Marine Products Corporation Reports Fourth Quarter And Full Year 2023 Financial Results And Declares Regular Quarterly Cash Dividend
- Net sales for the fourth quarter of 2023 decreased by 35% year-over-year to $70.9 million
- Net income was down 54% year-over-year to $5.4 million
- Full-year 2023 net sales increased by 1% year-over-year to $383.7 million
- Net income for full-year 2023 increased by 3% year-over-year to $41.7 million
- The company remains debt-free and paid $19.3 million in dividends in 2023
- EBITDA for the fourth quarter of 2023 decreased by 58% year-over-year to $6.5 million
- EBITDA for full-year 2023 decreased by 4% year-over-year to $51.6 million
Insights
The reported decrease in net sales and net income for Marine Products Corporation in the fourth quarter is a significant indicator of the company's performance, reflecting broader market trends. The 35% decline in net sales and 54% drop in net income year-over-year suggest a substantial slowdown in demand. This is further evidenced by the 320 basis point contraction in net income margin, signifying reduced profitability. The shift from a post-COVID sales boom to a normalization phase indicates a retraction in consumer spending on discretionary items like boats, which could be attributed to economic headwinds such as inflation and rising interest rates.
From a financial perspective, the company's debt-free status and ability to pay dividends are positive signs of financial health. However, the reduced EBITDA and EBITDA margin highlight operational challenges and potentially increased costs or inefficiencies. The full-year increase in net sales and net income suggests resilience, yet the decrease in EBITDA year-over-year raises questions about sustainability of profit margins and operational efficiency moving forward.
The boating industry, as indicated by the management commentary, is experiencing a shift due to the normalization of demand post-COVID. The addition of new retail customers since 2020 has been a growth driver, but the current economic uncertainty and higher dealer inventory levels pose challenges. Rising interest rates generally lead to decreased consumer spending on non-essential goods, which could be affecting the industry.
Marine Products Corporation's adjustment to production volumes and manufacturing costs is a strategic response to the changing market dynamics. The alignment with near-term demand suggests a proactive approach to managing inventory and cost control. This adjustment is critical in maintaining product turnover and avoiding excess inventory, which can lead to increased storage costs and potential write-downs. Stakeholders should monitor the company's ability to adapt to these market changes and maintain profitability in a potentially contracting market.
* 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 54% year-over-year, and diluted earnings per share (EPS) was$0.16 7.7% - EBITDA was
$6.5 million 58% year-over-year; EBITDA margin decreased 490 basis points year-over-year to9.2% - 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 3% year-over-year, and diluted EPS was$1.21 10.9% - EBITDA was
$51.6 million 4% year-over-year, with EBITDA margin of13.5% - Net cash flow provided by operating activities was
$56.8 million $46.7 million - The Company remains debt-free and paid
$19.3 million
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
4Q:23 Consolidated Financial Results: Year-Over-Year Comparisons (versus 4Q:22)
Net sales were
Gross profit was
Selling, general and administrative expenses were
Interest income of
Income tax provision was
Net income and diluted EPS were
EBITDA (earnings before interest, taxes, depreciation and amortization) was
Balance Sheet, Cash Flow and Capital Allocation
Cash and cash equivalents were
Net cash provided by operating activities and free cash flow were
Payment of dividends in 2023 totaled
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
For information about Marine Products Corporation or this event, please contact:
Michael L. Schmit
Chief Financial Officer
(404) 321-7910
irdept@marineproductscorp.com
Mark Chekanow, CFA
Vice President, Investor Relations
(404) 419-3809
mchekano@marineproductscorp.com
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
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