MCFT

The following discussion and analysis should be read together with the unaudited condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q. In addition, the statements in this discussion and analysis regarding our expectations concerning the performance of our business, anticipated financial results, liquidity and the other non-historical statements are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in “Cautionary Note Regarding Forward-Looking Statements” above and in “Risk Factors” set forth in our 2025 Annual Report. Our actual results may differ materially from those contained in or implied by any forward-looking statements. Certain statements in the following discussions are based on non-GAAP financial measures. A “non-GAAP financial measure” is a numerical measure of a registrant’s historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with U.S. GAAP in the statements of operations, balance sheets or statements of cash flows of the issuer; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. Non-GAAP financial measures do not include operating and statistical measures. The Company includes non-GAAP financial measures in Management’s Discussion and Analysis, as the Company’s management believes that these measures and the information they provide are useful to users of the financial statements, including investors, because they permit users of the financial statements to view the Company’s performance using the same tools that management utilizes and to better evaluate the Company’s ongoing business performance. In order to better align the Company’s reported results with the internal metrics used by the Company's management to evaluate business performance as well as to provide better comparisons to prior periods and peer data, non-GAAP measures exclude the impact of purchase accounting amortization related to business acquisitions. Overview The Company’s results for all periods presented, as discussed in Management’s Discussion and Analysis, are presented on a continuing operations basis, which consists of our MasterCraft and Pontoon segments. Marine Products Transaction On February 5, 2026, the Company announced that it had entered into the Marine Products Transaction. The Marine Products Transaction is expected to close shortly after our special meeting of shareholders, scheduled May 12, 2026, subject to approval by both the Company's and Marine Products’ shareholders and the satisfaction of other customary closing conditions. Results of Operations Despite recent geopolitical and macroeconomic uncertainty, the Company delivered increased net sales of $2.2 million and increased gross margin of 420 basis points for the third quarter of fiscal 2026, when compared with the same prior-year period. These increases were primarily driven by favorable model mix and option sales, increased prices, and decreased dealer incentives, while maintaining effective cost controls, partially offset by lower unit volumes. 18 Results of Continuing Operations Consolidated Results The table below presents our consolidated results of operations for the three and nine months ended: Three Months Ended 2026 vs. 2025 Nine Months Ended 2026 vs. 2025 March 29, March 30, % March 29, March 30, % 2026 2025 Change Change 2026 2025 Change Change (Dollar amounts in thousands) Consolidated statements of operations: NET SALES $ 78,206 $ 75,960 $ 2,246 3.0 % $ 218,967 $ 204,687 $ 14,280 7.0 % COST OF SALES 58,664 60,195 (1,531 ) (2.5 %) 168,502 166,232 2,270 1.4 % GROSS PROFIT 19,542 15,765 3,777 24.0 % 50,465 38,455 12,010 31.2 % OPERATING EXPENSES: Selling and marketing 3,360 2,845 515 18.1 % 9,649 8,543 1,106 12.9 % General and administrative 17,030 8,356 8,674 103.8 % 34,267 23,258 11,009 47.3 % Amortization of other intangible assets 450 450 — — 1,350 1,350 — — Total operating expenses 20,840 11,651 9,189 78.9 % 45,266 33,151 12,115 36.5 % OPERATING INCOME (LOSS) (1,298 ) 4,114 (5,412 ) (131.6 %) 5,199 5,304 (105 ) (2.0 %) OTHER INCOME (EXPENSE): Interest expense (58 ) — (58 ) — (146 ) (1,169 ) 1,023 (87.5 %) Interest income 760 760 — — 2,257 2,649 (392 ) (14.8 %) Loss on extinguishment of debt (71 ) — (71 ) — (71 ) — (71 ) 0.0 % INCOME (LOSS) BEFORE INCOME TAX EXPENSE (667 ) 4,874 (5,541 ) (113.7 %) 7,239 6,784 455 6.7 % INCOME TAX EXPENSE 49 1,053 (1,004 ) (95.3 %) 1,811 1,521 290 19.1 % INCOME (LOSS) FROM CONTINUING OPERATIONS $ (716 ) $ 3,821 $ (4,537 ) (118.7 %) $ 5,428 $ 5,263 $ 165 3.1 % Additional financial and other data: Unit sales volume: MasterCraft 409 422 (13 ) (3.1 %) 1,195 1,196 (1 ) (0.1 %) Pontoon 162 197 (35 ) (17.8 %) 524 527 (3 ) (0.6 %) Consolidated unit sales volume 571 619 (48 ) (7.8 %) 1,719 1,723 (4 ) (0.2 %) Net sales: MasterCraft $ 66,764 $ 64,227 $ 2,537 4.0 % $ 186,647 $ 174,857 $ 11,790 6.7 % Pontoon 11,442 11,733 (291 ) (2.5 %) 32,320 29,830 