Marine Products Corporation Reports Third Quarter 2018 Financial Results
ATLANTA, Oct. 24, 2018 /PRNewswire/ -- Marine Products Corporation (NYSE: MPX) announced its unaudited results for the quarter ended September 30, 2018. Marine Products is a leading manufacturer of fiberglass boats under two brand names: Chaparral and Robalo. Chaparral's sterndrive models include H2O Sport and Ski & Fish Boats, SSi and SSX Sportboats, Sunesta Sportdecks and Signature Cruisers. In addition, Chaparral manufactures SunCoast Sportdeck outboards, Vortex Jet Boats and the Surf Series of Chaparral SSi and SSX Sportboats, Sunesta Sportdecks and H2O models. Robalo builds outboard sport fishing boats, which include center console, dual console, walkaround cabin and Cayman bay boat models.
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For the quarter ended September 30, 2018, Marine Products generated net sales of $72,012,000, a 21.6 percent increase, compared to $59,201,000 in the same period of the prior year. The increase in net sales was due to a 7.9 percent increase in units sold coupled with a 12.6 percent increase in the average selling price per boat.
Gross profit for the quarter was $16,183,000, a 20.2 percent increase compared to gross profit of $13,461,000 in the same period of the prior year. Gross profit for the third quarter increased compared to the prior year due to higher net sales. Gross margin was 22.5 percent in the third quarter of 2018, compared to 22.7 percent in the third quarter of 2017.
Operating profit for the quarter was $9,187,000, an increase of 37.8 percent, compared to $6,669,000 in the third quarter of last year. Selling, general and administrative expenses were $6,996,000 in the third quarter of 2018, an increase of 3.0 percent compared to $6,792,000 in the third quarter of 2017. Selling, general and administrative expenses increased primarily due to higher incentive compensation consistent with improved operating results. Selling, general and administrative expenses as a percentage of net sales declined from 11.5 percent of net sales during the third quarter of 2017 to 9.7 percent of net sales during the third quarter of 2018 due to the relatively fixed nature of a majority of these expenses during the short term.
Net income for the third quarter of 2018 was $7,161,000, an increase of $2,597,000 or 56.9 percent compared to the third quarter of 2017. Diluted earnings per share of $0.21 increased by $0.08 or 61.5 percent compared to the third quarter of 2017. Marine Products Corporation's effective tax rate during the third quarter was 22.9 percent, a significant decrease compared to an effective tax rate of 32.4 percent in the third quarter of 2017. The effective tax rate declined compared to the prior year due to the Tax Cuts and Jobs Act enacted during the fourth quarter of 2017.
Net sales for the nine months ended September 30, 2018 were $236,554,000, an increase of 17.3 percent compared to the first nine months of 2017. Net income for the nine-month period was $23,760,000 or $0.69 diluted earnings per share, compared to net income of $15,944,000, or $0.46 diluted earnings per share in the prior year.
Richard A. Hubbell, Marine Products' President and Chief Executive Officer stated, "Our results during the third quarter of 2018 were driven by a model mix which included larger boats, such as our larger Chaparral 277 and 347 SSX models, as well as several of our larger Robalo models. Unit sales of most of our product lines increased, including sales of our sterndrive models, which increased in contrast to the overall weakness in this recreational boating segment. In addition, we are pleased to report continued strong market positions in both our sterndrive and outboard sport fishing boat product lines. For the 12-month period ending in June 2018, Chaparral maintained its position as the largest sterndrive manufacturer in its size category, with a market share of 16.8 percent. In addition, Robalo held the third largest market position in its category, with a market share of 5.1 percent. During the third quarter we held our annual dealer conference, and I am pleased to report that our dealer network is optimistic about market demand in the upcoming year and enthusiastic about our 2019 models. Our order backlog at the end of the third quarter was higher than at the end of the third quarter of last year, and dealer inventories were relatively unchanged, reflecting strong retail sales levels.
During the quarter, we continued our regular quarterly cash dividends and share repurchases under our open market share repurchase program. In spite of these uses of cash, we finished the third quarter with $22.3 million in cash and marketable securities, an increase of $4.8 million compared with the third quarter of last year," concluded Hubbell.
Marine Products Corporation will hold a conference call today, October 24, 2018, 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. The live conference call can also be accessed by calling (800) 458-4121 or (323) 794-2597 for international callers and using the conference ID #1757122. A replay will be available in the investor relations section of Marine Products' website beginning approximately two hours after the call.
