MCFT 10-K & 10-Q changes, risk factors and insider trading

In times of economic uncertainty or recession, consumers tend to have less discretionary income and to defer significant spending on non-essential items, which may adversely affect our financial performance. The economic uncertainty caused by (i) general economic conditions, (ii) the impact of inflation and elevated interest rates, (iii) labor shortages, (iv) supply chain disruptions, (v) rapid changes in trade policy and new or increased tariffs, (vi) political uncertainty and regional or global conflicts (vii) public health crises, pandemics, or national emergencies and (viii) actions and stimulus measures adopted by local, state and federal governments may lead to unfavorable business outcomes. We continue to develop our portfolio of brands, but our business remains cyclical and sensitive to consumer spending on new boats.

The market prices of certain materials and components used in manufacturing our products, especially resins that are made with hydrocarbon feedstocks, fiberglass, aluminum, lumber, and steel, can be volatile. Significant increases in inflation, particularly those related to wages and increases in the cost of raw materials, have, and may continue to have, an adverse impact on our business, financial condition, and results of operations. Although inflation has moderated slightly recently, itInflation has remained persistent in the United States and globally in recent years due in part to global supply chain issues and elevated energy prices, among other factors.

In addition, the existence of inflation in certain economies has resulted in, and may continue to result in, elevated interest rates. For examples, whileAlthough the U.S. Federal Reserve cutheld the federal funds rate threesteady timesthrough much of the first half of calendar year 2025 and cut rates in 2024the bysecond a totalhalf of 100calendar basisyear points,2025, theamid U.S.persistent Federalinflation Reserveconcerns hasand heldtrade policy uncertainty, it may raise rates steadyas followingit sincepreviously itsdid Januaryin 2025calendar meeting.years 2022 and 2023. As a result, it remains to be seen whether interest rates will stabilize, increase or decrease, either globally or in the United States specifically. Inflation, along with elevated interest rates, could translate into an increased cost of boat ownership for new boat buyers, who often finance their purchases. Should inflation continue to occur and interest rates remain elevated, prospective consumers may choose to forego or delay their purchases or buy a less expensive boat in the event credit is not available to finance their boat purchases.

Our results of operations can be directly affected, positively and negatively, by volatility in the cost and availability of energy, which is subject to global supply and demand and other factors beyond our control. Prices for crude oil, natural gas and other energy supplies, from time to time, have been subject to high volatility, including as a result of geopolitical factors or otherwise. Further, the global clean energy movement may also reduce the availability of fossil fuels, which may in turn cause increases to energy costs. Higher energy costs result in increases in operating expenses at our manufacturing facilities, in the expense of shipping raw materials to our facilities, and in the expense of shipping products to our dealers. In addition, increases in energy costs may adversely affect the pricing and availability of petroleum-based raw materials, such as resins and foams that are used in our products. The military conflict in Iran has caused, and may continue to cause, material supply chain disruptions resulting in significant increases in fuel prices. Any escalation of hostilities in the Middle East could further disrupt global oil and natural gas supply and related infrastructure, leading to additional significant increases and volatility in fuel prices. Higher fuel prices may also have an adverse effect on demand for our boats, as they increase cost of boat ownership and possibly affect product use. Higher fuel prices may also have an effect on consumer preferences, which could cause a shift from traditional fuel-powered boats to electric boats.

Weakening demand for marine products could hurt our dealers’ financial performance. In particular, reduced cash flow from decreases in sales and tightening credit markets could impair dealers’ ability to fund operations. Inability to fund operations can force dealers to cease business, and we may be unable to obtain alternate distribution in the vacated market. An inability to obtain alternate distribution could unfavorably affect our net sales through reduced market presence. If economic conditions deteriorate, we anticipate that dealer failures or voluntary market exits would increase, especially if overall retail demand materially declines. Additionally, the deterioration in the health of competitors’ dealers, such as Tommy's Boats declaration of bankruptcy during fiscal 2025,dealers has and may again in the future negatively impact the marketplace, including our dealers, by causing boat inventories at those dealers to be deeply discounted or relocated to other geographical areas, resulting in elevated inventories our dealers are competing against.

During the first half of fiscal 2025, we made the strategic decision to reduce field inventories in order to rebalance inventory held by our dealers in light of industry headwinds and weakness in retail demand. The planned reduction is substantially complete and we intend to align field inventories more closely with retail demand on a go-forward basis. Our profitability depends, in part, on our ability to spread fixed costs over a sufficiently large number of products sold and shipped. WhenIf retail demand decreases,does not materialize as expected, we experiencemay loweragain ratesbe ofrequired absorptionto ofreduce fixedfield costs in our manufacturing,inventories, which would negatively impactsimpact our gross and net margins. Further reduction in inventories could continue to negatively impact our margins. As a result, we must balance the economies of level production with seasonal retail sales patterns experienced by our dealers and other macroeconomic conditions. Failure to adjust manufacturing levels adequately,adequately for seasonal retail sales patterns and other macroeconomic conditions, decreased demand or the need to reduce production may have a material adverse effect on our financial condition and results of operations.