2,490 8.3 % Consolidated net sales $ 78,206 $ 75,960 $ 2,246 3.0 % $ 218,967 $ 204,687 $ 14,280 7.0 % Net sales per unit: MasterCraft $ 163 $ 152 $ 11 7.2 % $ 156 $ 146 $ 10 6.8 % Pontoon 71 60 11 18.3 % 62 57 5 8.8 % Consolidated net sales per unit 137 123 14 11.4 % 127 119 8 6.7 % Gross margin 25.0 % 20.8 % 420 bps 23.0 % 18.8 % 420 bps Net sales increased $2.2 million during the third quarter of fiscal 2026, when compared with the same prior-year period. The increase in net sales was driven by favorable model mix and option sales, increased prices, and decreased dealer incentives, partially offset by lower unit volumes. Net sales increased $14.3 million during the first nine months of fiscal 2026, when compared with the same prior year period, due to favorable model mix and option sales, increased prices, and decreased dealer incentives. Gross margin percentage increased 420 basis points during both the third quarter and first nine months of fiscal 2026, when compared with the same prior year periods. Higher margins were primarily the result of increased net sales, as discussed above, combined with effective cost controls. 19 Operating expenses increased $9.2 million and $12.1 million during the third quarter and first nine months of fiscal 2026, respectively, when compared with the same prior year periods, due to business development and consulting costs related to the Marine Products Transaction, increased selling and marketing costs, and ERP implementation costs. Segment Results MasterCraft Segment The following table sets forth MasterCraft segment results for the three and nine months ended: Three Months Ended 2026 vs. 2025 Nine Months Ended 2026 vs. 2025 March 29, March 30, % March 29, March 30, % (Dollar amounts in thousands) 2026 2025 Change Change 2026 2025 Change Change Net sales $ 66,764 $ 64,227 $ 2,537 4.0 % $ 186,647 $ 174,857 $ 11,790 6.7 % Operating income 277 5,792 (5,515 ) (95.2 %) 10,834 12,864 (2,030 ) (15.8 %) Purchases of property, plant and equipment 836 1,778 (942 ) (53.0 %) 4,797 5,459 (662 ) (12.1 %) Unit sales volume 409 422 (13 ) (3.1 %) 1,195 1,196 (1 ) (0.1 %) Net sales per unit $ 163 $ 152 $ 11 7.2 % $ 156 $ 146 $ 10 6.8 % Net sales increased $2.5 million and $11.8 million during the third quarter and first nine months of fiscal 2026, respectively, when compared with the same prior year periods. The increase was driven by favorable model mix and option sales, increased prices, and decreased dealer incentives, partially offset by lower unit volumes. Operating income decreased $5.5 million and $2.0 million during third quarter and first nine months of fiscal 2026, respectively, when compared with the same prior year periods. The change was primarily the result of increased operating expenses, partially offset by increased net sales, as discussed above. Pontoon Segment The following table sets forth Pontoon segment results for the three and nine months ended: Three Months Ended 2026 vs. 2025 Nine Months Ended 2026 vs. 2025 March 29, March 30, % March 29, March 30, % (Dollar amounts in thousands) 2026 2025 Change Change 2026 2025 Change Change Net sales $ 11,442 $ 11,733 $ (291 ) (2.5 %) $ 32,320 $ 29,830 $ 2,490 8.3 % Operating loss (1,575 ) (1,678 ) 103 (6.1 %) (5,635 ) (7,560 ) 1,925 (25.5 %) Purchases of property, plant and equipment 203 233 (30 ) (12.9 %) 949 1,147 (198 ) (17.3 %) Unit sales volume 162 197 (35 ) (17.8 %) 524 527 (3 ) (0.6 %) Net sales per unit $ 71 $ 60 $ 11 18.3 % $ 62 $ 57 $ 5 8.8 % Net sales decreased $0.3 million during the third quarter of fiscal 2026, when compared with the same prior-year period, primarily due to lower unit volumes, partially offset by favorable option sales, increased prices, and decreased dealer incentives. Net sales increased $2.5 million during the first nine months of fiscal 2026, when compared to the same prior-year period, primarily due to favorable option sales, increased prices, and decreased dealer incentives, partially offset by unfavorable model mix. Operating loss for the third quarter of fiscal 2026 decreased $0.1 million, when compared with the same prior-year period, due to effective cost controls, partially offset by decreased net sales, as discussed above. Operating loss for the first nine months of fiscal 2026 decreased $1.9 million, when compared with the same prior-year periods, due to increased net sales, as discussed above, and effective cost controls. 20 Non-GAAP Measures EBITDA, Adjusted EBITDA, EBITDA margin, and Adjusted EBITDA margin 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. Adjusted Net Income and Adjusted Net Income per share We define Adjusted Net Income 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. Free Cash Flow We define Free Cash Flow from continuing operations as net cash flows from operating activities less purchases of property, plant, and equipment. 