Marine Products Corporation reports third quarter 2024 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 third quarter ended September 30, 2024.

* 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 to 3Q:23 unless stated otherwise.

Third Quarter 2024 Results

• Net sales decreased 36% year-over-year to $49.9 million
• Net income was $3.4 million, down 67% year-over-year, and diluted Earnings Per Share (EPS) was $0.10; net income margin decreased 660 basis points to 6.8%
• Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) was $4.3 million, down 67% year-over-year; EBITDA margin decreased 810 basis points to 8.6%
• Results reflected continued weakness in dealer ordering patterns given soft consumer demand; in response, the Company has reduced costs and adjusted production schedules until demand strengthens
• The Company continued to generate strong cash flow, ending the quarter with approximately $54 million in cash and no debt

"As we approach the end of the year, our industry remains challenged by continued soft consumer demand and tepid dealer order flow," stated Ben M. Palmer, Marine Products' President and Chief Executive Officer. "Our dealer inventories are at reasonable levels, lower versus the year-ago quarter as well as sequentially versus the second quarter of 2024, as we have scaled down production to allow the channel to de-stock. Regarding the recent hurricanes that affected the Southeastern states, our facility in Nashville, GA was fortunate to have limited damage. However, we did temporarily shut down operations for a week, and many of our employees faced disruptive damage in the community. We continue to monitor our costs and production flow to minimize the impact of weak sales during this demand lull."

"We were pleased to see the first decrease in interest rates announced during the quarter, with more hopefully on the way before year-end. While one rate cut won't change the market, we believe it is an important first step toward lowering floor plan carrying costs for dealers and financing costs for consumers, as well as providing some optimism on the direction of interest costs going forward. During this period of soft demand, we remain focused on operations, margins, quality and innovation. With no debt, strong cash generation, and well over $50 million in cash at the end of the third quarter, we are well positioned to navigate the current headwinds, while still providing attractive dividends to our shareholders and exploring growth investments in the business," concluded Palmer.

3Q:24 Consolidated Financial Results: Year-Over-Year (versus 3Q:23)

Net sales were $49.9 million, down 36%. The decrease in net sales was primarily due to a 40% decrease in the number of boats sold during the quarter, partially offset by positive price/mix of 4%, driven by higher gross selling prices. Sales continued to be impacted by soft consumer demand, as dealers tightly manage their inventories to minimize floor plan carrying costs until demand improves. The Company believes its year-over-year comparisons will likely remain soft in the near term.

Gross profit was $9.2 million, down 52%. Gross margin was 18.4%, down 630 basis points. The year-over-year gross margin change reflected lower sales volumes and associated manufacturing cost inefficiencies, coupled with the impact of reinstituting retail incentive programs. Production schedules and labor costs have been adjusted to more closely align with current demand. The Company expects year-over-year changes in gross margin to be less pronounced in the near-term as comparisons to prior year periods become less difficult.

Selling, general and administrative expenses were $5.6 million, down 36%, generally in line with the sales decline, and represented 11.3% of net sales, consistent with the prior year. 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 $634 thousand decreased due to lower cash balances as a result of the Company's special dividend paid during the second quarter of 2024.

Income tax provision was $820 thousand, or 19.4% of income before income taxes, down 220 basis points.

Net income and diluted EPS were $3.4 million and $0.10, respectively, down from $10.4 million and $0.30, respectively, in 3Q:23. Net income margin was 6.8%, down 660 basis points.

EBITDA was $4.3 million, down from $13.0 million; EBITDA margin was 8.6%, down 810 basis points.

Balance Sheet, Cash Flow and Capital Al__cpLocation

Cash and cash equivalents were $53.5 million at the end of 3Q:24, with no outstanding borrowings under the Company's $20 million revolving credit facility.

Net cash provided by operating activities and free cash flow were $24.9 million and $21.3 million, respectively, year-to-date through 3Q:24.

Payment of dividends totaled $38.8 million year-to-date through 3Q:24, including a special dividend of $0.70 per share paid during the second quarter. The Board of Directors declared a regular quarterly dividend of $0.14 per share payable on December 10, 2024, to common stockholders of record at the close of business on November 11, 2024.

Conference Call Information

Marine Products Corporation will hold a conference call today, October 24, 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.