MasterCraft Boat Holdings, Inc. (NASDAQ:MCFT) Q2 2023 Earnings Call Transcript

And so far, they’ve been very receptive to that. And I think that’s very much our approach to how we want to work with dealers and be very dealer-centric as much as we are consumer-centric.

Tim Oxley: Craig, I’d like to add that while the promotional environment is higher than the last couple of years, it’s not back up to historical levels. So we’re comparing to a period where it’s kind of an all-time low.

Craig Kennison: Yes, that’s very helpful. And then just on the floor plan issue, a lot of dealers are struggling with the fact that there’s interest cost now on all of their inventory. Just wondering what the pushback has been among dealers to take on inventory? And whether maybe you have the infrastructure in place to be more demand-driven and operate with less inventory in the channel and keep that floor plan expense down?

George Steinbarger: Yes. So I’ll answer the latter part first. We absolutely have the flexibility and we believe that we can operate our businesses and take market share and get the dealers the product they need while maintaining lower levels of inventory in the channel versus historical levels. We think the dealers very much view that similarly as we do. And so that’s very much built into our financial plan and how we manage the business every day. We’re tracking retail activity every day, every week. And so we’re making sure that our production is getting inventory into the markets and the dealers where it’s retailing. And as I mentioned previously, we’re very much focused on how do we help our dealers retail product, not just pushing them wholesale inventory.

In terms of the floor plan financing, I mean every OEM programs are different but with our free flooring upwork to pro-flooring support that we provide, right now, we’re not getting any pushback from our dealers in terms of taking product. And so we feel very confident that our programs are structured in a way that really allows the dealer to minimize the stocking risk throughout the selling season and allows us and positions us to be able to get the inventory to the dealer to maximize on our retail opportunities.

Craig Kennison: Just to follow up on that. How long does the free flooring last for dealers? And how does that flow through the income statement? Is that a contrary revenue or is there a cost?

Tim Oxley: Craig, correct. It is contra-revenue and every boat has at least 6 months of free flooring. And if it’s bought early in the season, say, July, it will get up to 9 months; so to between 6 and 9 months. There’s also a cash alternative which has taken advantage of primarily in Q4 of our fiscal year.

Operator: And our next question will come from Drew Crum of Stifel.

Drew Crum: Maybe just sticking with the brand commentary and specifically on MasterCraft, maybe a little more detail on the unit sales performance down 12% year-on-year in the quarter. And any commentary in terms of what you’re seeing at retail in terms of consumer demand. And then separately, on Aviara, can you talk about how the brand is tracking relative to some of the financial targets you had set out for the fiscal year?