In addition, we have made strategic capital investments in capacity expansion activities to successfully capture growth opportunities and enhance product offerings, including brand relocation and plant expansions.expansions and acquisitions. For example, in connection with the Marine Products Transaction, we acquired a new manufacturing facility in Nashville, Georgia for the production of the recreational and sport fishing boats in our Chaparral and Robalo brands. We’ve also made strategic divestments of manufacturing assets, such as our Merritt Island manufacturing facility during fiscal 2025, to optimize our cost structure and direct resources toward other long-term initiatives. Moving production to a different plant andplant, expanding capacity at an existing facility (as the result of a disruption at one of our other facility or otherwise), and integrating a newly acquired facility involves risks, including difficulties initiating production within the cost and timeframe estimated, supplying product to customers when expected, integrating new products, inserting or maintaining engineering, technological and manufacturing product expertise, and attracting sufficient skilled labor to handle additional production demands. If we fail to meet these objectives, it could adversely affect our ability to meet customer demand for products and increase the cost of production versus projections, both of which could result in a significant adverse impact on operating and financial results. Additionally, plant expansion can result in manufacturing inefficiencies, additional expenses, including higher wages or severance costs, and cost inefficiencies, which could negatively impact financial results. In addition, with respect to acquired facilities, there can be no assurance that all potential instances of environmental or other liabilities have been identified, even for properties where an environmental site assessment has been conducted. Future events, such as changes in existing laws or policies or their enforcement, or the discovery of currently unknown contamination, may give rise to future remediation liabilities that may be material.

Changes in seasonal weather conditions can have a significant effect on our operating and financial results. Sales of our boats are typically stronger just before and during spring and summer, and favorable weather during these months generally has had a positive effect on consumer demand. Conversely, unseasonably cool weather, excessive rainfall, or drought conditions during these periods can reduce or change the timing of demand. Climate change could have an impact on longer-term natural weather trends, resulting in environmental changes including, but not limited to, increases in severe weather, changing sea levels, changes in sea, land and air temperatures, poor water conditions, or reduced access to water,water. Such environmental changes could adversely impact customer and dealer network infrastructures, which could disrupt or negatively affect our business.

We rely on the continuous operation of our manufacturing facilities for the production of our products. Any natural disaster or other serious disruption to our facilities due to fire, snow, flood, earthquake, pandemics, civil insurrection or social unrest or any other unforeseen circumstance could adversely affect our business, financial condition, and results of operations. Hurricanes, floods, earthquakes, storms, and catastrophic natural or environmental disasters, as well as acts of terrorism or civil unrest, could also disrupt our distribution channel, operations, or supply chain and decrease consumer demand. If a catastrophic event takes place in one of our major sales markets, our sales could be diminished and our insurance may not adequately cover losses from such disruptions. Additionally, if such an event occurs near our business locations, manufacturing facilities or key supplier facilities, business operations, and/or operating systems could be interrupted.

We believe that our consumers look for and expect quality, innovation, and advanced features when evaluating and making purchasing decisions about products and services in the marketplace. Our ability to remain competitive and meet our growth objectives may be adversely affected by difficulties or delays in product development, such as an inability to develop viable new or redesigned products, gain market acceptance of new or redesigned products, generate sufficient capital to fund new or redesigned product development, or obtain adequate intellectual property protection for new or redesigned products. To meet ever-changing consumer demands, both timing of market entry and pricing of new or redesigned products are critical. For example, we launched our redesigned flagshipX24 product,and theour XStar,all new X22 and X23 products in the first half of fiscal 2025.2026. The introduction of new brands or other new or redesigned products may not be introduced in a timely or cost-effective manner, may contain defects or may not meet consumer demands to the extent necessary to keep us competitive in all markets that we serve. Furthermore, we must continue to meet or exceed consumers’ expectations regarding product quality and after-sales service or our operating results could suffer.

Divestitures and othersimilar strategic transactions may materially and adversely affect our business or results of operations.

Our financial results may be adversely affected by our third-party suppliers’ increased costs orcosts, inability to adjust for our required production levels due to changes in demand or global supply chain disruptions.disruptions, or our inability to maintain relationship with new suppliers.

We rely on a complex global supply chain of third parties to supply raw materials used in the manufacturing process, including resins, fiberglass, aluminum, lumber and steel, as well as product parts and components. The prices for these raw materials, parts, and components fluctuate depending on market conditions and, in some instances, commodity prices or trade policies, including tariffs. Our supply could experience industry consolidation, which could increase the prices of raw materials, parts and components. Where we rely on a limited number of suppliers or a single supplier, the risk of supplier loss due to industry consolidation or a decline in financial performance is enhanced. Substantial increases in the prices of raw materials, parts, and components would increase our operating costs, and could reduce our profitability if we are unable to recoup the increased costs through higher product prices or improved operating efficiencies. Similarly, if a critical supplier were to close its operations, cease manufacturing, or otherwise fail to deliver an essential component necessary to our manufacturing operations, that could detrimentally affect our ability to manufacture and sell our products, resulting in an interruption in business operations and/or a loss of sales.

