Good day, and thank you for standing by. Welcome to the MasterCraft Boat Holdings Fiscal Fourth Quarter and Full-Year 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Tim Oxley, CFO. Please go ahead.

Thank you, operator, and welcome, everyone. Thank you for joining us today as we discuss MasterCraft's fiscal fourth quarter and full year performance for 2022. As a reminder, today's call is being webcast live and will also be archived on our website for future listening. Joining me on today's call are Fred Brightbill, Chief Executive Officer and Chairman; and George Steinbarger, our Chief Revenue Officer. Fred will begin with a review of our operational highlights from the fourth quarter and full year. I will then discuss our financial performance. Then, I will turn the call back to Fred for some closing remarks before we open the call for Q&A. Before we begin, we'd like to remind participants that the information contained in this call is current only as of today, September 8, 2022. The company assumes no obligation to update any statements, including forward-looking statements. Statements that are not historical facts are forward-looking statements and subject to the safe harbor disclaimer in today's press release. Additionally, on this conference call, we will discuss non-GAAP measures that include or exclude special or items not indicative of our ongoing operations. For each non-GAAP measure, we also provide the most directly comparable GAAP measure in our fiscal 2022 fourth quarter earnings release, which includes a reconciliation of these non-GAAP measures to our GAAP results. We would also like to remind listeners that there is a slide deck summarizing our financial results in the Investors section of our website. With that, I'll turn the call over to Fred.

Thank you for joining us today. Our business is executed extremely well against our strategic and operational priorities during fiscal 2022 in a very challenging and dynamic environment. We delivered record setting performances for each quarter, which culminated in record net sales and earnings for the full year and for the second consecutive year. We grew our net sales by nearly 35% and our diluted adjusted earnings per share by more than 37% year-over-year, all on an organic basis. We far exceeded expectations in the fourth quarter by delivering net sales growth of nearly 40% and diluted adjusted earnings per share growth of more than 80%. This represents the seventh consecutive record-setting quarter and the sixth consecutive quarter of year-over-year net sales growth of more than 25% as we leveraged our flexible operating model to capitalize on the strong consumer demand for our products. This exceptional performance was enabled by a year-over-year unit increase of more than 14% for the full year, resulting in the most wholesale units ever sold by the company. To be able to increase throughput and produce record units and a challenging supply chain environment clearly demonstrates our disciplined execution, operational excellence and the strength of our team and our market leading brands. The credit for this performance goes to our more than 1,700 employees that continue to execute our key strategic priorities in the face of adversity. Although, we achieved another record year, our growth in net sales and earnings were constrained due to supply chain disruptions and labor challenges associated with COVID. These headwinds limited our unit shipments and created significant production inefficiencies during the year. They also resulted in additional costs, not typically experienced in a normal production environment. Constrained production and higher production costs combined with higher than expected inflation during the…

Thanks, Fred. Looking at the top line, net sales for the full year were a record $707.9 million, an increase of $182.1 million or 34.6% compared to $525.8 million for the prior year period. This increase was primarily due to higher wholesale unit volume, higher prices, favorable model mix and higher options and content sales. Our gross margin was 22.9% for the year, a decrease of 180 basis points compared to the prior year. Lower margins were primarily as a result of operational challenges at NauticStar, supply chain disruptions that limited production, inflationary pressures that drove input cost higher. Price increase is phased in over the course of the fiscal year, partially offset these higher costs and our gross margin increased each quarter sequentially from our fiscal first quarter. Operating expenses were $84.5 million for the year, an increase of $30.5 million compared to the prior year. This increase was predominantly due to a $23.8 million non-cash impairment related to NauticStar business. General and administrative expense increased as a result of continued investments in information technology and product development. Additionally, third-party consulting fees were recognized at NauticStars -- at the NauticStar segment as part of our operational improvement initiatives. Selling and marketing expense increased due to prior-year expenses being impacted by the COVID-19 pandemic. Although we strategically increased spend in targeted areas of our business, SG&A's percentage of net sales was the lowest for any year since becoming a public company as we continue to prudently manage cost. Turning to the bottom-line, adjusted net income for the year increased to a record $84.6 million or $4.54 per diluted share, computed using the company's estimated annual effective tax rate of 23%. This compares to adjusted net income of $62.8 million or $3.31 per diluted share in the prior year. Adjusted EBITDA…

Thanks, Tim. For the second consecutive year, we achieved record setting results introduced an array of new and innovative products across our brands, produced industry-leading organic sales growth, and gained market share, all while navigating arguably one of the most challenging business environments in recent history. These results would not have been possible without the hard work and dedication of our team who continue to execute against our strategic priorities. During fiscal 2022 our focus was largely on product availability and quality to meet the strong retail demand that we were experiencing. An important focus for fiscal 2023 will be on building the highest quality products possible for our consumers and delivering on our commitment to operational excellence. We are dedicated to ensuring our dealer pipelines remain healthy to avoid being over inventory. The potential for a weakening economy caused us to approach our wholesale production plan for fiscal 2023 with a prudent level of conservatism. Even so, if our business performs to the lower end of our guidance range, we will deliver the second best year in the history of our company in terms of both revenue and earnings. Furthermore, as we clearly demonstrated during the past two years, our flexible business model will allow us to maximize our wholesale performance and to generate outstanding financial results should retail demand outpace our expectations. We've been judicious with our pricing strategy for fiscal 2023 as we seek to match expected cost inflation with price increases to avoid a mid-year price increase and the associated confusion and disruption for our dealer and partners and consumers. However, should retail demand continue to slow, the guidance we have provided reflects flexibility to ensure that we can defend our market share while maintaining strong profitability. Our capital allocation strategy has consistently prioritized balance sheet resiliency and growth, while looking for prudent opportunities to return capital to shareholders. In addition to the organic growth potential of our businesses, opportunistic acquisitions will continue to be a part of our growth strategy. As Tim mentioned, our financial position is incredibly sound. Our cash balance, future free cash flow and access to low cost debt financing provide us with the financial flexibility to grow as opportunities arise. Our consumer-centric business model is proving to be resilient through a range of business cycles and we continue to be confident in the future prospects for the company. As we manage through a dynamic business environment near-term, we remain committed to long term value creation for our shareholders and all stakeholders by focusing on sustainable, profitable growth. We will continue to be a purpose driven business committed to our consumers, dealer and vendor partners and people. Operator, you may now open the line for questions.

