ahead.

Tim Oxley: There's also a slide deck summarizing our financial results in the investor section of our website.

Bradley Nelson: As we navigate this dynamic environment, we are well positioned to leverage our strong portfolio brands and drive long-term growth opportunities while maintaining the flexibility to return capital to shareholders.

Tim Oxley: As a reminder, unless otherwise noted, the following commentary is made on a continuing operation spaces, but that'll turn the call over to Brad.

Speaker Change: As we navigate this dynamic environment, we are well positioned to leverage our strong portfolio brands and drive long-term growth opportunities while maintaining the flexibility to return capital shareholders.

Brad Nelson: Thank you, Tim, and good morning, everyone. Mastercraft delivered results ahead of our latest expectations while continuing to navigate a challenging economic environment and highly competitive retail landscape. Entering fiscal 2024, our focus was to proactively navigate market headwinds and execute our strategic and operational priorities to generate value for our stakeholders. Our efforts were centered around destocking field inventory levels, advancing consumer and dealer centric initiatives, and returning capital to shareholders while optimizing profitability and cash flow.

Unknown Executive: Operator, you may now open the line for questions. Thank you. If you would like to ask a question, please press star 11. If your question has been answered and you'd like to remove yourself from the queue, please press star 11 again.

Speaker Change: Operator, email in the line for questions.

Speaker Change: Thank you. If you would like to ask a question, please press star 1-1. If your question has been answered and you'd like to remove yourself from the queue, please press star 1-1 again.

Joseph Altobello: Our first question comes from Joseph Altobello with Raymond James. Your line is open.

Speaker Change: Our first question comes from Joseph Altebello with Raymond James, your line is open.

Unknown Executive: Good morning, Miss, and Martin on for Joe. I was looking at the guide and trying to understand a little bit better. We're looking at the lower EBITDA margin.

Martin: Good morning, this is Martin on for Joe. I was looking at the guide and trying to understand a little bit better. We're looking at the lower e-bidout margin. Is that largely coming from the volume due leverage, or do you anticipate that the promotional environment isn't again a little bit worse?

Timothy Oxley: Is that largely coming from the volume to leverage, or do you anticipate that the promotional environment is going to get a little bit worse? It's primarily from a lower volume. They get to leveraging from the overhead absorption. There is additional GNA expenses as we fund bonuses at 100%. So we have both those headwinds.

Brad Nelson: Throughout the year, market conditions put downward pressure on retail and wholesale demand. In anticipation of this softness, we took early action to adjust production plans. Our proactive approach to wholesale proved to be prudent as we work to alleviate pressures our dealers are facing. In the summer selling season, we experienced a general slowdown in demand from retail customers across our brands consistent with the majority of the marine industry. This combined with continued economic uncertainty, elevated interest rates, and lingering competitor dealer disruptions has driven up inventory carrying costs for dealers contributing to caution throughout the dealer network.

Speaker Change: It's primarily from the lower volume and the debt to leveraging from the overhead absorption. There is additional G and A expenses as we fund bonuses at 100%. So we have both those headwinds.

Unknown Executive: God, thank you. And just to better understand for the guide, would you mind providing the adjusted EBITDA, NPS X? I have the arrow for the year. I believe in your prepared comments. He said $40 million. Or fiscal 2024, that is correct. $40 million for without the effect of audio.

Speaker Change: God, thank you. And I'd just to better understand for the guide, would you mind providing the adjusted given dot, GPS X, IVA, for the year? I believe in your prepared comments he said $40 million.

Speaker Change: or fiscal 2024, that is correct, $40,000 for what's without the effect of obvious.

Unknown Executive: And would you have the adjusted EPS? I don't have that in front of me. Sorry. Okay.

Brad Nelson: Field inventories have improved by approximately 20% from fiscal 2023, which was near the low end of our targeted range. We're pleased with our progress to date, but filled inventories remain higher than optimal based on recent retail trends. We continue to incentivize our dealers to sell through inventory in a judicious manner. Although these conditions have short-term implications for wholesale shipments, our inventory rebalancing efforts are positive for long-term dealer health.

