Marine Products Corporation — manufacturer of Chaparral, Robalo and Vortex boats — announced its unaudited results for the quarter ended June 30, 2020.
For the quarter ended June 30, 2020, Marine Products generated net sales of $40,818,000, a 54.0% decrease compared to record net sales of $88,696,000 in the same period of the prior year. The decrease in net sales was due to a 57.9% reduction in the number of units sold during the quarter as compared to the prior year. Unit sales declined in every product category due to the temporary suspension of manufacturing operations for five weeks during the quarter. Average selling price per boat during the second quarter rose by 7.8% due to a favorable model mix.
Gross profit for the second quarter of 2020 was $7,831,000, a 61.7% decrease compared to gross profit of $20,424,000 in the same period of the prior year. Gross margin was 19.2% of net sales in the second quarter of 2020 compared to 23% in the second quarter of 2019. Gross margin as a percentage of net sales declined due to manufacturing cost inefficiencies resulting from the temporary operational suspension during the quarter, partially offset by a favorable model mix consisting of larger boats.
Net income for the second quarter of 2020 was $1,707,000, a decrease of $7,666,000, or 81.8%, compared with record net income of $9,373,000 in the second quarter of 2019. Diluted earnings per share were $0.05 in the second quarter of 2020 compared to $0.27 in the second quarter of 2019. The effective tax rate for both the second quarter of 2020 and 2019 was 18.3%. Net sales for the six months ended June 30, 2020 were $99,937,000, a decrease of 41.8% compared to the first six months of 2019. Net income for the six-month period of 2020 was $5,915,000 or $0.17 diluted earnings per share, compared to net income of $16,842,000, or $0.49 diluted earnings per share in the prior year.
Richard A. Hubbell, Marine Products’ president and CEO stated, “As we announced a few months ago, in late March we temporarily suspended manufacturing operations in response to concerns over the potential spread of COVID-19. Our Nashville, Ga. production facility did not resume operations until the second week in May, and as a result, our production and sales were dramatically impacted for almost half of the quarter. During this shutdown we continued with our research and development efforts, modified our marketing efforts to maintain our presence with dealers and customers, and reduced costs wherever possible. In addition, we expedited the shipment of as many boats as possible to our dealers to meet high retail demand.
“We resumed operations on May 6 at slightly higher production levels than during the first quarter. We are continuing to increase production early in the third quarter because of significantly higher dealer and consumer demand since mid-March. At the end of the second quarter, our dealer inventory was significantly lower than at the end of both the first quarter of 2020 and the second quarter of the prior year, and our order backlog was at its highest level in several years.
“It is clear that American consumers are choosing recreational boating as a safe, enjoyable outdoor activity suited for social distancing. We are very pleased to begin our 2021 model year in this favorable environment, and are working to increase production to meet this surge in demand with appealing new models. As always, we will monitor macroeconomic factors closely, and maintain a balance among high product demand, potential supply chain constraints, and our desire to produce quality products,” concluded Hubbell.