The talents and efforts of our employees, particularly key managers, are vital to our success. We have observed an overall tightening and increasingly competitive labor market in recent years, which could inhibit our ability to recruit, train and retain employees we require at efficient costs and could lead to increased costs, such as increased overtime to meet demand and increased wage rates to attract and retain employees. Our management team has significant industry experience and would be difficult to replace. We may be unable to retain them or to attract other highly qualified employees. Additionally, our employees and the employees previously employed by Marine Products prior to the Marine Products Transaction may experience uncertainty about their future roles and may decide not to remain with us as a result of the Marine Products Transaction. Failure to hire, develop, and retain highly qualified employee talent and to develop and implement an adequate succession plan for the management team could disrupt our operations and adversely affect our business and our future success. We perform an annual review of management succession plans with our board of directors (the “Board”), including reviewing executive officer and other important positions to substantially mitigate the risk associated with key contributor transitions, such as our upcoming Chief Financial Officer leadership transition at the beginning of fiscal 2026, but we cannot ensure that all transitions will be implemented successfully.

The premium performance sport boat and outboard boat categories and the powerboat industry as a whole are highly competitive for consumers and dealers. We also compete against consumer demand for used boats. Competition affects our ability to succeed in both the markets we currently serve and new markets that we may enter in the future. Competition is based primarily on brand name, price, product selection, and product performance. We compete with several large manufacturers that may have greater financial, marketing, and other resources than we do and who are represented by dealers in the markets in which we now operate and into which we plan to expand. We also compete with a variety of small, independent manufacturers. Following the Marine Products Transaction, we now compete across additional product categories, including fiberglass sport boats, center console fishing boats, bay boats, and dual console boats, where we face competition from large national and regional manufacturers such as Brunswick Corporation, Malibu Boats, Inc., Sea Hunt Boats, and Regal Marine Industries, Inc., as well as numerous smaller, privately held manufacturers. In addition, certain of our Chaparral models compete in the wake and surf category alongside our MasterCraft brand, which may result in intra-company competition that could affect the sales or pricing of products within our portfolio. We cannot provide assurance that we will not face greater competition from existing large or small manufacturers or that we will be able to compete successfully with new competitors. Our failure to compete effectively with our current and future competitors would adversely affect our business, financial condition, and results of operations.

Although we employ quality control procedures, sometimes a product is distributed that needs repair or replacement. Our standard warranties require us or our dealers to repair or replace defective products during such warranty periods at no cost to the consumer. The Company’s warranty programs vary by brand and segment and may result in different warranty cost profiles and reserve requirements. Historically, product recalls have been administered through our dealers and distributors. The repair and replacement costs we could incur in connection with a recall could adversely affect our business. In addition, product recalls could harm our reputation and cause us to lose consumers, particularly if recalls cause consumers to question the safety or reliability of our products.

An inability to identify and complete targeted acquisitions, as well as an inability to timely and successfully integrate completed acquisitions, such as the Marine Products Transaction, could negatively impact financial results.results and/or adversely affect our internal controls.

We have, and may in the future again, explore acquisitions and strategic alliances that will enable us to acquire complementary skills and capabilities, offer new products, expand our consumer base, enter new product categories or geographic markets, and obtain other competitive advantages. We cannot provide assurance, however, that we will identify acquisition candidates or strategic partners that are suitable to our business, obtain financing on satisfactory terms, or complete acquisitions or strategic alliances. In managing our acquisition strategy, we conduct rigorous due diligence, involve various functions, and continually review target acquisitions, all of which we believe mitigates some of our acquisition risks. However, we cannot assure that suitable acquisitions will be identified or consummated or that, if consummated, they will be successful. Acquisitions include a number of risks, including our ability to project and evaluate market demand, realize potential synergies and cost savings, and make accurate accounting estimates, as well as diversion of management attention. Uncertainties exist in assessing the value, risks, profitability, and liabilities associated with certain companies or assets, negotiating acceptable terms, obtaining financing on acceptable terms, and receiving any necessary regulatory approvals. As we continue to grow, in part, through acquisitions, our success depends on our ability to anticipate and effectively manage these risks. Our failure to successfully do so could have a material adverse effect on our financial condition and results of operations.

If we fail to timely and successfully integrate new businessesbusinesses, including Marine Products, into existing operations, we may see higher costs, lost sales, or otherwise diminished earnings and financial results.

Demand for our products depends in part on their acceptance by the public. Public concerns about the perceived safety of our productsproducts, particularly with respect to concerns about presence or use of regulated substances such as PFAS chemicals, or the environmental impact, particularly with respect to shoreline preservation, or our sustainability practices generally, could result in diminished public perception of the products we sell. Government, media, or activist pressure to limit emissions could also negatively impact consumers’ perceptions of our products. Any decline in the public acceptance of our products could negatively impact their sales or lead to changes in laws, rules and regulations that prevent access to certain locations or restrict use or manner of use in certain areas or during certain times, which could also negatively impact sales. Any material decline in the public acceptance of our products could impact our ability to retain existing consumers or attract new ones which, in turn, could have a material adverse effect on our business, results of operations or financial condition.