Speaker Change: and we will have the Jeff GPS.

Unknown Executive: Thank you very much. Thank you. As a reminder to ask a question, please press Star 11.

Speaker Change: I don't have that in front of me story.

Speaker Change: Okay, thank you very much.

Speaker Change: Thank you, as a reminder to ask a question, please press star 11.

Drew Krom: Our next question comes from Drew Krom with Stifel. Your line is open. Okay.

Speaker Change: Our next question comes from Drew Crum with Stiefle, your line is open.

Unknown Executive: Thanks, hey guys.

Drew Krom: Good morning. Just on your guidance again, you laid out a range of scenarios in terms of retail demand. What are you assuming? Or how are you assuming that trends is the year progresses? And then I will follow up. You know, we're off to a decent start, a little bit ahead of our expectations. But as Tommy's inventory, you know, continues to be reached in the hands of retail customers. We expect that to be a significant headwind for dealers. Okay.

drew Crum: Okay, thanks guys, good morning. Just, you know, on your guidance again, you laid out a range of scenarios in terms of retail demand. What are you assuming, or how are you assuming that trend is the year progresses?

Brad Nelson: Pipeline management remains a primary focus as we move forward, positioning us well for the market recovery ahead.

Speaker Change: and then I go follow up.

Speaker Change: i

Brad Nelson: Before we turn to fiscal 2025, I would like to discuss the announcement we issued earlier this month relating to the divestiture of the Aviara business. After a thorough review of our strategic plans, we determined that exiting this business would best position us to extend our leadership position in our mastercraft, crest and beliefs brands. This focus also allows us to optimize our cost structure and direct resources towards other long-term initiatives to drive sustainable and profitable long-term growth.

Speaker Change: We're off to a decent start, a little bit ahead of our expectations, but as Tommy Zimman Tory continues to be reaching the hands of retail customers, expect that to be a significant headwind for viewers.

Timothy Oxley: So, Tim, would you expect things to get better as the year progresses? Or it's just too early to tell? I think it's too early to sell. We're off to a good start, but it is really early. Okay. Fair enough.

Speaker Change: Guys, so Tim, would you expect things to get better as the year progresses or it's just too early to tell?

Tim: I think it's too early, today we're off to a good start, but it is really early.

Bradley Nelson: And then maybe more big picture. Yeah.

Bradley Nelson: Go ahead, Brad. Yeah. Drew, just just just to add to that, you know, of course. We are going to continue to work with our dealers from an incentive perspective in balance and with their participation, of course, to help that through the selling season, primarily through the winter. You know, we all remain hopeful that the retail environment is going to improve. At some point, you know, this protracted recession in marine is going to repat rebound, and we're positioned well for that. Got it. Okay.

Tim: Okay, okay, fair enough. And then maybe more big picture, yeah, go ahead, Brett, yeah, through just just to add to that, you know, of course.

Brad Nelson: As part of the asset exchange agreement, we are transferring the rights of the Aviara brand to cruiser yachts, a subsidiary of Marine Max, the brand's primary retail partner. We anticipate the transaction to close during our fiscal first quarter. We are winding down operations at our Maryland Florida facility and have begun marketing the site for sale. In Q1 of fiscal 2025, we will begin reporting the financial results of the Aviara segment as discontinued operations.

Brett: We're going to continue to work with our dealers from an incentive perspective in balance with their participation of course.

Brett: to help that through the selling season, you know, primarily through the winter.

Speaker Change: You know it's we all remain hopeful that the retail environment's going to prove and at some point, you know, this protracted recession in marine is going to repap rebound or position well for that.

Drew Krom: And then maybe more big picture, but you know, it's not a star and now out of the era, the company has moved on from two brands that seem promising, at least initially, but didn't work out. So, you know, based on those experiences, is adding new brands, whether it's organically or through acquisitions, still an important part of the strategy. And if so, the company refining its approach to portfolio management.

