Marine Products Corporation reports 36% sales drop in Q3
Marine Products Corporation (MPC), manufacturer of fiberglass boats under the brand names Chaparral and Robalo, announced its unaudited results for the third quarter ended September 30, 2024.
The company reported net sales for the quarter totaled $49.9 million, down 36% from the same quarter the previous year. MPC noted the decrease in net sales was primarily due to a 40% decrease in the number of boats sold during the quarter, partially offset by positive price/mix of 4%, driven by higher gross selling prices. Sales continued to be impacted by soft consumer demand, as dealers tightly manage their inventories to minimize floor plan carrying costs until demand improves. The company said it believes its year-over-year comparisons will likely remain soft in the near term.
“As we approach the end of the year, our industry remains challenged by continued soft consumer demand and tepid dealer order flow,” stated Ben M. Palmer, Marine Products’ President and Chief Executive Officer. “Our dealer inventories are at reasonable levels, lower versus the year-ago quarter as well as sequentially versus the second quarter of 2024, as we have scaled down production to allow the channel to de-stock. Regarding the recent hurricanes that affected the Southeastern states, our facility in Nashville, Ga. was fortunate to have limited damage. However, we did temporarily shut down operations for a week, and many of our employees faced disruptive damage in the community. We continue to monitor our costs and production flow to minimize the impact of weak sales during this demand lull.”
MPC reported gross profit in Q3 2024 was $9.2 million, down 52%. Gross margin was 18.4%, down 630 basis points. The year-over-year gross margin change reflected lower sales volumes and associated manufacturing cost inefficiencies, coupled with the impact of reinstituting retail incentive programs. Production schedules and labor costs have been adjusted to more closely align with current demand. The company expects year-over-year changes in gross margin to be less pronounced in the near-term as comparisons to prior year periods become less difficult.
“We were pleased to see the first decrease in interest rates announced during the quarter, with more hopefully on the way before year-end. While one rate cut won’t change the market, we believe it is an important first step toward lowering floor plan carrying costs for dealers and financing costs for consumers, as well as providing some optimism on the direction of interest costs going forward. During this period of soft demand, we remain focused on operations, margins, quality and innovation. With no debt, strong cash generation, and well over $50 million in cash at the end of the third quarter, we are well positioned to navigate the current headwinds, while still providing attractive dividends to our shareholders and exploring growth investments in the business,” concluded Palmer.
The full Q3 2024 results can be found on the Marine Products Corporation website.