We manage our business operations through a variety of information technology systems and their underlying infrastructure, which we continually enhance to increase efficiency and security. In addition to the disruptions in our information technology systems, intentional or inadvertent insider personnel misconduct, cybersecurity threats and sophisticated and targeted cyberattacks pose a risk to our information technology systems. We have established security policies, processes, and defenses, including employee awareness training regarding phishing, malware, and other cyber risks, designed to help identify and protect against intentional and unintentional misappropriation or corruption of our information technology systems and information and disruption of our operations. Additionally, we maintain quarterly discussions with our Board to address cyber risks and system and process enhancements. Despite these efforts, our information technology systems may be damaged, disrupted, or shut down due to attacks by unauthorized access, malicious software, computer viruses, undetected intrusion, hardware failures, or other events, and in these circumstances our disaster recovery plans may be ineffective or inadequate. The techniques and sophistication used to conduct cyberattacks and breaches of information technology systems change frequently, including as a result of the deployment of evolving artificial intelligence (“AI”) and machine learning tools used to identify vulnerabilities and create more effective phishing attempts, and have the potential to not be recognized until such attacks are launched or have been in place for a period of time. These breaches or intrusions could lead to business interruption, exposure of proprietary or confidential information, data corruption, damage to our reputation, exposure to legal and regulatory proceedings, and other costs. Further, while we perform due diligence prior to acquisitions and take actions to safeguard the businesses that we acquire, these businesses may not have invested as significantly as we do in security and technology and may be more susceptible to cybersecurity incidents, which may make us more vulnerable to cybersecurity incidents as well. A security breach might also lead to violations of privacy laws, regulations, trade guidelines or practices related to our customers and associates and could result in potential claims from customers, associates, shareholders, or regulatory agencies. Any failure to maintain compliance with such laws, regulations, trade guidelines or practices may cause us to incur significant penalties and generate negative publicity, and may require us to change our business practices, increase our costs or otherwise adversely affect our business. Such events could adversely impact our reputation, business, financial position, results of operations, and cash flows. In addition, we could be adversely affected if any of our significant customers or suppliers experiences any similar events that disrupt their business operations or damage their reputation.

TheTariff impositionmeasures, ofincluding certain tariffs, including the “reciprocal tariffs” announced by the Trump administration,tariffs, have been introducedintroduced, modified, suspended, and pausedreinstated on numerous occasions, pending negotiations with the relevant countries. As a result, there continues to be significant uncertainty regarding the extent and duration of applicable tariffs, and their impact on the global economy. Any resulting economic downturns or market volatility may result in decreased consumer spending, which may adversely impact our industry. In response to consumer spending, we may decide to offer a higher amount of discounts and incentives than we have historically, which may adversely impact our operating results. In addition, any United States initiated tariffs on certain foreign goods, including raw materials, commodities, and products manufactured outside the United States that are used in our manufacturing processes may cause our manufacturing cost to rise, which would have a negative impact on our business and results of operations. We may submit tariff recovery claims through applicable customs or other governmental processes; however, the amount, timing and realization of any refunds, credits or other recoveries remain uncertain. If we are unable to mitigate any potential impacts through supply chain adjustments, pricing strategies, or other measures, our financial performance and growth prospects and/or our ability to create or execute our long-term plans or goals could be negatively affected.

Goodwill and indefinite-lived intangible assets, such as our trade names, are recorded at fair value at the time of acquisition and are not amortized, but are reviewed for impairment at least annually or more frequently if impairment indicators arise. In evaluating the potential for impairment of goodwill and trade names, we make assumptions regarding future operating performance, business trends, and market and economic conditions. Such analyses further require us to make certain assumptions about sales, operating margins, growth rates, and discount rates. Uncertainties are inherent in evaluating and applying these factors to the assessment of goodwill and trade name recoverability. We could be required to evaluate the recoverability of goodwill or trade names prior to the annual assessment if we experience business disruptions, unexpected significant declines in operating results, a divestiture of a significant component of our business, or declines in market capitalization.

As of June 30, 2025,2026, the balance of total goodwill and indefinite lived intangible assets was $54.5$191.6 million, which represents approximately 2138 percent of total assets.assets and includes goodwill and intangible asset balances recognized as a result of the Marine Products Transaction. The related purchase accounting remains subject to ongoing refinement. If the future operating performance of either the Company or individual operating segments is not sufficient, we could be required to record non-cash impairment charges. Impairment charges could substantially affect our reported earnings in the periods such charges are recorded. In addition, impairment charges could indicate a reduction in business value which could limit our ability to obtain adequate financing in the future.

Compliance with environmental, health, safety, data privacy and other regulatory requirements may increase costs and reduce demand for our products.