Brad Nelson: The hard work and dedication of our strong Aviara team quickly enabled this product line to become a blue chip brand in voting. Decisions that impact our employees are always difficult, but we are fully committed to supporting them through this transition. We appreciate the contributions of all who have been involved with the operation.

Speaker Change: God.

Speaker Change: Okay, and then maybe more big picture, but, you know, it's not a star and now I've here.

Speaker Change: The company has moved on from two brands that seemed promising, at least initially, but didn't work out. So, you know, based on those experiences, is adding new brands, whether it's organically or through acquisitions.

Brad Nelson: As we turn our focus to next year, we are encouraged by the market response to the launch of our new premium pontoon brand, Belize. Through cross-collaborative efforts of our experienced mastercraft and crest teams, Belize will allow us to reach an affluent and resilient customer base in the pontoon segment. These products will be manufactured at Crest's existing facility in Michigan, requiring minimal capital investment and leveraging an experienced team. Belize lineup is being sold through a diverse and largely incremental dealer network. This brand brings accretive margins for our pontoon segment and will be profitable in year one. Today, the team is already onboarded 11 dealers with locations in 26 expansive markets.

Speaker Change: Still an important part of the strategy and if so is the company refining its approach to portfolio management.

Bradley Nelson: Thanks. Yeah, Drew, on the decision with Aviar are relative to other forward looking ventures. Obviously, that's a careful decision we made after a thorough strategic review. As you know, you know, that business was challenged with volume to truly absorb costs in a startup facility that was dedicated to that unit. You know, there's a good we stomach losses there for quite some time, you know, never was able to be profitable pretty much due primarily to volume issues. Let me just remind you that deal is not close yet. We do expect it to close in our fiscal Q1 here.

Drew: Yeah, drew on the decision with Bobby R. are relative to other forward-looking ventures.

Speaker Change: Obviously, that's a careful decision we made after a thorough strategic review.

Speaker Change: As you know, that business was challenged with volume to truly absorb cost in a startup facility that was dedicated.

Speaker Change: to that unit. You know, we stomach losses there for quite some time. You know, it never was able to be profitable. Pretty much do primarily due to volume issues.

Speaker Change: Let me just remind you too, that deal is not closed yet. We do expect it to close in our fiscal Q1 here.

Bradley Nelson: But going forward, there's some big differences in a brand launch like Belize, which is underway compared to Aviar. In fact, in some ways it's opposite. I would just remind you that the police is being manufactured in our existing press facility will recurrently produce pontoon side by side with the same experience team. There's open capacity in that factory. So it helps us actually with utilization on day one and producing those new units. A couple of the things I would highlight: the police product line is largely going to an incremental new dealer network in exciting markets with strong dealers.

Speaker Change: But going forward, there's some big differences.

Brad Nelson: We will provide more details on this brand later in the call. As we enter fiscal 2025, we will continue to prioritize a healthy distribution network across all brands. Our production schedule aligns with current dealer sentiment and credit availability and consequently, we plan to ship a higher number of boats in the second half of fiscal 2025 compared to the first half. The industry will benefit as other OEMs also take the necessary measures to rebalance dealer inventories in this challenging environment.

Speaker Change: in a brand-law, like Belize, which is underway compared to obvious.

Speaker Change: Mark, in fact, in some ways it's opposite.

Speaker Change: I will just.

Speaker Change: Remind you that the release is being manufactured in our existing press facility will be currently produced upon two and side by side with the same experienced team. There's open capacity in that factory, so it helps us actually with utilization on day one and producing those new units.

Brad Nelson: We appreciate the support of our dealers and we will work closely with them to capitalize on the opportunities ahead. Due to the economic and industry headwinds combined with the cautious deal of ordering patterns and elevated carrying costs, we expect the destocking trend to continue in fiscal 2025. To align with our production plans, we've taken measures to right size our cost structure, while maintaining a healthy balance of continued investment in our key long-term growth initiatives.

Speaker Change: A couple of other things I would highlight, the Belize product line is largely going to an incremental new dealer network.