Marine Products Corporation (NYSE: MPX) designs, manufactures and distributes premium-branded Chaparral sterndrive, jet drive and outboard pleasure boats, and Robalo outboard sport fishing boats. The Company continues to diversify its product lines through product innovation. With 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 to generate superior financial performance to build long-term shareholder value. For more information on Marine Products Corporation visit our website at www.marineproductscorp.com.
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, statements regarding the optimism of our dealer network about market demand in the upcoming year about and enthusiasm about our 2019 models, the diversification of our product lines through product innovation; and statements regarding our plans to increase our market share and to generate superior financial performance to build long-term shareholder value. These statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Marine Products Corporation to be materially different from any future results, performance or achievements expressed or implied in such forward-looking statements. These risks include possible decreases in the level of consumer confidence and available funds impacting discretionary spending, increased interest rates and fuel prices, weather conditions, changes in consumer preferences, deterioration in the quality of Marine Products' network of independent boat dealers or availability of financing of their inventory, continued weakness in the sterndrive recreational boat market, and competition from other boat manufacturers and dealers. Additional discussion of factors that could cause the actual results to differ materially from management's projections, forecasts, estimates and expectations is contained in Marine Products' Form 10-K, filed with the Securities and Exchange Commission for the year ending December 31, 2017.
For information contact:
BEN M. PALMER
JIM LANDERS
Chief Financial Officer
Vice President, Corporate Finance
(404) 321-7910
(404) 321-2162
irdept@marineproductscorp.com
jlanders@marineproductscorp.com
MARINE PRODUCTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
---
Periods ended September 30, (Unaudited) Third Quarter Nine Months
---
2018 2017
% BETTER 2018 2017
% BETTER
(WORSE) (WORSE)
Net Sales $
72,012 $
59,201 21.6 $
236,554 $
201,725 17.3
% %
Cost of Goods Sold 55,829 45,740 (22.1) 183,248 157,071 (16.7)
---
Gross Profit 16,183 13,461 20.2 53,306 44,654 19.4
Selling, General and Administrative Expenses 6,996 6,792 (3.0) 23,935 22,365 (7.0)
---
Operating Profit 9,187 6,669 37.8 29,371 22,289 31.8
Interest Income 102 81 25.9 220 189 16.4
---
Income Before Income Taxes 9,289 6,750 37.6 29,591 22,478 31.6
Income Tax Provision 2,128 2,186 2.7 5,831 6,534 10.8
---
Net Income $
7,161 $
4,564 56.9 $
23,760 $
15,944 49.0
% %
=== ===
EARNINGS PER SHARE
Basic $
0.21 $
0.13 61.5 $
0.69 $
0.46 50.0
% %
===
Diluted $
0.21 $
0.13 61.5 $
0.69 $
0.46 50.0
% %
===
AVERAGE SHARES OUTSTANDING
Basic 34,539 34,829 34,563 34,898
Diluted 34,539 34,829 34,563 34,898
MARINE
PRODUCTS
CORPORATION
AND
SUBSIDIARIES
CONSOLIDATED
BALANCE
SHEETS
---
At September
30,
(Unaudited)
(in thousands)
---
2018 2017
ASSETS
Cash and cash
equivalents $
6,146 $
4,052
Marketable
securities 4,603 3,329
Accounts
receivable,
net 7,404 7,438
Inventories 49,871 41,442
Income taxes
receivable 71 995
Prepaid
expenses and
other
current
assets 1,527 1,466
---
Total current
assets 69,622 58,722
---
Property,
plant and
equipment,
net 14,800 13,742
Goodwill 3,308 3,308
Other
intangibles,
net 465 465
Marketable
securities 11,564 10,177
Deferred
income taxes 3,391 5,481
Other assets 10,970 9,197
---
Total assets $
114,120 $
101,092
===
LIABILITIES
AND
STOCKHOLDERS'
EQUITY
Accounts
payable $
12,237 $
8,278
Accrued
expenses and
other
liabilities 13,390 13,625
---
Total current
liabilities 25,627 21,903
Long-term
pension
liabilities 7,545 6,466
Other long-
term
liabilities 453 57
---
Total
liabilities 33,625 28,426
---
Common stock 3,450 3,478
Capital in
excess of
par value
Retained
earnings 78,958 71,281
Accumulated
other
comprehensive
loss (1,913) (2,093)
Total
stockholders'
equity 80,495 72,666
---
Total
liabilities
and
stockholders'
equity $
114,120 $
101,092
===
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SOURCE Marine Products Corporation