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 (loss), operating 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 (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: •Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and the Non-GAAP measures do not reflect any cash requirements for such replacements; •Certain Non-GAAP measures do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments; •Certain Non-GAAP measures do not reflect changes in, or cash requirements for, our working capital needs; •Certain Non-GAAP measures do not reflect our tax expense or any cash requirements to pay income taxes; 21 •Certain Non-GAAP measures do not reflect interest expense, or the cash requirements necessary to service interest payments on our indebtedness; and •Certain Non-GAAP measures do not reflect the impact of earnings or charges resulting from matters we do not consider to be indicative of our core and/or ongoing operations, but may nonetheless have a material impact on our results of operations. In addition, because not all companies use identical calculations, our presentation of the Non-GAAP Measures may not be comparable to similarly titled measures of other companies, including companies in our industry. 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: Three Months Ended Nine Months Ended March 29, % of Net March 30, % of Net March 29, % of Net March 30, % of Net (Dollar amounts in thousands) 2026 sales 2025 sales 2026 sales 2025 sales Income (loss) from continuing operations $ (716 ) -0.9% $ 3,821 5.0% $ 5,428 2.5% $ 5,263 2.6% Income tax expense 49 1,053 1,811 1,521 Interest expense 58 — 146 1,169 Interest income (760 ) (760 ) (2,257 ) (2,649 ) Depreciation and amortization 2,482 2,569 6,960 7,024 EBITDA 1,113 1.4% 6,683 8.8% 12,088 5.5% 12,328 6.0% Share-based compensation 894 805 2,688 2,080 Senior leadership transition and organizational realignment costs(a) — — 196 448 ERP implementation costs(b) 291 — 784 — Business development and consulting costs(c) 8,425 — 9,394 — Adjusted EBITDA $ 10,723 13.7% $ 7,488 9.9% $ 25,150 11.5% $ 14,856 7.3% 22 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: Three Months Ended Nine Months Ended March 29, March 30, March 29, March 30, (Dollar amounts in thousands, except per share data) 2026 2025 2026 2025 Income (loss) from continuing operations $ (716 ) $ 3,821 $ 5,428 $ 5,263 Income tax expense 49 1,053 1,811 1,521 Amortization of acquisition intangibles 450 450 1,350 1,350 Share-based compensation 894 805 2,688 2,080 Senior leadership transition and organizational realignment costs(a) — — 196 448 ERP implementation costs(b) 291 — 784 — Business development and consulting costs(c) 8,425 — 9,394 — Adjusted Net Income before income taxes 9,393 6,129 21,651 10,662 Adjusted income tax expense(d) 2,160 1,103 4,980 1,919 Adjusted Net Income $ 7,233 $ 5,026 $ 16,671 $ 8,743 Adjusted Net Income per share: Basic $ 0.45 $ 0.31 $ 1.03 $ 0.53 Diluted $ 0.45 $ 0.30 $ 1.03 $ 0.53 Weighted average shares used for the computation of(e): Basic Adjusted Net Income per share 16,136,132 16,414,340 16,147,425 16,471,352 Diluted Adjusted Net Income per share 16,136,132 16,540,345 16,263,844 16,554,235 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: Three Months Ended Nine Months Ended March 29, March 30, March 29, March 30, 2026 2025 2026 2025 Income (loss) from continuing operations per diluted share $ (0.04 ) $ 0.23 $ 0.33 $ 0.32 Impact of adjustments: Income tax expense — 0.06 0.11 0.09 Amortization of acquisition intangibles 0.03 0.03 0.08 0.08 Share-based compensation 0.06 0.05 0.17 0.13 Senior leadership transition and organizational realignment costs(a) — — 0.01 0.03 ERP implementation costs(b) 0.02 — 0.05 — Business development and consulting costs(c) 0.52 — 0.58 — Adjusted Net Income per diluted share before income taxes 0.59 0.37 1.33 0.65 Impact of adjusted income tax expense on net income per diluted share before income taxes(d) (0.14 ) (0.07 ) (0.30 ) (0.12 ) Adjusted Net Income per diluted share 0.45 $ 0.30 1.03 $ 0.53 23 The following table presents a reconciliation of net cash flows by operating activities of continuing operations as determined in accordance with U.S. GAAP to Free Cash Flow for the periods presented: Nine Months Ended March 29, March 30, 2026 2025 Net cash used in operating activities of continuing operations $ 13,387 $ 18,457 Less: Purchases of property, plant and equipment (5,746 ) (6,606 ) Free cash flow $ 7,641 $ 11,851 (a)Represents amounts paid for legal fees and recruiting costs associated with the CEO and CFO transitions, as well as non-recurring severance costs incurred as part of the Company’s strategic organizational realignment undertaken in connection with the transitions. (b)Represents consulting costs incurred in connection with the ERP system