Bradley Nelson: Whereas Aviar, we had a strong dealer with a retailer, but it was largely exclusive to that retailer. So it's much more diverse channel strategy, and we're really excited about that. So, from a margin perspective, it's a creative to the segment as well. We expect it to be profitable in year one. Very different scenario circumstances from Aviar.

Speaker Change: and exciting markets.

Speaker Change: with strong dealers, whereas we had a strong dealer with a retailer, but it was largely exclusive to that retailer. So it's much more diverse channel strategy.

Speaker Change: and we're really excited about that. So from a margin perspective, it's a creative disagreement, as well, we've expected to be profitable in the year one, very different scenario of circumstances from Aviaro.

Brad Nelson: Given our refined portfolio of strong brands and proactive cost control, we expect to generate positive free cash flow in fiscal 2025. This is particularly notable while being at or near the bottom of the cycle. Supported by our strong balance sheet of free cash flow generation, we have the flexibility to continue to fund long-term growth initiatives. This includes focused innovation and product and brand development. Given near-term uncertainty in the marine environment, we will take a selective and disciplined approach to M&A. In addition to maintaining a resilient balance sheet and investing for the future, we will also maintain a flexibility to continue funding our share repurchase program.

Unknown Executive: Thank you.

Kevin Condon: Our next question comes from Kevin Condon with Baird. Your line is open. Hi. Good morning, everyone. Thanks for taking my question. I think on the call you mentioned that you finished fiscal 24 with inventory 20%. Lower year over year. Is that true?

Speaker Change: Can I do thanks guys?

Speaker Change: Thank you. Our next question comes from Kevin Condon with Bear. Your line is open.

Kevin Condon: Hi, good morning, everyone and thanks for taking my question. I think I'm the call you mentioned that you've finished fiscal 24th inventory 20%.

Bradley Nelson: And I guess when you think about your guidance and the retail outlook, is there a similar target that you might have to finish fiscal 2025? Yeah. And speaking of the raw numbers, we were planning on the year being down between 600 and 1,000 units in fiscal 24. And it was at the lower end of that range. So we did have significantly stocking in 24, but the market has been soft. So we anticipate also destocking in 25, probably in that same kind of range between 600 and 1000 boats. And that is that is between massacraft and crest.

Kevin Condon: Lower your over here. Is that true? And I guess when you think about your guidance and the retail outlook is there a similar target that you might have to finish pistol 20 25.

Speaker Change: In speaking of the role numbers, we were planning on the year being down between 600 and 1,000 units in fiscal 24, and it was at the lower end of that range.

Tim Oxley: Turning to our full year fiscal 2024 financial results, we concluded with net sales of $367 million declining from last year's record of $662 million, primarily due to lower volume in a challenging market environment. Despite the net sales decline and the dilutive impact of Aviyara, we generated $33 million of adjusted EBITDA. Excluding Aviyara, we generated $40 million of adjusted EBITDA and positive free cash flow during the year. Our ability to proactively adjust to market conditions allows us to optimize profitability through planning and cost control efforts while also maintaining investments in our long-term growth initiatives. This execution provides us with a strong financial position as we continue to navigate through the current cycle.

Speaker Change: So we did have significantly stocking in 24, but the market has been soft. So we anticipate also destocking in 25, probably in that same kind of range up to in 600 and a thousand boats.

Bradley Nelson: Correct. And it probably a little, a little more weighted toward the crest as we look at those numbers.

Speaker Change: and that is that is between massacraft and crest. Correct. And it probably looks a little more weighted toward the crest as we look at those numbers.

Bradley Nelson: members. Is there any way to sink through the Bayley's impact of, you know, you're, you're ramping up there? I'm, does that, I mean, I guess that's all in the pontoon segment now. But would you still expect that, that overall segment to destock? Yes, I'm keeping in mind the Belize units are significantly higher AUSP. And, and so the, you know, the destocking will be uncrashed as opposed to Belize. Okay, let's thank you. Thank you.

