Marine Products Corporation posts 65% increase YOY for Q2
Marine Products Corporation announced its unaudited results for the quarter ended June 30, 2021. Marine Products is the manufacturer of fiberglass boats under the brand names of Chaparral and Robalo.
For the quarter ended June 30, 2021, Marine Products generated net sales of $67,259,000, a 64.8% increase compared to $40,818,000 in the same period of the prior year. The increase in net sales was due to a 58.8% increase in the number of units sold during the quarter as compared to the prior year as well as a 7.5% increase in average selling price per boat. The company reported that unit sales increased in all product categories compared to the prior year due to continued high dealer and retail demand during the second quarter of 2021. In addition, Marine Products’ sales in the second quarter of 2020 were negatively impacted by the suspension of manufacturing operations for five weeks during that period due to concerns over the potential spread of COVID-19. Average selling prices also increased compared to the second quarter of the prior year due to a model mix that included relatively higher sales growth of larger boats, such as our Chaparral OSX Sportboats, and lower sales of smaller Chaparral SSi and Robalo models due to production mix priorities.
Gross profit for the second quarter of 2021 was $14,608,000, an 86.5% increase compared to gross profit of $7,831,000 in the same period of the prior year. Gross margin as a percentage of net sales increased to 21.7% in the second quarter of 2021 compared to 19.2% in the second quarter of 2020. Gross margin as a percentage of net sales improved due to manufacturing efficiencies resulting from higher production and a favorable model mix during the second quarter of 2021 as compared to the prior year, partially offset by supply chain disruptions and higher materials costs as a percentage of net sales, as compared to the prior year.
Operating profit for the second quarter of 2021 was $7,363,000, an increase of 255% compared with operating profit of $2,074,000 in the second quarter of last year. Selling, general and administrative expenses were $7,245,000 in the second quarter of 2021 compared to $5,757,000 in the second quarter of 2020. These expenses increased due to costs that vary with sales and profitability, such as incentive compensation, sales commissions and warranty expenses. Selling, general and administrative expenses as a percentage of net sales were 10.8% in the second quarter of 2021 compared to 14.1% of net sales during the second quarter of 2020. The company said that although these expenses increased during the quarter as compared to the prior year, they decreased as a percentage of net sales due to leverage of higher sales over expenses that are relatively fixed during the short term.
Net income for the second quarter of 2021 was $5,794,000, an increase of $4,087,000, or 239.4%, compared with net income of $1,707,000 in the second quarter of 2020. Diluted earnings per share were $0.17 in the second quarter of 2021 compared to $0.05 in the second quarter of 2020. The effective tax rate for the second quarter of 2021 was 21.4%, an increase compared to an effective tax rate of 18.3% for the second quarter of the prior year.
Net sales for the six months ended June 30, 2021 were $145,634,000, an increase of 45.7% compared to the first six months of 2020. Net income for the six-month period was $13,891,000 or $0.41 diluted earnings per share, compared to net income of $5,915,000, or $0.17 diluted earnings per share in the prior year.
“The extraordinarily high demand for our products has continued unabated, and we expect it to remain so beyond the 2021 retail selling season,” stated Richard A. Hubbell, Marine Products’ president and chief executive officer. “As we have reported during the past year, American consumers continue to have a renewed interest in recreational boating as a safe, enjoyable outdoor activity. The most recent reported data indicate that total retail sales among our various product categories increased by 28% during the first five months of 2021 compared to the prior year. We continue to be pleased by our strong market share. Updated statistics for the 12 months ended March 31, 2021 indicate that our Robalo product continued to hold the highest market share for outboard boats in its size category, and that Chaparral continues to hold the second-highest market share in the sterndrive category.
“Our second quarter 2021 financial results also reflect significant supply chain and other logistical challenges which negatively impacted our production processes and shipment schedules. These issues caused production delays and in some cases, prevented us from shipping all finished boats during the quarter. In addition, production delays reduced manufacturing efficiencies that we would have otherwise realized. We are coordinating with our suppliers to establish realistic expectations for the resolution of the various supply chain disruptions we have faced, and we are using their projections to set our production schedules for the next few months. There are many favorable indications that supply chain problems will be less significant during the upcoming months, but we still face a great deal of uncertainty in this area.
“As we continue to operate in such a strong demand environment, we are working closely with our dealers to communicate our projected production schedules and manage delivery expectations. We have also begun allocating production to dealers to ensure equitable product shipments to our valued dealer network. In addition, we are introducing our 2022 models to our dealers and retail consumers in the coming months. We are excited about our model lineup for 2022, which features a stremlined number of models that we believe will meet market demand while allowing us to manufacture more efficiently and bring products to market in a more timely manner,” concluded Hubbell.