implementation. (c)Represents non-recurring third-party business development and consulting costs and debt extinguishment costs related to the Marine Products Transaction. (d)For fiscal 2026 and 2025, income tax expense reflects an income tax rate of 23.0% and 20.0%, respectively. (e)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 basic and diluted share for all periods presented herein. Liquidity and Capital Resources Our primary liquidity and capital resource needs are to finance working capital, fund capital expenditures, service debt, fund potential acquisitions, and fund our share repurchase program. Our principal sources of liquidity are our cash balance, short-term investments, cash generated from operating activities, our revolving credit agreement and the refinancing and/or new issuance of long-term debt. We believe our cash balance, short-term investments, cash from operations, and our ability to borrow will be sufficient to provide for our liquidity and capital resource needs. Cash and cash equivalents totaled $75.4 million as of March 29, 2026, an increase of $46.5 million from $28.9 million as of June 30, 2025. Short-term investments totaled $9.2 million as of March 29, 2026, a decrease of $41.3 million from $50.5 million as of June 30, 2025. As of March 29, 2026, and June 30, 2025, we had no long-term debt outstanding and $75.0 million and $100.0 million, 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 nine months ended March 29, 2026, the Company repurchased 116,370 shares of common stock for $2.3 million in cash, excluding related fees and expenses. The following table and discussion below relate to our cash flows from continuing operations from operating, investing, and financing activities: Nine Months Ended March 29, March 30, (Dollar amounts in thousands) 2026 2025 Total cash provided by (used in): Operating activities $ 13,387 $ 18,457 Investing activities 35,826 34,960 Financing activities (2,889 ) (54,988 ) Net change in cash and cash equivalents from continuing operations $ 46,324 $ (1,571 ) Nine Months Ended March 29, 2026 Cash Flows from Continuing Operations Net cash provided by operating activities for the nine months ended March 29, 2026 was $13.4 million, primarily due to net income, partially offset by working capital usage. 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 condensed consolidated balance sheets. Working capital usage primarily consisted of an increase in accounts receivable, inventories, and prepaid expenses and other current assets, partially offset by an increase in accounts payable. Accounts 24 receivable increased 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 increased due to payment of annual general insurance premiums. Accounts payable increased due to timing of professional fee payments related to the Marine 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 $35.8 million, which included $41.6 million of net proceeds in available-for-sale securities, partially offset by $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 $2.9 million, primarily due to share repurchases totaling $2.3 million, excluding related fees and expenses. Nine Months Ended March 30, 2025 Cash Flows from Continuing Operations Net cash provided by operating activities for the nine months ended March 30, 2025 was $18.5 million, primarily due to net income and favorable changes to working capital. Favorable changes in working capital primarily consisted of an increase in accounts payables and a decrease in accounts receivable. Partially offsetting favorable changes in working capital was an increase in inventories. Accounts payables increased due to increased production compared to the prior-year period. Accounts receivable decreased due to timing of sales at the end of the period compared to the end of the prior-year period. Inventories increased due to higher value on finished goods and timing of sales at the end of the period compared to the end of the prior-year period. Net cash provided by investing activities was $35.0 million, which included $41.6 million of proceeds in available-for-sale securities, partially offset by $6.6 million in capital expenditures. Our capital spending was primarily focused on information technology, tooling, and machinery and equipment. Net cash used in financing activities was $55.0 million, which included share repurchases totaling $5.0 million, excluding related fees and expenses, and $49.5 million used to repay outstanding borrowings of the Company's previous term loan. Drawn amounts on the Revolving Credit Facility were fully repaid as of March 30, 2025. Off Balance Sheet Arrangements The Company did not have any off balance sheet financing arrangements as of March 29, 2026. Critical Accounting Estimates As of March 29, 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.