Speaker Change: Is there any way to think through the Bailey's impact of, you know, you're ramping up there? I mean, I guess that's all on the pontoon segment now.

Speaker Change: but would you still expect that overall segment to be stuck?

Speaker Change: Yes, that can keep in mind the believes you know in sort, significantly RAUSP, and so the, you know, that he's talking will be on crest as opposed to beliefs.

Speaker Change: Okay, let's all. Thank you.

Unknown Executive: As there are no further questions, this does conclude the question in the intercession.

Tim Oxley: Let me now briefly review some of the latest developments across our brands. MasterCross model year 2025 lineup, which includes a range of new features of enhancements, has been well received by our dealers. The X and XT series received upgraded dashes and new software, and the XT series now has a stern thruster upgrade option allowing maximum maneuverability. The new Elmore 5.3-lear GDI high output engine is now standard on NXT and XT, coupled with underwater exhaust delivering powerful, reliable, more fuel efficient, and quieter experience. Our diverse product lineup delivers top performance, superior comfort, unmatched quality and reliability and industry-leading technology.

Speaker Change: Thank you as there are no further questions, this does conclude the question nature session. You may now disconnect. Everyone, have a great day.

Unknown Executive: You may now disconnect. Everyone, have a great day.

Tim Oxley: With a renewed focus on innovation, our team is preparing for an exciting product launch later in the year that will enhance our premium lineup.

Tim Oxley: Turning to our pontoon segment, which includes both the Crest and Belize brands. Crest model year 2025 lineup includes two redesign models, and All New High Performance Triton, and a streamlined product portfolio. The redesigned classic model features a refreshed helm, all new interior and superior styling. The lineup also includes a redesigned Caribbean model featuring a new luxury interior, new color options, and an updated exterior. Our tritons have received upgrades including an extended rear deck that comes in standard, improved handling and performance, and an all around better budding experience.

Tim Oxley: For our luxury pontoon brand Belize, we've been shipping our innovative Horizon and Helix models to dealers and targeted markets across the country in our fiscal fourth quarter. Both models offer differentiated style and detail as well as high-end standard features that prioritize on-water entertainment and relaxation. The Belize models offer the industry's most refined finishes, high-tech features, and luxurious comfort. Although standard boats come well equipped, upgradable options are available to take each model to the next level.

Tim Oxley: Both models offer the ability to upgrade to the industry's first in-water power cooler, tube lighting, and underwater lighting. The ultra premium Helix model, both an innovative gas assist tower, an integrated premium bendy, and dual raised hills. The market response from dealers and consumers for both innovative pontoon brands have been encouraging and work confident in the future of this segment.

Tim Oxley: I'll now turn the call over to Tim who will provide additional commentary on the year and a detailed discussion of our financial results. Thanks Brad, focusing on the top line, net sales for the fifth year were 366, 366.6 million, a decrease of 295.5 million, or 45 percent from the prior year. This decrease was primarily due to lower unit sales volume and an increase in incentives, partially offset by higher prices.

Tim Oxley: For the year, our gross margin was 18.3 percent compared to the prior year of 25.6 percent. Lower margins were the result of lower cost absorption from the plane decrease in the unit volume and higher deorant incentives, partially offset by higher prices.

Tim Oxley: Operating expenses were 59.5 million for the year, an increase of 6.7 million compared to the prior year. This increase was put it only due to a 9.8 million non-cash impairment related to the Aviera business, and partially offset by lower general and administrative expenses. Excluding the non-cash impairment, operating expenses decreased during the year as we prudently managed cost.

Tim Oxley: Trends of the bottom line adjusted that income for the year was 20.9 million, or $1.22 per diluted share. Calculated using an estimated annual effective tax rate of 20 percent. This compared to compares to adjusted EBITDA, adjusted net income of 95 million, or $5.35 for the prior year. Calculated using a tax rate of 23 percent.

Tim Oxley: I just need but all was 32.9 million for the year compared to 131.5 million for the prior year. I just need but our margin was 9% compared to 19.9% in the prior year.

