Marine Products Corporation realigns with dealer inventories
Marine Products Corporation — manufacturer of Chaparral, Robalo and Vortex announced its unaudited results for the quarter ended Dec. 31, 2019.
For the quarter ended Dec. 31, 2019, Marine Products generated net sales of $48,175,000, a 22.4% decrease compared with net sales of $62,062,000 in the same period of the prior year. During the quarter, unit sales declined by 21%, as sales declined across all model lines. Average selling price declined by 1.3% due to a change in model mix.
Gross profit for the fourth quarter of 2019 was $10,522,000, a 19.2% decrease compared with gross profit of $13,017,000 in the same period of the prior year. Gross margin as a percentage of net sales was 21.8% in the fourth quarter of 2019, compared with 21% in the fourth quarter of 2018.
“As we discussed at the end of the third quarter, our dealer inventories had increased to levels that prompted us to adjust production to be aligned with field inventory as we prepared for the 2020 model year and retail selling season,” Richard A. Hubbell, Marine Products’ president and chief executive officer said. “Our fourth quarter sales show the result of that decision. Our inventory aging shows a high percentage of newer 2020 models, which is a positive attribute. We continue to monitor dealer inventories and orders very closely as we formulate our plans for 2020 production. The early 2020 winter boat shows are better attended than last year, and more sales are being closed at the shows than in prior years, both of which indicate that the 2020 retail selling season is likely to be strong. We will monitor orders from the boat shows during the next month and are considering appropriate production increases during the first quarter.”
Operating profit for the fourth quarter of 2019 was $4,178,000, a decrease of 30.6% compared with operating profit of $6,016,000 in the fourth quarter of the prior year. Selling, general and administrative expenses were $6,344,000 in the fourth quarter of 2019, compared with $7,001,000 in the fourth quarter of 2018. These expenses decreased due to expenses that vary with sales and profitability, such as warranty expenses and incentive compensation expenses, as well as lower research and development expenses during the fourth quarter of 2019 as compared to the fourth quarter of the prior year. Selling, general and administrative expenses as a percentage of net sales were 13.2% in the fourth quarter of 2019 compared with 11.3% of net sales during the fourth quarter of 2018.
Net income for the fourth quarter of 2019 was $3,542,000, a decrease of $1,186,000, or 25.1%, compared with net income of $4,728,000 in the fourth quarter of 2018. Diluted earnings per share were $0.10 in the fourth quarter of 2019, a decrease of $0.04 compared to $0.14 diluted earnings per share in the fourth quarter of 2018. The effective tax rate for the fourth quarter of 2019 was 17%, a decrease compared to an effective tax rate of 22% for the fourth quarter of the prior year.
Net sales for the 12 months ended Dec. 31, 2019 were $292,136,000, a decrease of 2.2% compared to the prior year. Net income for the 12 months ended Dec. 31, 2019 was $28,239,000, essentially unchanged compared with $28,488,000 in the prior year. Diluted earnings per share were $0.83 in both years.
“For the trailing 12 months ended Sep. 30, 2019, Chaparral held the second highest sterndrive market share in its size category. Robalo continued to hold the second-highest market share in its category, and the combination of Robalo and Chaparral’s outboard boats held 6.5% of their market for this period, the highest market share in that category. During the fourth quarter we repurchased 88,983 shares under our share repurchase program. Also during the fourth quarter we issued a regular $0.12 per share dividend as well as a special $0.10 per share dividend. In spite of these uses of cash, our balance sheet as of Dec. 31, 2019 reflected $19.8 million in cash compared with $16.4 million in cash and marketable securities at the end of the fourth quarter of the prior year,” concluded Hubbell.
