ATLANTA – Despite market conditions, Marine Products Corp. (NYSE: MPX) saw slight sales and net income increases for the quarter ended March 31, due in part to cost cutting measures, it reported in a recent statement.
"Our financial results for the first quarter of 2008 reflect the continuation of the depressed recreational boating market,” commented Richard A. Hubbell, Marine Products' chief executive officer. "In order to manage our profitability during this time, we have undertaken appropriate cost reduction measures during the quarter, including some headcount reductions. These efforts improved our gross margin, and allowed us to support our dealers with a new, extended retail incentive program for the critical early spring retail selling season. These cost reduction efforts will continue during this downturn."
For the quarter ended March 31, Marine Products generated net sales of $65,542,000, a 0.9-percent increase compared to $64,976,000 last year. The increase in net sales was due to a 9.0 percent increase in the average selling price per boat, offset by an 8.7 percent decrease in the number of boats sold, according to the company.
Gross profit for the quarter was $13,464,000, or 20.5 percent of net sales, compared to $13,964,000, or 21.5 percent of net sales, in the prior year.
“Gross profit as a percentage of net sales declined compared to the prior year primarily due to the cost of our new retail incentive program associated with boats already sold to dealers,” the company explained. “This retail program for the early spring selling season is designed to reduce current field boat inventory and generate additional boat orders. The impact of this program, reflected as a reduction in sales, was partially offset by lower costs of good sold as a percentage of net sales resulting from a favorable model mix and the impact of the company's cost reduction efforts.”
Sales of the new Chaparral Sunesta Wide Techs and Xtremes continued to be strong during the quarter, and accounted for the increase in the average selling price per boat, Marine Products Corp. reported. Robalo unit sales during the first quarter of 2008 were higher than in the prior year as well.
Operating income for the quarter was $5,205,000, a 5.7-percent decrease compared to the first quarter last year due to lower gross profit, partially offset by lower selling, general and administrative expenses. Operating income was 7.9 percent of net sales for the quarter compared to 8.5 percent of net sales in the prior year.
Net income for the quarter ended March 31, 2008 was $4,132,000, a 5.5-percent increase compared to $3,917,000 in the prior year. Net income increased in spite of slightly lower operating income and income before income taxes because of a lower effective tax rate during the quarter resulting from increased tax-exempt interest income.
“The winter boat show season was slow in many of our markets, which compels us to be extremely cautious about this year's retail selling season,” said Hubbell. “Due to continued problems in the housing market, high fuel prices and concern regarding a general economic slowdown, we believe that the weak market for our products will continue for the immediate future."
Marine Products manufactures fiberglass boats under two brand names: Chaparral and Robalo.
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