Tim Oxley: Our balance sheet positions us well as we ended the year with more than 86 million of cash and short term investments. We have no net debt as our cash and short term investments exceed exceeded our debt by 30 nearly 337 million. We maintain ample liquidity and financial strength to prioritize funding key growth initiatives and returning capital as shareholders.

Tim Oxley: During the year we spent approximately $16.3 million to repurchase more than 750,000 shares of our common stock. Since initiating our share repurchase program in June of 2021, we allocated nearly $65 million to repurchase approximately 2.6 million. These cumulative repurchases provided a 13% benefit to our full year adjusted net income per share.

Tim Oxley: At the end of fiscal 2024, we had more than $35 million remaining our $50 million program authorized in July of 2023.

Tim Oxley: Now turning to our expectations for fiscal 2025, which consists of continuing operations only we have developed payments for a wide range of potential market scenarios. Our guidance reflects an assumption of retail unit sales being down between 5 and 15%. This cautious approach is indicative of market uncertainties as we exit the summer selling season. Our guidance also considers that our dealers are competing with both teams sold at liquidation prices due to certain competitor of dealer disruptions.

Tim Oxley: For fiscal year 2025, we expect consolidate net sales to be between 265 million and 300 million. With the gesture, they bidaw between 15 million and 26 million and adjusted earnings per share between 36 cents and 87 cents per share. We expect capital expenditures to be approximately $12 million for the year. It is typical for us to have more wholesale shipments in the second half of fiscal year compared to the first half.

Tim Oxley: This dichotomy will be more pronounced this year as we prioritize dealer health coming out of the summer selling season. For the first quarter of fiscal 2025, consolidated net sales is expected to be approximately 61 million with a gesture, but of approximately 2 million and adjusted earnings per share of approximately 4 cents.

Brad Nelson: Now turn the call back to bad for his closing remarks. Thanks Tim. Despite the uncertain macro economic environment in the industry had with face during the fourth quarter and fiscal year 2024, we executed well against our strategic priorities and reduced dealer inventories. We continue to exercise the discipline approach to capital allocation. For the past three years, we have returned nearly 65 million of excess cash to our shareholders through our share repurchase program. Our strong balance sheet provides us with the financial flexibility to pursue our strategic growth initiative. The launch of the belief brand and product enhancements and mastercraft and crest are examples of our forward commitment to innovation.

Brad Nelson: As we look forward to fiscal 2025, we have developed business plans for a range of potential retail demand scenarios. Our highly variable business model allows us to proactively adjust to changes in demand. With a strong emphasis on pipeline management, we are positioning the business well. For the market upswing that lies ahead. As we navigate this dynamic environment, we are well positioned to leverage our strong portfolio brands and drive long-term growth opportunities while maintaining the flexibility to return capital shareholders.

Unknown Executive: Operator, you may now open the line for questions. Thank you. If you would like to ask a question, please press star 1-1. If your question has been answered and you'd like to remove yourself from the queue, please press star 1-1 again.

Joseph Altobello: Our first question comes from Joseph Altobello with Raymond James. Your line is open. Good morning, Ms. Martin from Joe. I was looking at the guide and trying to understand a little bit better. We're looking at the lower EBITDA margin. Is that largely coming from the volume to leverage or do you anticipate that the promotional environment isn't going to get a little worse? It's primarily from a lower volume. They get to leveraging from the overhead absorption. There is additional G&A expenses as we fund bonuses at a hundred percent. So we have both those headwinds.

Joseph Altobello: God, thank you. And just to better understand for the guide, would you mind providing the adjusted EBITDA, NPS, XIVIRO for the year? I believe in your prepared comments, he said $40 million. Or fiscal 2024, that is correct. $40 million for without the effect of audio. And would you have the just DPS? I don't have that in front of me, sorry. Okay, thank you very much.

Unknown Executive: Thank you. As a reminder, to ask a question, please press star 1-1.

Drew Krom: Our next question comes from Drew Krom with Stiefel. Your line is open. Okay, thanks, guys.