We are subject to federal, state, local, and foreign laws and regulations, including those concerning product safety, environmental protection, and occupational health and safety. Some of these laws and regulations require us to obtain permits and limit our ability to discharge hazardous materials into the environment.environment and others, such as SB 261 in California and federal Toxic Substances Control Act, may require us to prepare and file or publish reports related to certain materials and their related hazards and/or environmental impacts. Failure to comply with these requirements could result in the assessment of fines and penalties, obligations to conduct remedial or corrective actions, or, in extreme circumstances, revocation of our permits or injunctions preventing some or all of our operations. In addition, the components of our boats must meet certain regulatory standards, including stringent air emission standards for boat engines. Failure to meet these standards could result in an inability to sell our boats in key markets, which would adversely affect our business. Moreover, compliance with these regulatory requirements could require enhanced systems and controls and/or increase the cost of our products, which in turn, may reduce consumer demand. Any public reports, if perceived negatively by the public, could also result in reputational harm While we believe that we are in compliance with applicable federal, state, local, and foreign regulatory requirements, and hold all licenses and permits required thereunder, we cannot provide assurance that we will, at all times, be able to continue to comply with applicable regulatory requirements. Compliance with stringent regulatory and permit requirements may, in the future, cause us to incur substantial capital costs and increase our cost of operations, or may limit our operations, all of which could have a material adverse effect on our business or financial condition.

We strive to allocate capital in a manner that enhances shareholder value, lowers our cost of capital, or demonstrates our commitment to return excess capital to shareholders, while maintaining our ability to invest in strategic growth opportunities. In July 2023, the Board authorized a new share repurchase program under which the Companywe may repurchase up to $50 million of its outstanding shares of common stock. The new authorization became effective upon the expiration of the Company’sour previously existing $50 million share repurchase authorization. TheWe Company hashave and intendsintend to continue to purchase shares under the repurchase authorization from time to time on the open market at the discretion of management, subject to strategic considerations, market conditions, and other factors. Repurchases under our share repurchase program will reduce the market liquidity for our stock, potentially affecting its trading volatility and price. Future share repurchases will also diminish our cash reserves, which may impact our ability to pursue attractive strategic opportunities. Therefore, if we do not properly allocate our capital or implement a successful cash management strategy, including with respect to returning value to our shareholders through this share repurchase authorization, we may fail to produce optimal financial results and experience a reduction in shareholder value.

Our amended and restated certificate of incorporation authorizes us to issue shares of common stock and options, rights, warrants, and appreciation rights relating to common stock for the consideration and on the terms and conditions established by our Board in its sole discretion, whether in connection with acquisitions or otherwise. For example, we issued a substantial number of shares of our common stock as consideration in connection with the Marine Products Transaction, which diluted the beneficial ownership of the holders of our common stock.

OnIn Octoberfiscal 18, 2024,2025, the Company completed the Aviara Transaction and on December 23, 2024, the Company completed the Aviara Facility Sale. In fiscal 2023, the Company sold its NauticStar business. The Company'sCompany’s results for all periods presented, as discussed in Management'sManagement’s Discussion and Analysis, are presented on a continuing operations basis. Results related to our Aviara and NauticStar reporting units are reported as discontinued operations for all periods presented. See Notes 1 and 3 in Notes to Consolidated Financial Statements for more information on discontinued operations.

Net Sales. Net Sales decreasedincreased 11.822.8 percent for fiscal 20252026 when compared to fiscal 2024.2025. The decreaseincrease was a result of plannedincremental lowernet sales of $33.3 million sales generated in our Recreation and Sport Fishing segment as a result of the Marine Products Transaction, increased unit volumesvolumes, andincreased changes in price, partially offset byprices, favorable model mix related to new product introductions, favorableand option sales, and decreased dealer incentives.

Gross Margin. Gross Margin percentage declinedincreased 220290 basis points during fiscal 20252026 when compared to fiscal 2024.2025. LowerHigher margins were primarily the result of lowerincreased net sales, as discussed above, combined with effective cost absorptioncontrols duein our Performance and Wake and Leisure segments, partially offset by a $2.6 million inventory step-up charge related to decreasedthe productionMarine volume,Products material and overhead inflation, and changes in sales price.Transaction.

Interest Expense. Interest expense decreased $2.1$1.0 millionmillion, primarily duereflecting tothe repayment of all outstanding borrowings under the 2021 Credit Agreement being repaid during the first six months of fiscal 2025. While the Company borrowed under its Revolving Credit Facility in connection with the Marine Products Transaction during fiscal 2026, those borrowings were subsequently repaid during the year.

Interest Income. Interest income decreased $2.3$0.7 million during fiscal 20252026 primarily due to certain investment securities beingmaturing soldwith toproceeds repayused outstandingin borrowingsconnection underwith funding the RevolvingMarine CreditProducts Facility during the second quarter of fiscal 2025.Transaction.