Thank you. [Operator Instructions] Our first question comes from Joe Altobello with Raymond James. Your line is open.

Thanks. Hey, guys. Good morning.

Good morning.

I just want to start on the commentary regarding retail sales showing signs of slowing. Maybe a little more color there. When did you start seeing that? Is that the industry broadly or your categories in particular? Maybe just a little more color would be helpful.

Yeah. Hey, Joe. Good morning. It's George. Yeah. I think we're obviously -- I think when we started to see slowing is in that fiscal fourth quarter where we started to see, I think early in the year, retail was certainly constrained due to lack of inventory, but I think more in that fourth quarter, we started to see and hear from dealers and consumers due to some of the economic indicators that we started to see a slowdown. So that's real -- and we're seeing it pretty broadly across the industry. I think that's reflected in the SSI data that's come out more recently. So I don't think it's specific to our segments. I think broadly we're seeing that and certainly that's went into the thinking around how we thought about the next 12 months related to our guidance.

Hey, Joe. The interesting thing from my perspective was in the fourth quarter, it was -- as we were scrambling to provide dealers with inventory to have enough for the selling season. It was more like, hey, instead of five leads, I have two leads and I can still sell every boat that I'm receiving, that was kind of the attitude. But clearly it was coming off the peak level of excitement. In the first quarter this year, from my perspective, dealer attitudes are still incredibly positive. So this is not a reaction to dealer sentiment, which I think is still very, very positive. It's more our look at the macroeconomic context we're in. Some of what we've seen at retail certainly, in terms of slowing demand for the industry. But just projecting out and saying, look, in the near term, are conditions likely to get better or are they likely to continue to be tough? We continue to have significant rate increases by the Fed (ph). We're looking at quantitative tightening. We're looking at recessions in Europe. It's not a scenario that makes us want to get out over our Skies. So that's kind of the context. But let's face it. If the headwinds pass, and we see acceleration in the second half of the year, we will respond.

No. That's helpful. And I guess just a follow-up on that, Fred. I mean, if you think about where we were three months to six months ago, talking about a pipeline sale opportunity. I think on your last earnings call, you mentioned that you didn't expect inventories don't normalize until fiscal ‘24. This commentary sort of flies in the face of that a little bit so help us understand, where we are from a pipeline for the opportunity and why that doesn't seem to be the case beyond Q1, it sounds like?

Well, it's very simply that at the rate we're producing at, we're able to refill the pipeline relative to -- that slowing retail demand that we've been seeing recently. So once again, we have more aggressive targets for inventory turnover at our dealers. But the change from then till now is based on the change in retail outlook. So we're able to refill the pipeline, restock the pipeline prior to -- I expect us to be in optimal position prior to next selling season.

Okay. Thanks, guys.

Thank you. One moment. Our next question comes from Craig Kennison with Baird. Your line is open.

Hey. Good morning. Thanks for taking my questions as well. Just a follow-up on what Joe asked about current consumer trends. I'm curious if you have a feel for what has caused maybe demand to slow down and whether you think it's the interest rate environment, it's inflation and just the cost of a boat today. Is it confidence. I know it's a lot of factors, but I'm wondering, if you could identify the ones that you think are the most prominent?

I'll take cut and let the other guys jump in. To me, first and foremost, its confidence, it’s kind of sentiment. And for the reasons I stated in response to Joe's question, I think people are getting more concerned about the economic outlook and they're seeing the results reflected in the stock market, which is down substantially this year. So I don't think for most of our consumers, it's a question whether they have enough money to be able to buy the boat or be able to make the purchase. It's one of those situations where I think they're just stepping back and be more cautious right now. So I don't think overall in the long term, we're going to miss demand. I think it's going to be more of a postponement of demand. They need to feel like in my mind to reaccelerate like the economic headwinds have bottomed out and we're on the other side of this. And I don't think that's the current set. As you know, as every week and month goes by, the outlook tends to be more negative in terms of likelihood of economic slowdown.

That's great. And then are you able to put sort of a numerical range on the retail forecast that is embedded in your financial guidance?

Yeah, Craig. I think about it, our guidance kind of assumes that our retail kind of consolidated basis with our brands is down in the mid-teens to low 20% range this year.

That's volume?

That's based on units, correct.

Thank you. And then just from a -- I guess from an ASP standpoint, I mean, we've had significant inflation, just curious, when you consider mix inflation, maybe getting control over inflation, how should we think about ASP trends in each of your brands?

Yes, Joe. This is -- I'm sorry, Craig, this is Tim. Yeah. For MasterCraft, we think that we're going to be up in the mid-single digit range. Crest is probably going to be in the low-teens range and Aviara up in the 20% range considering mix and pricing and all those considerations.

Great. Thank you.

You’re welcome.

Thank you. And I'm showing no other questions in the queue. I'd like to turn the call back to management for any closing remarks.

We're good. Have a great day. Thank you for participating.

This concludes today's conference call. Thank you for participating. You may now disconnect.