Drew Krom: Good morning. Just on your guidance again, you laid out a range of scenarios in terms of retail demand. What are you assuming? Or how are you assuming that trends is the year progresses? And then I will follow up. You know, we're off to a decent start, a little bit ahead of our expectations. But as Tommy's inventory continues to be reached in the hands of retail customers, we expect that to be a significant headwind for dealers.

Drew Krom: Okay, so Tim, would you expect things to get better as the year progresses? Or it's too early to tell? I think it's too early to sell. We're off to a good start, but it is really early. Okay, okay, fair enough.

Brad Nelson: And then maybe more big picture. Yeah, go ahead, Brad. Drew, just to add to that, you know, of course. We are going to continue to work with our dealers from an incentive perspective in balance and with their participation, of course, to help that through the selling season, you know, primarily through the winter. You know, it's, we all remain hopeful that the retail environment is going to improve and at some point, you know, this protracted recession in marine is going to repat rebound and we're positioned well for that. Got it.

Brad Nelson: Okay, and then maybe more big picture, but, you know, it's not a star and now out of the era, the company has moved on from two brands that seem promising, at least initially, but didn't work out. So, you know, based on those experiences is adding new brands, whether it's organically or through acquisitions, still an important part of the strategy. And if so, is the company refining its approach to portfolio management? Thanks.

Brad Nelson: Yeah, yeah, Drew, on the decision with Avi are relative to other forward looking ventures. Obviously that's a careful decision we made after a thorough strategic review. As you know, you know, that, that business was challenged with, with volume to truly absorb costs in a, in a startup facility that was dedicated to that unit. You know, there's a, we, we, stomach losses there for quite some time, you know, never was able to be profitable pretty much do primarily due to volume issues.

Brad Nelson: Let me just remind you too, that deal is not close yet. We do expect it to close in our fiscal Q1 here. But going forward, there's some big differences in, in a, in a brand launch like Belize, which is underway compared to Aviar. In fact, in some ways it's opposite. I would just remind you that, that Belize is being manufactured in our existing press facility where we currently produce pontoon side by side with the same experience team.

Brad Nelson: There's open capacity in that factory. So it helps us actually with utilization on day one and producing those new units. A couple of the things I would highlight the Belize product line is largely going to an incremental new dealer network in exciting markets with strong dealers. Whereas Aviara, we had a strong dealer with a, with a retailer, but it was largely exclusive to that retailer. So it's much more diverse channel strategy. And we're really excited about that. So from a margin perspective, it's a creative to the segment as well. We expect it to be profitable in year one very different scenario circumstances from Aviara. Good.

Drew Krom: Thanks, guys. Thank you.

Kevin Condon: Our next question comes from Kevin Condon with Baird. Your line is open. Hi, good morning, everyone. Thanks for taking my question. I think on the call you mentioned that you finished fiscal 24 with inventory 20%. Lower year over year. Is that true?

Kevin Condon: And I guess when you think about your guidance and the retail outlook, is there a similar target that you might have to finish fiscal 2025? Yeah. And speaking of the raw numbers, we were planning on the year being down between 600 and 1000 units in fiscal 24. And it was at the lower end of that range. So we did have significantly stocking in 24, but the market has been soft. So we anticipate also destocking in 25 probably in that same kind of range between 600 and 1000 boats. And that is that is between massacraft and crest. Correct. And then probably a little a little more weighted toward the crest as we look at those numbers, members.

Kevin Condon: Is there any way to sink through the Bailey's impact of, you know, you're, you're ramping up there? I'm, does that, I mean, I guess that's all in the pontoon segment now. But we just don't expect that, that overall segment to destack. Yes, I can keep in mind the Belize units are significantly higher, USP. And, and so the, you know, the destocking will be, will be uncrashed as opposed to Belize.

Kevin Condon: Okay, let's all, thank you.

Unknown Executive: Thank you, as there are no further questions, this does conclude the question in the intercession. You may now disconnect.

Unknown Executive: Everyone, have a great day.