Marine Products Corporation, the parent of the Chaparral and Robalo boat brands, reported that net sales for the 2024 second quarter were $69.5 million, down 40 percent year-over-year (YoY). The decrease in net sales was primarily due to a 41 percent decrease in the number of boats sold during the quarter.

Price/mix was up 1 percent, driven by higher gross selling prices. Dealer efforts to reduce inventories continued to impact sales due in part to higher floor plan carrying costs and lower consumer demand.

“We continue to navigate a challenging environment impacted by high inventory levels in the dealer channel relative to current demand,” stated Ben M. Palmer, president and CEO of Marine Products Corporation.

“Interest rates also remain relatively high, resulting in elevated floorplan carrying costs for our dealers and financing costs for consumers. We continue to support our dealers with aggressive promotions and extending these programs in a collaborative effort to spur sales and reduce channel inventories. Operationally, we have continued to right-size our production to align with dealer demand, implementing reduced work schedules and taking other cost reduction measures,” Palmer continued.

The company reported that its year-over-year comparisons would likely remain soft in the near term as the industry continues to normalize following high post-pandemic demand and dealers’ unwinding of channel inventory.

“Despite the uncertainties we face, we remain enthusiastic around our 2025 model year launch, with new models, features and colors,” continued Palmer. “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 Florida to unveil the new lineup and features and celebrate Chaparral’s 60th anniversary with our dealer partners.”

Gross profit was $13.2 million, down 54 percent versus the 2023 second quarter. Gross margin was 18.9 percent of net sales, down 580 basis points YoY. The year-over-year gross margin change reportedly reflected “lower sales volumes and associated manufacturing cost inefficiencies, coupled with the impact of reinstituting retail incentive programs.” The company said production schedules and labor costs have been adjusted to more closely align with current demand.

Selling, general and administrative (SG&A) expenses were $7.4 million, down 39 percent YoY, generally in line with the sales decline, and represented 10.7 percent of net sales, up 20 basis points YoY. 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 $879 thousand increased due to higher cash balances and higher investment yields.

Income tax provision was $1.0 million, or 15.7 percent of income before income taxes, down 110 basis points YoY.

Net income amounted to $5.6 million, or 14 cents per diluted share, in Q2, down from $14.3 million , or 42 cents per diluted share, Q2 2023. Net income margin was 8.0 percent of net sales, down 430 basis points YoY.

EBITDA was $6.5 million in the quarter, down from $17.1 million in Q2 last year. EBITDA margin was 9.3 percent of net sales, down 540 basis points YoY.

Balance Sheet, Cash Flow and Capital Allocation
At the end of Q2 2024, cash and cash equivalents were $55.1 million, and there were no outstanding borrowings under the Company’s $20 million revolving credit facility.

Net cash provided by operating activities and free cash flow were $19.7 million and $18.1 million, respectively, year-to-date through June 30.

Payment of dividends totaled $34.0 million year-to-date through the second quarter, including a special dividend of 70 cents per share paid during the second quarter. The Board of Directors declared a regular quarterly dividend of 14 cents per share, payable on September 10, 2024, to common stockholders of record at the close of business on August 9, 2024.

“With no debt, strong cash generation, and more than $55 million in cash at the end of the second quarter, we can provide attractive tangible returns of capital through dividends while still leaving Marine Products with ample liquidity to pursue both organic growth investments and strategic acquisitions,” concluded Palmer.

Image courtesy Robalo/Marine Products Corp.