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ATLANTA – Marine Products Corp. saw a 7.1 percent decrease in net sales during the first quarter, ended March 31, the manufacturer reported this week.
MPX generated net sales of $64,976,000, a 7.1 percent decrease compared to $69,957,000 in the first quarter of last year. The company said the change in net sales was caused primarily by a 7.1 percent decrease in the number of boats sold and a 1.8 percent decrease in the average gross selling price per boat.
Gross profit for the quarter was $13,964,000, or 21.5 percent of net sales, compared to $16,818,000, or 24.0 percent of net sales, in the prior year. The decrease in gross profit as a percentage of net sales was primarily the result of cost inefficiencies due to lower production volumes, as well as higher raw materials costs compared to the prior year, MPX said.
Operating income for the quarter was $5,521,000, a 32.5 percent decrease compared to the first quarter last year, due to lower gross profit, partially offset by slightly lower selling, general and administrative expenses, MPX said. Operating income was 8.5 percent of net sales for the quarter, compared to 11.7 percent in the prior year. Selling, general and administrative expenses decreased because many of these costs vary directly with sales and profitability.
Net income for the quarter ended March 31, was $3,917,000, a 32.2 percent decrease compared to $5,776,000 in the prior year. Net income decreased due to lower operating income and a higher effective income tax rate compared to the prior year. Diluted earnings per share for the quarter were $0.10, a decrease of $0.05, or 33.3 percent, compared to the prior year.
“Our results for the first quarter of 2007 reflect continued weakness in the recreational boating market,” said Richard A. Hubbell, Marine Products’ CEO. “Although attendance and sales during the winter boat show season were relatively comparable to last year, we are continuing to see weak demand as the retail selling season begins. We believe that the weak housing market, especially in vacation homes, has deepened the downturn in our business, and that rising fuel prices are also discouraging consumers from buying boats at this time.
“In this environment, we are pleased to report higher unit sales of our larger SSi Sportboats and SSX Sportdecks. The larger Sportboats are the models for which we have won several awards, and the Sportdeck is our new offering for the 2007 model year, so their success is important. Although average sales prices among this model improved slightly compared to the prior year, the overall average selling prices of these boats are lower than our larger cruisers and the Robalo sport fishing boats, so our overall average sales prices fell during the quarter compared to the prior year.
“As we have reported since the fourth quarter of 2005, we continue to monitor dealer inventories and backlog. Our dealer inventories are comparable to this time last year, and we continue to be well positioned to increase production if there is an increase in demand.”
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