Marine Products Corporation (NYSE: MPX) announced its unaudited results for the quarter ended March 31, 2022. Marine Products is a manufacturer of fiberglass boats under the brand names of Chaparral and Robalo. Chaparral’s sterndrive models include SSi and SSX, along with the Chaparral Surf Series. Chaparral’s outboard offerings include OSX Luxury Sportboats, and SSi and SSX outboard models. Robalo builds an array of outboard sport fishing boats, which include center consoles, dual consoles and Cayman Bay Boat models.
For the quarter ended March 31, 2022, Marine Products generated net sales of $76,612,000, a 2.2% decrease compared to $78,375,000 in the same period of the prior year. The decrease in net sales was due to a 20.9% decrease in the number of boats sold and a decrease in parts and accessories sales, substantially offset by a 23.3% increase in the average selling price per boat. Average selling prices increased due to 2022 model year price increases necessitated by raw materials and labor cost increases, as well as a favorable model mix. In spite of strong dealer and consumer demand, unit sales volumes in most product categories were negatively impacted.
Gross profit for the first quarter of 2022 was $18,395,000, comparable to $18,462,000 the first quarter of the prior year. Gross margin as a percentage of net sales increased to 24% in the first quarter of 2022 compared to 23.6% in the first quarter of 2021. Gross margin as a percentage of net sales improved due to a favorable model mix and model year price increases.
Operating profit for the first quarter of 2022 was $9,155,000, a decrease of 8.7% compared to operating profit of $10,025,000 in the first quarter of last year. Selling, general and administrative expenses were $9,240,000 in the first quarter of 2022 compared to $8,437,000 in the first quarter of 2021. These expenses increased primarily due to higher boat show expenses during the quarter as compared to the prior year as well as increased employment costs. Selling, general and administrative expenses as a percentage of net sales were 12.1% in the first quarter of 2022 compared to 10.8% of net sales during the first quarter of 2021. Net income for the first quarter of 2022 was $7,063,000, a decrease of 12.8% compared to net income of $8,097,000 in the first quarter of 2021. Earnings before interest, taxes, depreciation and amortization (EBITDA) for the first quarter of 2022 was $9,627,000, a decrease of $845,000 compared to the first quarter of 2021.
Diluted earnings per share were $0.21 in the first quarter of 2022 compared with $0.24 in the first quarter of the prior year. The effective tax rate for the first quarter of 2022 was 22.7%, an increase compared to an effective tax rate of 19.3% for the first quarter of the prior year.
“Our first quarter 2022 results demonstrate the effect of ongoing supply chain challenges impacting our ability to complete final assembly and deliver boats on a timely basis,” stated Richard A. Hubbell, Marine Products’ President and Chief Executive Officer. “We began the quarter with production slowdowns caused by brief Covid-related employee absences. I am pleased to report that this issue was resolved early in the quarter, but our production continued to be impacted by shortages and delayed receipts of critical parts and components. We continue to work with our suppliers to manage product delivery times, optimize our production efficiency and fulfill our dealer commitments, but these issues led to unit sales declines resulting from higher than normal inventory levels comprised of substantially completed boats. Our inventory levels at March 31, 2022 were significantly higher than the end of the first quarter of 2021 and slightly higher than at the end of last year.
“In spite of these short-term problems, we are pleased by continued strong recreational boating demand. The most recent winter boat shows were well-attended and generated strong order volumes. Our dealers and retail customers continue to be interested in our full model lineup and have accepted the price increases we have been forced to implement as a result of our cost increases. Our Robalo and Chaparral sterndrive and outboard products continue to hold high market share.
“As we enter the second quarter, we continue to make efficient production and quality our priorities and have started to see some improvement in the supply chain issues. We are also closely monitoring the potential impact of price increases and higher interest rates on consumer demand, although at this time we do not anticipate any deterioration in our historically high order backlog and low dealer inventories,” concluded Hubbell.