Marine Products Corporation Reports Fourth Quarter And Full Year 2023 Financial Results And Declares Regular Quarterly Cash Dividend
ATLANTA, Jan. 25, 2024 /PRNewswire/ -- 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. |
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
Full Year 2023 Highlights
- 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
Management Commentary
"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 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.
About Marine Products
Marine Products Corporation is a leading manufacturer of high-quality fiberglass boats under the brand names Chaparral and Robalo. Chaparral's sterndrive models include SSi Sportboats and SSX Luxury Sportboats, and the SURF Series. Chaparral's outboard offerings include OSX Luxury Sportboats and the SSi Outboard Bowriders. Robalo builds an array of outboard sport fishing models, which include Center Consoles, Dual Consoles and Cayman Bay Boats. The Company continues to diversify its product lines through product innovation. With these premium brands, a solid capital structure, and a strong independent dealer network, Marine Products Corporation is prepared to capitalize on opportunities to increase its market share and generate superior financial performance to build long-term shareholder value. For more information on Marine Products Corporation visit our website at marineproductscorp.com.
Forward Looking Statements
Certain statements and information included in this press release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include statements that look forward in time or express management's beliefs, expectations or hopes. In particular, such statements include, without limitation: our belief that adjustments to our production schedules, variable cost structure, and retail incentive programs will align with future volume levels; statements regarding our comfort with the level of our product in field inventories, statements regarding excitement about our new 2024 product launches, our expectation for near-term industry softness and overall channel de-stocking; our belief that the winter boat shows in the next few weeks will allow us to showcase our newest products and gauge retail demand ahead of the 2024 retail selling season; and our expectation to continue paying dividends to shareholders and to assess acquisitions. Risk factors that could cause such future events not to occur as expected include the following: supply chain disruptions may continue to delay the receipt of both raw materials and key components used in our manufacturing process, thus delaying production and deliveries to our dealers; negative economic conditions, unavailability of credit and possible decreases in the level of consumer confidence impacting discretionary spending; business interruptions due to adverse weather conditions, and increased interest rates. Additional factors that could cause the actual results to differ materially from management's projections, forecasts, estimates and expectations are contained in Marine Products' Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission (the "SEC") for the year ended December 31, 2022.
For information about Marine Products Corporation or this event, please contact:
Michael L. Schmit
Chief Financial Officer
(404) 321-7910
[email protected]
Mark Chekanow, CFA
Vice President, Investor Relations
(404) 419-3809
[email protected]
MARINE PRODUCTS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands except per share data) | ||||||||||||
Three Months Ended | Years Ended | |||||||||||
Periods ended December 31, | 2023 | 2022 | 2023 | 2022 | ||||||||
(Unaudited) | (Unaudited) | (Unaudited) | ||||||||||
Net sales | $ | 70,871 | $ | 108,509 | $ | 383,729 | $ | 380,995 | ||||
Cost of goods sold | 57,408 | 81,189 | 293,350 | 287,278 | ||||||||
Gross profit | 13,463 | 27,320 | 90,379 | 93,717 | ||||||||
Selling, general and administrative expenses | 7,718 | 12,472 | 43,213 | 41,921 | ||||||||
Gain on disposition of assets, net | (74) | — | (2,036) | — | ||||||||
Operating income | 5,819 | 14,848 | 49,202 | 51,796 | ||||||||
Interest income, net | 794 | 286 | 2,860 | 338 | ||||||||
Income before income taxes | 6,613 | 15,134 | 52,062 | 52,134 | ||||||||
Income tax provision | 1,191 | 3,277 | 10,367 | 11,787 | ||||||||
Net income | $ | 5,422 | $ | 11,857 | $ | 41,695 | $ | 40,347 | ||||
EARNINGS PER SHARE | ||||||||||||
Basic | $ | 0.16 | $ | 0.35 | $ | 1.21 | $ | 1.18 | ||||
Diluted | $ | 0.16 | $ | 0.35 | $ | 1.21 | $ | 1.18 | ||||
AVERAGE SHARES OUTSTANDING | ||||||||||||
Basic | 34,467 | 34,218 | 34,443 | 34,183 | ||||||||
Diluted | 34,467 | 34,218 | 34,443 | 34,183 | ||||||||
MARINE PRODUCTS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS | ||||||
(in thousands) | ||||||
