IPO Report: MCBC Holdings (MCFT)

Francis Gaskins |

MCBC Holdings (MCFT) is a world-renowned innovator, designer, manufacturer, and marketer of premium performance sport boats, with a leading market position in the U.S., a strong international presence, and dealers in 40 countries around the world. It is based in Vonore, TN.

Seven other companies are scheduled for the week of July 13.  The full IPO calendar is available at IPO Premium.

SEC Documents

Manager, Joint-managers: Baird, Raymond James, Wells Fargo Securities
Co-managers: KeyBanc Capital Markets, Wunderlich

End of lockup (180 days): Wednesday, January 13, 2016
End of 25-day quiet period: Tuesday, August 11, 2015

MCFT scheduled an $85 million IPO with a market capitalization of $205 million at a price range midpoint of $14 for Friday, July 17, 2015 on Nasdaq.

MCFT IPO Summary

MCFT is a world-renowned innovator, designer, manufacturer, and marketer of premium performance sport boats, with a leading market position in the U.S., a strong international presence, and dealers in 40 countries around the world.

MCFT’s boats are used for water skiing, wakeboarding, and wake surfing, as well as general recreational boating.

MCFT IPO Valuation

Glossary

Accumulated deficit (mm)

.

.

-$54

     

Per share dilution

.

.

-$14.99

     
             

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

MCBC Holdings (MCFT)

$241

1.1

36.1

8.0

-14.1

35%

Annualizing March 9 mos

       
             

Malibu Boads (MBUU)

$301

1.3

14.5

9.4

60.2

28%

             

MCFT IPO Conclusion

Neutral slightly plus

March 9 mos rev +27%

24% gross profit, that's low

1.1price to sales

36 P/E ratio

Malibu Boats' P/E is 14.5

8 times price to book

Per share dilution $14.99, higher than price range mid-point of $14


MCFT Business

MCFT is a world-renowned innovator, designer, manufacturer, and marketer of premium performance sport boats, with a leading market position in the U.S., a strong international presence, and dealers in 40 countries around the world.

MCFT’s boats are used for water skiing, wakeboarding, and wake surfing, as well as general recreational boating.

Seasonal

Seasonal variations in retail demand for boats, with a significant majority of sales occurring during peak boating season, which MCFT attempts to manage by providing incentive programs and floor plan subsidies to encourage dealer purchases throughout the year.

Most recognized brand name

MCFT believes that MasterCraft is the most recognized brand name in the performance sport boat category.

History

Founded in 1968, MCFT has cultivated its iconic brand image through a rich history of industry-leading innovation, which has led to numerous industry achievements, awards, and accolades. MCFT’s robust product portfolio of performance sport boats is manufactured to the highest specifications in quality, performance, and styling.

Over the past 40 years, MCFT has been a leading and consistent innovator in the boating industry, beginning in 1968 with its first custom hull ski boat.

MCFT has been the first to market with numerous innovations, including the first swim platform in 1976, the patented wearguard ski pylon in 1989, a V-drive drivetrain and a dedicated wakeboard-specific boat in 1996, a now popular pickle-fork style bow in 2003, a twin V-drive engine in 2004, wake and surf shaping devices in 2009 and MCFT’s patented Gen 2 fully integrated surf system in 2013.

Each of these pioneering introductions has allowed MCFT’s customers to more fully enjoy the ultimate water skiing, wakeboarding, wake surfing, and on-the-water recreational experience that its boats provide.

Innovation awards

Throughout MCFT’s history, its boats have received numerous industry awards for product innovations, including recent NMMA Innovation Awards for MCFT’s ProStar water skiing boat, Gen 2 integrated surf system and X23 performance tow boat.

These MasterCraft products won three of the combined six Innovation Awards for the performance sport boat category presented by the NMMA at the 2014 and 2015 Miami Boat Shows.

Intellectual property

MCFT currently holds six U.S. patents, including a design patent for a swivel board rack design, a utility patent for an integrated light and tow-line attachment, and the Gen 2 surf system technology which is the only surf system that is custom designed for each hull and allows users to customize a four-zone, 20-foot long wake to rider preferences using a sophisticated-yet-easy-to-use interface.

Provided that MCFT complies with all statutory maintenance requirements, one of its patents is expected to expire in 2016 and the remaining patents are expected to expire after 2021.

MCFT also holds 11 pending U.S. patent applications (including two provisional applications) and two pending foreign patent applications.

MCFT also owns in excess of 70 registered trademarks in various countries around the world, most notably the MasterCraft name and logo and the Star Series, XSeries, and NXT product family names, and MCFT owns several applications for additional registrations.

Such trademarks may endure in perpetuity on a country-by-country basis provided that MCFT complies with all statutory maintenance requirements, including continued use of each trademark in each such country. In addition, MCFT owns 38 registered U.S. copyrights. Finally, MCFT has applied to register certain vessel hull designs with the U.S. Copyright Office.

Competition

MCFT competes with several large manufacturers that may have greater financial, marketing, and other resources than MCFT does. MCFT also competes with a wide variety of small privately held independent manufacturers.

Competition in MCFT’s industry is based primarily on brand name, price, innovative features, design, and product performance.

5% shareholders pre-IPO

Wayzata            88.71%

Patrick J. Halloran         88.71%

Dividends

No dividends are planned.

Use of proceeds

MCFT expects to receive $75 million from its IPO and use it for the following:

First, to repay all outstanding borrowings under its $75 million Term Loan Facility and, to the extent sufficient net proceeds remain, to repay borrowings under its $30 million Revolving Credit Facility ($44 million of the outstanding borrowings under its Term Loan Facility and Revolving Credit Facility were used to fund a dividend distribution to its stockholders in connection with the Recapitalization Transactions); and

second, to the extent any net proceeds remain, for general corporate purposes.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
MCFT MCBC Holdings Inc. 13.91 -0.04 -0.29 80,059

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