ATLANTA – Net sales for boat builder Marine Products Corp. (NYSE: MPX) dropped 18 percent during the quarter ended September 30, compared to the same period of last year, the company reported in a recent statement.
Marine Products, which builds fiberglass boats under the brand names Chaparral and Robalo, generated net sales of $52,481,000 during the quarter, compared to $64,002,000 last year. The decrease in net sales was due to a 24.7-percent decrease in the number of boats sold, partially offset by a 7.2-percent increase in the average gross selling price per boat.
"The third quarter of 2007 continued the trend of lower retail demand that we have seen for the last couple of years,” said Richard A. Hubbell, Marine Products' CEO. “High fuel prices, insurance costs and interest rates have increased the cost of owning a boat. We have also become concerned that the residential mortgage crisis, with its resulting declines in consumer confidence, real estate prices, and funds available for boating purchases, is having a negative impact on the boating industry.”
Hubbell suggested that while there was positive news, including increases in boat show attendance this fall, interest rate cuts and a mild hurricane season, “we continue to be cautious about consumers' decisions to make large discretionary purchases.” He also noted that the company’s dealer inventories and order backlogs are better than at this time last year.
Gross profit for the quarter was $11,266,000, or 21.5 percent of net sales, compared to $14,705,000, or 23.0 percent of net sales, in the prior year. The reduction in gross profit as a percentage of net sales was due to production inefficiencies caused by the lower unit production volumes, according to the company.
“This was partially offset by higher average selling prices due to the relative success of our larger SSi Sportboats, Robalo offshore sport fishing boats, and our new SSX Sportdecks, as well as price increases instituted at the beginning of the 2008 model year, which began in the third quarter,” stated the company.
Operating income for the quarter was $4,795,000, a 28.2 percent decrease compared to the third quarter last year due to lower gross profit, partially offset by lower selling, general and administrative expenses, which declined due to the variable nature of many of these expenses, according to the company. Operating income was 9.1 percent of net sales for the quarter compared to 10.4 percent of net sales in the prior year.
Net income for the quarter was $3,229,000, a 29.2-percent decrease compared to $4,562,000 in the prior year. Net income decreased due to lower operating income and a higher effective tax rate, MPX reported. Diluted earnings per share for the quarter were $0.08, a 33.3-percent decrease compared to $0.12 diluted earnings per share in the prior year.
Net sales for the nine months ended September 30 were $185,326,000, a 9.9-percent decrease compared to the first nine months of 2006. Net income for the nine-month period decreased 25.3 percent to $12,421,000 compared to $16,627,000 in the prior year.
“In this soft retail environment, we are using our management expertise, engineering talent and financial strength to develop innovative new products which we believe position us to continue to be industry leaders, both now and when our industry begins to grow again," Hubbell concluded.
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