DECEMBER 31, | DECEMBER 31, | |||||
2023 | 2022 | |||||
(Unaudited) | ||||||
ASSETS | ||||||
Cash and cash equivalents | $ | 71,952 | $ | 43,171 | ||
Accounts receivable, net | 2,475 | 5,340 | ||||
Inventories | 61,611 | 73,015 | ||||
Income taxes receivable | 361 | 28 | ||||
Prepaid expenses and other current assets | 2,847 | 3,444 | ||||
Total current assets | 139,246 | 124,998 | ||||
Property, plant and equipment, net | 22,456 | 14,965 | ||||
Goodwill | 3,308 | 3,308 | ||||
Other intangibles, net | 465 | 465 | ||||
Deferred income taxes | 8,590 | 6,027 | ||||
Other assets | 19,737 | 13,952 | ||||
Total assets | $ | 193,802 | $ | 163,715 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Accounts payable | $ | 6,071 | $ | 8,250 | ||
Accrued expenses and other liabilities | 16,496 | 15,340 | ||||
Total current liabilities | 22,567 | 23,590 | ||||
Retirement plan liabilities | 17,998 | 14,440 | ||||
Other long-term liabilities | 1,649 | 1,304 | ||||
Total liabilities | 42,214 | 39,334 | ||||
Common stock | 3,447 | 3,422 | ||||
Capital in excess of par value | — | — | ||||
Retained earnings | 148,141 | 122,954 | ||||
Accumulated other comprehensive loss | — | (1,995) | ||||
Total stockholders' equity | 151,588 | 124,381 | ||||
Total liabilities and stockholders' equity | $ | 193,802 | $ | 163,715 | ||
MARINE PRODUCTS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
(in thousands) | ||||||
Years ended December 31, | 2023 | 2022 | ||||
(Unaudited) | ||||||
OPERATING ACTIVITIES | ||||||
Net income | $ | 41,695 | $ | 40,347 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Depreciation and amortization | 2,416 | 1,905 | ||||
Pension settlement loss | 2,363 | 1,180 | ||||
Working capital | 13,679 | 3,057 | ||||
Other operating activities | (3,307) | 2,859 | ||||
Net cash provided by operating activities | 56,846 | 49,348 | ||||
INVESTING ACTIVITIES | ||||||
Capital expenditures | (10,174) | (2,500) | ||||
Proceeds from sale of assets | 2,303 | — | ||||
Net cash used for investing activities | (7,871) | (2,500) | ||||
FINANCING ACTIVITIES | ||||||
Payment of dividends | (19,284) | (17,077) | ||||
Cash paid for common stock purchased and retired | (910) | (702) | ||||
Net cash used for financing activities | (20,194) | (17,779) | ||||
Net increase in cash and cash equivalents | 28,781 | 29,069 | ||||
Cash and cash equivalents at beginning of period | 43,171 | 14,102 | ||||
Cash and cash equivalents at end of period | $ | 71,952 | $ | 43,171 | ||
Non-GAAP Measures
Marine Products Corporation has used the non-GAAP financial measures of EBITDA, EBITDA margin, and free cash flow in today's earnings release. These measures should not be considered in isolation or as a substitute for performance or liquidity measures prepared in accordance with GAAP. Management believes that presenting these non-GAAP measures enables investors to compare our operating performance consistently over various time periods, and in the case of EBITDA, without regard to changes in our capital structure.
A non-GAAP financial measure is a numerical measure of financial performance, financial position, or cash flows that either 1) 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 GAAP in the statement of operations, balance sheet or statement of cash flows, or 2) 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.
Set forth in the appendices below are reconciliations of these non-GAAP measures with their most directly comparable GAAP measures. These reconciliations also appear on Marine Products Corporation's investor website, which can be found on the Internet at marineproductscorp.com.
Appendix A | ||||||||||||
(Unaudited) | ||||||||||||
Periods ended December 31, | Three Months Ended | Years Ended | ||||||||||
(In thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||
Reconciliation of Net Income to EBITDA | ||||||||||||
Net income | $ | 5,422 | $ | 11,857 | $ | 41,695 | $ | 40,347 | ||||
Adjustments: | ||||||||||||
Add: Income tax provision | 1,191 | 3,277 | 10,367 | 11,787 | ||||||||
Add: Depreciation and amortization | 666 | 489 | 2,416 | 1,905 | ||||||||
Less: Interest income, net | 794 | 286 | 2,860 | 338 | ||||||||
EBITDA | $ | 6,485 | $ | 15,337 | $ | 51,618 | $ | 53,701 | ||||
Net income margin | 7.7 % | 10.9 % | 10.9 % | 10.6 % | ||||||||
EBITDA margin | 9.2 % | 14.1 % | 13.5 % | 14.1 % | ||||||||
Appendix B | ||||||
(Unaudited) | ||||||
Years Ended | ||||||
(In thousands) | 2023 | 2022 | ||||
Reconciliation of Operating Cash Flow to Free Cash Flow | ||||||
Net cash provided by operating activities | $ | 56,846 | $ | 49,348 | ||
Capital expenditures | (10,174) | (2,500) | ||||
Free cash flow | $ | 46,672 | $ | 46,848 | ||
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SOURCE Marine Products Corporation