Marine Products Corporation Reports Second Quarter 2024 Financial Results And Declares Regular Quarterly Dividend
* 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 2Q:23 unless stated otherwise.
Second Quarter 2024 Highlights
- Net sales decreased 40% year-over-year to
$69.5 million - Net income was
$5.6 million , down 61% year-over-year and diluted Earnings Per Share (EPS) was$0.14 ; net income margin decreased 430 basis points to 8.0% - Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) was
$6.5 million , down 62% year-over-year; EBITDA margin decreased 540 basis points to 9.3% - Results reflected continued weakness in dealer ordering patterns given persistently high industry-wide channel inventories and soft consumer demand; the Company continued to respond with actions to reduce costs, adjust production schedules and provide retail incentives
Management Commentary
"We continue to navigate a challenging environment impacted by high inventory levels in the dealer channel relative to current demand," stated
"Despite the uncertainties we face, we remain enthusiastic around our 2025 model year launch, with new models, features and colors. We are continuously gathering feedback and proactively driving innovation to make sure each model year includes fresh and exciting options and responds to dealer and consumer preferences. We are eagerly looking forward to our August dealer conference in south
"With no debt, strong cash generation, and more than
2Q:24 Consolidated Financial Results: Year-Over-Year (versus 2Q:23)
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
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
totaled
Conference Call Information
About
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, hopes or strategies. In particular, such statements include, without limitation: our belief that we continue to navigate a challenging environment impacted by high inventory levels in the dealer channel relative to current demand; our strategies to support our dealers with aggressive promotions and extending these programs in a collaborative effort to spur sales and reduce channel inventories, and to right-size our production to align with dealer demand by implementing reduced work schedules and taking other cost reduction measures, and any implied statements that such strategies will succeed in accomplishing our goals; our enthusiasm around our 2025 model year launch, our business strategy to continuously gather feedback, our goals to proactively drive innovation and provide fresh and exciting options that respond to dealer and consumer preferences every model year, and our positive outlook regarding our August dealer conference and the unveiling of our new lineup and features, as well as statements concerning having no debt and strong cash generation, and our ability to provide attractive tangible returns of capital through dividends while still leaving ample liquidity to pursue organic growth investments and strategic acquisitions, including implied statements that we may continue to be able to do so in the future and without incurring debt; any implied statements that a lowering of interesting rates and financing costs for consumers may lead to increased consumer demand; and statements regarding our ability to capitalize on opportunities to increase market share and generate superior financial performance to build long-term shareholder value. Risk factors that could cause such future events not to occur or our strategies not to succeed as expected include the following: negative economic conditions, unavailability of credit and possible decreases in the level of consumer confidence impacting discretionary spending; business interruptions due to, e.g., adverse weather conditions, supply chain disruptions and/or further increased interest rates; our retail incentives and allowances may not successfully increase consumer demand as anticipated, due to negative impacts to the overall economy, industry or competition, our adjustments to production levels may not match demand; increased cost of boat ownership makes it more difficult to raise prices in the future to compensate for increased costs; our new model launches may not match dealer and consumer preferences, which are inherently uncertain; and our ability to manage manufacturing costs may be constrained in light of lower production levels. Additional factors that could cause the actual results to differ materially from management's projections, forecasts, estimates and expectations are contained in
For information about
Chief Financial Officer
(404) 321-7910
irdept@marineproductscorp.com
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) |
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Three Months Ended |
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Six Months Ended |
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|
2024 |
|
2023 |
|
|
2024 |
|
2023 |
||||
|
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
69,547 |
|
$ |
116,158 |
|
|
$ |
138,887 |
|
$ |
235,072 |
Cost of goods sold |
|
|
56,373 |
|
|
87,502 |
|
|
|
111,729 |
|
|
177,394 |
Gross profit |
|
|
13,174 |
|
|
28,656 |
|
|
|
27,158 |
|
|
57,678 |
Selling, general and administrative expenses |
|
|
7,424 |
|
|
12,173 |
|
|
|
16,166 |
|
|
26,706 |
Operating income |
|
|
5,750 |
|
|
16,483 |
|
|
|
10,992 |
|
|
30,972 |
Interest income, net |
|
|
879 |
|
|
723 |
|
|
|
1,730 |
|
|
1,206 |
Income before income taxes |
|
|
6,629 |
|
|
17,206 |
|
|
|
12,722 |
|
|
32,178 |
Income tax provision |
|
|
1,044 |
|
|
2,885 |
|
|
|
2,540 |
|
|
6,308 |
Net income |
|
$ |
5,585 |
|
$ |
14,321 |
|
|
$ |
10,182 |
|
$ |
25,870 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER SHARE (1) |
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|
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|