Income Tax Expense. Our consolidated effective income tax rate decreasedwas to22.6 percent for fiscal 2026, up from 20.8 percent for fiscal 2025 from 22.5 percent for fiscal 2024.2025. See Note 1011 in Notes to Consolidated Financial Statements for more information.

PontoonPerformance and Wake Segment

The following table sets forth PontoonPerformance and Wake segment results for the fiscal years ended:

Net sales decreasedincreased 27.112.6 percent during fiscal 2025,2026, when compared to fiscal 2024,2025. asThe aincrease resultwas ofprimarily decreaseddriven by increased unit volume and increased dealer incentives, partially offset byvolumes, favorable model mix and favorable option sales.sales, increased prices, and decreased dealer incentives.

Operating lossincome wasincreased $9.44.3 millionpercent during fiscal 2025,2026, when compared to $2.1 million in fiscal 2024.2025, Thedriven changeby was primarily due to decreasedincreased net sales, as discussed above, andpartially offset by increased laboroperating and materialstransaction cost.costs of $13.5 million, primarily related to Marine Products Transaction.

We define EBITDA as income from continuing operations, before interest, income taxes, depreciation and amortization. We define Adjusted EBITDA as EBITDA further adjusted to eliminate certain non-cash charges or other items that we do not consider to be indicative of our core and/or ongoing operations. For the periods presented herein, these adjustments include share-based compensation, senior leadership transition and organizational realignment costs, Enterprise resource planning (“ERP”) implementation costs, Marine Products Transaction costs, impairments, and businessinventory development consulting costs,step-up as described in more detail below. We define EBITDA margin and Adjusted EBITDA margin as EBITDA and Adjusted EBITDA, respectively, expressed as a percentage of Net sales.

We define Adjusted Net Income and Adjusted Net Income per share as income from continuing operations adjusted to eliminate certain non-cash charges or other items that we do not consider to be indicative of our core and/or ongoing operations and reflecting income tax expense on adjusted net income before income taxes at our estimated annual effective tax rate. For the periods presented herein, these adjustments include other intangible asset amortization, share-based compensation, senior leadership transition and organizational realignment costs, ERP implementation costs, Marine Products Transaction costs, impairments, and businessinventory development consulting costs.step-up.

Represents amounts paid for legal fees and recruiting costs associated with the CEO and CFO transitions, as well as non-recurringone-time severance costs incurred as part of the Company'sCompany’s strategic organizational realignment undertaken in connection with the transitions.

Represents the Weighted average shares used for the computation of Basic and Diluted earnings (loss) per share as presented on the Consolidated Statements of Operations to calculate Adjusted Net Income per diluted share for all periods presented herein.

Cash and cash equivalents totaled $43.9 million as of June 30, 2026, an increase of $15.0 million from $28.9 million as of June 30, 2025,2025. anThere increasewere ofno $21.5short-term million from $7.4 millioninvestments as of June 30, 2024.2026, Short-termcompared investments totaledto $50.5 million as of June 30, 2025, a decrease of $28.3 million from $78.8 million as of June 30, 2024.2025. Net changes in Cash and cash equivalents and Short-term investments include certain investment securities maturing with proceeds from short-term investments being used toin repayconnection outstandingwith amounts underfunding the RevolvingMarine CreditProducts Facility and $26.1 million in net proceeds from the Aviara Facility Sale.Transaction. Refer to Note 3 — Discontinued Operations and Note 4 — Short-termBusiness investmentsCombinations in the Notes to Consolidated Financial Statements for further details. Total debt as of June 30, 2024 was $49.3 million, with no amounts outstanding as of June 30, 2025.

On July 24, 2023, the Board authorized a new share repurchase program under which the Company may repurchase up to $50.0 million of its outstanding shares of common stock. The new authorization became effective upon the completion of the Company’s previously existing $50.0 million stockshare repurchase authorization. As of June 30, 2025,2026, $25.9$23.5 million remained available under the new authorization.

Net cash provided by operating activities was $38.2 million, primarily due to net income and favorable working capital changes. Working capital is defined as accounts receivable, income tax receivable, inventories, and prepaid expenses and other current assets net of accounts payable, income tax payable, and accrued expenses and other current liabilities as presented in the consolidated balance sheets, excluding the impact of acquisitions and non-cash adjustments. Favorable changes in working capital primarily consisted of a decrease in inventories, accounts receivable, other assets, prepaid expenses and other current assets, and an increase in income tax payable, partially offset by a decrease in accounts payable. Inventories decreased due to timing of sales at the end of the period compared to the end of the prior-year and planned raw materials reduction due to lower unit production volume. Accounts receivable decreased due to timing of sales at the end of the period compared to the end of the prior-year period. Income tax payable increased due to timing of estimated payments. Prepaid expenses and other current assets decreased mainly due to lower general insurance premiums. Accounts payable decreased due to a reduction in raw material purchases and timing of purchases at the end of the period compared to the prior-year period.

During the sixnine months ended DecemberMarch 28,29, 2025,2026, there have been no material changes to the risk factors disclosed in “Part I, Item 1A. Risk Factors” in our 2025 Annual Report.

