Marine Products Corporation reports fourth quarter and full year 2023 Financial results

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Marine Products Corporation (NYSE: MPX) ("the Company"), a leading manufacturer of fiberglass boats, announced its unaudited results for the fourth quarter and full year ended December 31, 2023.

* Non-GAAP measures, including EBITDA, EBITDA margin, and free cash flow are reconciled to the most comparable GAAP measures in the appendices of this earnings release.

* All comparisons are year-over-year (versus 4Q:22) unless stated otherwise.

Fourth Quarter 2023 Highlights

• Net sales decreased 35% year-over-year to $70.9 million
• Net income was $5.4 million, down 54% year-over-year, and diluted earnings per share (EPS) was $0.16; net income margin decreased 320 basis points year-over-year to 7.7%
• EBITDA was $6.5 million, down 58% year-over-year; EBITDA margin decreased 490 basis points year-over-year to 9.2%
• Results reflected the normalization of retail demand following a strong period of post-Covid sales; the Company has adjusted production volumes and manufacturing costs to align with near-term demand

• Net sales increased 1% year-over-year to $383.7 million
• Net income was $41.7 million, up 3% year-over-year, and diluted EPS was $1.21; net income margin was 10.9%
• EBITDA was $51.6 million, down 4% year-over-year, with EBITDA margin of 13.5%
• Net cash flow provided by operating activities was $56.8 million and free cash flow was $46.7 million
• The Company remains debt-free and paid $19.3 million in dividends in 2023

"Our fourth quarter results reflect soft retail boat demand for the second consecutive quarter as the industry has normalized from elevated post-Covid demand," stated Ben M. Palmer, Marine Products' President and Chief Executive Officer. "While the boating market has added new retail customers since 2020, the industry has recently been grappling with economic uncertainty, rising interest rates and generally higher levels of dealer inventory. Beginning in the third quarter of 2023, we adjusted our production schedules, variable cost structure, and retail incentive programs to align with reset volume expectations. We are comfortable with the level of our product in field inventories and excited about our new 2024 product launches, but we are prepared for near-term industry softness and overall channel de-stocking. In this environment, we will focus on product innovation, maximize our dealer relationships, and aggressively manage costs. We look forward to the winter boat shows in the next few weeks as an opportunity to showcase our newest products and gauge retail demand ahead of the 2024 retail selling season.

"We generated strong cash flow in 2023, and our balance sheet now boasts over $70 million in cash. We will continue to pay an attractive dividend, while evaluating potential acquisitions to increase our scale and options to return additional capital to our shareholders," concluded Palmer.

4Q:23 Consolidated Financial Results: Year-Over-Year Comparisons (versus 4Q:22)

Net sales were $70.9 million, down 35%. The decrease in net sales was primarily due to a 34% decrease in the number of boats sold during the quarter. A 4% increase in gross average selling price was offset by higher retail incentives for a new program announced during the quarter. The incentive program is effective for our boats sold during the fourth quarter and in prior periods remaining in dealer inventory. The company believes net sales have also been impacted by a normalization of high post-Covid demand and higher interest rates. Higher rates impact financing costs for consumers, as well as inventory carrying costs for dealers. Management also believes that while boat production and sales have stabilized, year-over-year comparisons will likely remain soft in the near term.

Gross profit was $13.5 million, down 51%. Gross margin was 19.0%, down 620 basis points. Gross margin reflected lower sales volumes and associated manufacturing cost inefficiencies, coupled with the impact of higher retail incentives. The retail incentive program resulted in a pronounced impact to gross margin in the fourth quarter, given the terms of the program as described above. Production schedules and labor costs have been adjusted to align more with current demand.

Selling, general and administrative expenses were $7.7 million, down 38%, and represented 10.9% of net sales, down 60 basis points. The decrease in SG&A expenses was due to costs that vary with sales and profitability, such as incentive compensation, sales commissions and warranty expense.

Interest income of $794 thousand increased due to higher cash balances and interest rates.

Income tax provision was $1.2 million, or 18.0% of income before income taxes.

Net income and diluted EPS were $5.4 million and $0.16, respectively, down from $11.9 million and $0.35, respectively, in 4Q:22. Net income margin was 7.7%, down 320 basis points.

EBITDA (earnings before interest, taxes, depreciation and amortization) was $6.5 million, down from $15.3 million; EBITDA margin was 9.2%, down 490 basis points.

Balance Sheet, Cash Flow and Capital Allocation

Cash and cash equivalents were $72.0 million at the end of 4Q:23, with no outstanding borrowings under the Company's $20 million revolving credit facility.

Net cash provided by operating activities and free cash flow were $56.8 million and $46.7 million, respectively, for the full year 2023.

Payment of dividends in 2023 totaled $19.3 million. The Board of Directors declared a regular quarterly cash dividend of $0.14 per share, payable March 11, 2024, to common stockholders of record at the close of business on February 9, 2024.

Conference Call Information

Marine Products Corporation will hold a conference call today, January 25, 2024, at 8:00 a.m. Eastern Time to discuss the results for the quarter. Interested parties may listen in by accessing a live webcast in the investor relations section of Marine Products' website at www.marineproductscorp.com. Additionally, the live conference call can be accessed by calling (888) 660-6357, or (929) 201-6127 for international callers, and using conference ID number 9979064. A replay will be available in the investor relations section of Marine Products' website beginning approximately two hours after the call.

For more information on Marine Products Corporation visit our website at www.MarineProductsCorp.com.