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|
|
|
|
|
|
|
Basic |
|
$ |
0.14 |
|
$ |
0.42 |
|
|
$ |
0.28 |
|
$ |
0.75 |
Diluted |
|
$ |
0.14 |
|
$ |
0.42 |
|
|
$ |
0.28 |
|
$ |
0.75 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE SHARES OUTSTANDING (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
34,708 |
|
|
34,458 |
|
|
|
34,670 |
|
|
34,419 |
Diluted |
|
|
34,708 |
|
|
34,458 |
|
|
|
34,670 |
|
|
34,419 |
|
(1) Earnings per share includes a reduction of |
|
(2) Includes participating securities which are share-based payment awards with non-forfeitable rights to dividends. Under the two-class method, average shares outstanding shown above were reduced by participating securities of 886 for the quarter and 883 for the six months ended |
MARINE PRODUCTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS |
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(in thousands) |
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2024 |
|
2023 |
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|
|
(Unaudited) |
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|
|
ASSETS |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
55,131 |
|
$ |
71,952 |
Accounts receivable, net |
|
|
5,726 |
|
|
2,475 |
Inventories |
|
|
53,080 |
|
|
61,611 |
Income taxes receivable |
|
|
235 |
|
|
361 |
Prepaid expenses and other current assets |
|
|
3,440 |
|
|
2,847 |
Total current assets |
|
|
117,612 |
|
|
139,246 |
Property, plant and equipment, net |
|
|
22,733 |
|
|
22,456 |
|
|
|
3,308 |
|
|
3,308 |
Other intangibles, net |
|
|
465 |
|
|
465 |
Deferred income taxes |
|
|
9,435 |
|
|
8,590 |
Retirement plan assets |
|
|
17,365 |
|
|
15,379 |
Other assets |
|
|
4,808 |
|
|
4,358 |
Total assets |
|
$ |
175,726 |
|
$ |
193,802 |
|
|
|
|
|
|
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LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
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|
Liabilities |
|
|
|
|
|
|
Accounts payable |
|
$ |
7,955 |
|
$ |
6,071 |
Accrued expenses and other liabilities |
|
|
16,598 |
|
|
16,496 |
Total current liabilities |
|
|
24,553 |
|
|
22,567 |
Retirement plan liabilities |
|
|
20,238 |
|
|
17,998 |
Other long-term liabilities |
|
|
1,679 |
|
|
1,649 |
Total liabilities |
|
|
46,470 |
|
|
42,214 |
|
|
|
|
|
|
|
Stockholders' Equity |
|
|
|
|
|
|
Preferred stock |
|
|
— |
|
|
— |
Common stock |
|
|
3,472 |
|
|
3,447 |
Capital in excess of par value |
|
|
— |
|
|
— |
Retained earnings |
|
|
125,784 |
|
|
148,141 |
Total stockholders' equity |
|
|
129,256 |
|
|
151,588 |
Total liabilities and stockholders' equity |
|
$ |
175,726 |
|
$ |
193,802 |
MARINE PRODUCTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
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(in thousands) |
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Six months ended |
|
|
2024 |
|
|
2023 |
|
|
|
(Unaudited) |
|
|
(Unaudited) |
OPERATING ACTIVITIES |
|
|
|
|
|
|
Net income |
|
$ |
10,182 |
|
$ |
25,870 |
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
1,384 |
|
|
1,140 |
Pension settlement loss |
|
|
— |
|
|
2,277 |
Working capital |
|
|
6,799 |
|
|
10,341 |
Other operating activities |
|
|
1,372 |
|
|
1,157 |
Net cash provided by operating activities |
|
|
19,737 |
|
|
40,785 |
|
|
|
|
|
|
|
INVESTING ACTIVITIES |
|
|
|
|
|
|
Capital expenditures |
|
|
(1,661) |
|
|
(7,194) |
Net cash used for investing activities |
|
|
(1,661) |
|
|
(7,194) |
|
|
|
|
|
|
|
FINANCING ACTIVITIES |
|
|
|
|
|
|
Payment of dividends |
|
|
(33,990) |
|
|
(9,637) |
Cash paid for common stock purchased and retired |
|
|
(907) |
|
|
(910) |
Net cash used for financing activities |
|
|
(34,897) |
|
|
(10,547) |
|
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents |
|
|
(16,821) |
|
|
23,044 |
Cash and cash equivalents at beginning of period |
|
|
71,952 |
|
|
43,171 |
Cash and cash equivalents at end of period |
|
$ |
55,131 |
|
$ |
66,215 |
Non-GAAP Measures
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
Appendix A |
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(Unaudited) |
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Three Months Ended |
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Six Months Ended |
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(In thousands) |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||
Reconciliation of Net Income to EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
5,585 |
|
$ |
14,321 |
|
$ |
10,182 |
|
$ |
25,870 |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Add: Income tax provision |
|
|
1,044 |
|
|
2,885 |
|
|
2,540 |
|
|
6,308 |
Add: Depreciation and amortization |
|
|
702 |
|
|
617 |
|
|
1,384 |
|
|
1,140 |
Less: Interest income, net |
|
|
879 |
|
|
723 |
|
|
1,730 |
|
|
1,206 |
EBITDA |
|
$ |
6,452 |
|
$ |
17,100 |
|
$ |
12,376 |
|
$ |
32,112 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
69,547 |
|
$ |
116,158 |
|
$ |
138,887 |
|
$ |
235,072 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income margin(1) |
|
|
8.0 % |
|
|
12.3 % |
|
|
7.3 % |
|
|
11.0 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA margin(1) |
|
|
9.3 % |
|
|
14.7 % |
|
|
8.9 % |
|
|
13.7 % |
|
(1) Net income margin is calculated as net income divided by net sales. EBITDA margin is calculated as EBITDA divided by net sales. |
Appendix B |
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||||
(Unaudited) |
|
|
Six Months Ended |
||||
|
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||
(In thousands) |
|
|
2024 |
|
2023 |
||
Reconciliation of Operating Cash Flow to Free Cash Flow |
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
$ |
19,737 |
|
$ |
40,785 |
Capital expenditures |
|
|
|
(1,661) |
|
|
(7,194) |
Free cash flow |
|
|
$ |
18,076 |
|
$ |
33,591 |
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