On February 5, 2026, the Company announced that it had entered into the Marine Products Transaction. The Marine Products Transaction is expected to close duringshortly theafter firstour halfspecial meeting of calendarshareholders, yearscheduled May 12, 2026, subject to approval by both the Company's and Marine Products'Products’ shareholders and the satisfaction of other customary closing conditions.

AmidDespite continuingrecent geopolitical and macroeconomic challenges,uncertainty, the Company delivered increased net sales of $8.4$2.2 million and increased gross margin of 440420 basis points for the secondthird quarter of fiscal 2026, when compared with the same prior-year period. ThisThese increaseincreases waswere primarily driven by favorable model mix and option sales, higherincreased unit volumes,prices, and increaseddecreased prices,dealer incentives, while maintaining effective cost controls.controls, partially offset by lower unit volumes.

The table below presents our consolidated results of operations for the three and sixnine months ended:

Net sales increased $8.4 million and $12.0$2.2 million during the secondthird quarter and first half of fiscal 2026, respectively, when compared with the same priorprior-year year periods.period. The increase in net sales was driven by favorable model mix and option sales, higherincreased prices, and decreased dealer incentives, partially offset by lower unit volumes, and increased prices.volumes.

GrossNet margin percentagesales increased 440$14.3 basis pointsmillion during both the second quarter and first halfnine months of fiscal 2026, when compared with the same prior year periods.period, Higherdue marginsto werefavorable primarilymodel themix resultand ofoption sales, increased netprices, sales,and asdecreased discusseddealer above, combined with effective cost controls.incentives.

OperatingGross expensesmargin percentage increased $2.1420 millionbasis and $2.9 millionpoints during both the secondthird quarter and first halfnine months of fiscal 2026, respectively, when compared with the same prior year periods,periods. dueHigher tomargins ERPwere implementation costs, business development and consulting costs related toprimarily the Marineresult Products Transaction, andof increased sellingnet andsales, marketingas costs.discussed above, combined with effective cost controls.

The following table sets forth MasterCraft segment results for the three and sixnine months ended:

Net sales increased $6.6$2.5 million and $9.3$11.8 million during the secondthird quarter and first halfnine months of fiscal 2026, respectively, when compared with the same prior year periods. The increase was driven by favorable model mix and option sales, higherincreased prices, and decreased dealer incentives, partially offset by lower unit volumes, and increased prices.volumes.

Operating income increaseddecreased $1.7$5.5 million and $3.5$2.0 million during secondthird quarter and first halfnine months of fiscal 2026, respectively, when compared with the same prior year periods. The change was primarily the result of increased netoperating sales,expenses, partially offset by increased operatingnet expenses,sales, as discussed above.

The following table sets forth Pontoon segment results for the three and sixnine months ended:

Net sales increaseddecreased $1.8 million and $2.8$0.3 million during the secondthird quarter and first half of fiscal 2026, respectively, when compared with the same priorprior-year year periods,period, primarily due to higherlower unit volumesvolumes, andpartially offset by favorable option sales.sales, increased prices, and decreased dealer incentives.

Operating loss for the secondthird quarter and first half of fiscal 2026 decreased $0.8 million and $1.8$0.1 million, respectively, when compared with the same priorprior-year yearperiod, periods.due Theto changeeffective wascost drivencontrols, partially offset by increaseddecreased net sales, as discussed above, and effective cost controls.above.

We define EBITDA as income (loss) from continuing operations, before interest, income taxes, depreciation and amortization. We define Adjusted EBITDA as EBITDA further adjusted to eliminate certain non-cash charges or other items that we do not consider to be indicative of our core and/or ongoing operations. For the periods presented herein, the adjustments are for share-based compensation, senior leadership transition and organizational realignment costs, ERP implementation costs, and business development and consulting costs. We define EBITDA margin and Adjusted EBITDA margin as EBITDA and Adjusted EBITDA, respectively, each expressed as a percentage of Net sales.

We define Adjusted Net Income and Adjusted Net Income per share as income (loss) from continuing operations, adjusted to eliminate certain non-cash charges or other items that we do not consider to be indicative of our core and/or ongoing operations and reflecting income tax expense on adjusted net income before income taxes at our estimated annual effective tax rate. We define Adjusted Net Income per Share as Adjusted Net Income divided by the weighted-average basic and diluted shares outstanding. For the periods presented herein, these adjustments include other intangible asset amortization, share-based compensation, senior leadership transition and organizational realignment costs, ERP implementation costs, and business development and consulting costs.

EBITDA, Adjusted EBITDA, EBITDA margin, Adjusted EBITDA margin, Adjusted Net Income, Adjusted Net Income per share, and Free Cash Flow, which we refer to collectively as the Non-GAAP Measures, are not measures of net income,income (loss), operating income,income (loss), or net operating cash flows as determined under accounting principles generally accepted in the United States, or U.S. GAAP. The Non-GAAP Measures are not measures of performance in accordance with U.S. GAAP and should not be considered as an alternative to net income,income (loss), net income (loss) per share, or net operating cash flows determined in accordance with U.S. GAAP. Additionally, Adjusted EBITDA is not intended to be a measure of cash flow. We believe that the inclusion of the Non-GAAP Measures is appropriate to provide additional information to investors because securities analysts and investors use the Non-GAAP Measures to assess our operating performance across periods on a consistent basis and to evaluate the relative risk of an investment in our securities. We use Adjusted Net Income and Adjusted Net Income per share to facilitate a comparison of our operating performance on a consistent basis from period to period that, when viewed in combination with our results prepared in accordance with U.S. GAAP, provides a more complete understanding of factors and trends affecting our business than does U.S. GAAP measures alone. We believe Adjusted Net Income and Adjusted Net Income per share assists our Board, management, investors, and other users of the financial statements in comparing our net income (loss) on a consistent basis from period to period because it removes certain non-cash items and other items that we do not consider to be indicative of our core and/or ongoing operations and reflecting income tax expense on adjusted net income before income taxes at our estimated annual effective tax rate. The Non-GAAP Measures have limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Some of these limitations are:

The following table presents a reconciliation of income (loss) from continuing operations as determined in accordance with U.S. GAAP to EBITDA, and Adjusted EBITDA, and income (loss) from continuing operations margin (expressed as a percentage of net sales) to EBITDA margin and Adjusted EBITDA margin (each expressed as a percentage of net sales) for the periods indicated:

The following table presents a reconciliation of income (loss) from continuing operations as determined in accordance with U.S. GAAP to Adjusted Net Income for the periods indicated:

The following table presents the reconciliation of income (loss) from continuing operations per diluted share to Adjusted Net Income per diluted share for the periods indicated:

Represents non-recurring third-party business development and consulting costs and debt extinguishment costs related to the Marine Products Transaction.

Cash and cash equivalents totaled $56.2$75.4 million as of DecemberMarch 28,29, 2025,2026, an increase of $27.3$46.5 million from $28.9 million as of June 30, 2025. Short-term investments totaled $25.2$9.2 million as of DecemberMarch 28,29, 2025,2026, a decrease of $25.3$41.3 million from $50.5 million as of June 30, 2025. As of DecemberMarch 28,29, 2025,2026, and June 30, 2025, we had no long-term debt outstanding and $75.0 million and $100.0 millionmillion, respectively, available borrowing capacity under the Revolving Credit Facility.

On July 24, 2023, the Board of the Company authorized a share repurchase program under which the Company may repurchase up to $50 million of its outstanding shares of common stock. During the sixnine months ended DecemberMarch 28,29, 2025,2026, the Company repurchased 116,370 shares of common stock for $2.3 million in cash, excluding related fees and expenses.

SixNine Months Ended DecemberMarch 29, 20242026 Cash Flows from Continuing Operations

Net cash provided by operating activities for the sixnine months ended DecemberMarch 29, 20242026 was $13.4 million, primarily due to net incomeincome, andpartially favorableoffset changes to working capital. Favorable changes inby working capital primarilyusage. consistedWorking ofcapital decreasesis indefined as accounts receivablereceivable, income tax receivable, inventories, and prepaid expenses and other current assets.assets Partiallynet offsettingof favorableaccounts changespayable, inincome workingtax capitalpayable, were decreases inand accrued expenses and other current liabilities andas presented in the condensed consolidated balance sheets. Working capital usage primarily consisted of an increase in accounts payables.receivable, inventories, and prepaid expenses and other current assets, partially offset by an increase in accounts payable. Accounts receivable decreasedincreased due to timing of sales at the end of the period compared to the end of the prior-year period. Inventories increased due to timing of raw material purchases compared to the end of the prior-year period, along with a subsequent increase in production. Prepaid and other current assets decreased due to amortization of insurance premiums. Accrued expenses and other current liabilities decreasedincreased due to payment of dealerannual incentivesgeneral andinsurance variable compensation.premiums. Accounts payablespayable decreasedincreased due to timing associatedof withprofessional fee payments related to the holidayMarine season.Products Transaction, timing of insurance related payments, and timing of purchases at the end of the period compared to the prior-year period.

Net cash provided by investing activities was $46.3$35.8 million, which included $50.9$41.6 million of net proceeds in available-for-sale securities, partially offset by $4.6$5.7 million in capital expenditures. Our capital spending was primarily focused on tooling, information technology, and machinery and equipment.

Net cash used in financing activities was $54.2$2.9 million, whichprimarily includeddue to share repurchases totaling $4.2$2.3 millionmillion, excluding related fees and $49.5 million used to repay outstanding borrowings of the Term Loan. Drawn amounts on the Revolving Credit Facility were fully repaid as of December 29, 2024.expenses.

The Company did not have any off balance sheet financing arrangements as of DecemberMarch 28,29, 2025.2026.

As of DecemberMarch 28,29, 2025,2026, there were no significant changes in or changes to the application of our critical accounting policies or estimation procedures from those presented in our 2025 Annual Report.