Good morning, and thank you for joining us for Marine Products Corporation's Third Quarter 2020 Financial Earnings Conference Call. Today's call will be hosted by Rick Hubbell, President and CEO, and Ben Palmer, Chief Financial Officer. Also present is Jim Landers, Vice President of Corporate Services. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. I would like to advise everyone that this conference call is being recorded. Jim will get us started by reading the forward-looking disclaimer.

Thank you, and good morning. Before we get started today, I'd like to remind everyone that some of the statements that we will make on this call may be forward looking in nature and reflect a number of known and unknown risks. I'd like to refer you to our press release issued today, our 2019 10-K, and other SEC filings that outline those risks. All of these are available on our website. If you have not received our press release and would like to see it, please visit our website for a copy. We will make a few comments about the quarter, and then we'll be available for your questions. Now I will turn the call over to our President and CEO, Rick Hubbell.

Jim, thanks. We issued our earnings press release for the third quarter of 2020 this morning. Ben Palmer, our CFO, will discuss the financial results in more detail in a moment. Before I summarize the quarter, I'd like to take a moment to recognize R. Randall Rollins, our Chairman, who passed away during the third quarter following a short illness. Randall held this position at Marine Products and its predecessor since 1986. He was proud of our company's success and reputation for quality, and we will miss him. Now on to our discussion of Marine Products third-quarter results. We completed a full quarter of production and sales following our temporary operational suspension during the second quarter due to concerns over the COVID-19 pandemic. In contrast to other years at this point in the boating season, we have a very high dealer order backlog, most of which has been sold at retail and low dealer inventories. For these reasons, we are continuing to operate at the highest feasible operational levels as we entered the third quarter. Recreational boating sales continued to benefit from the effects of the COVID pandemic, which is restricting vacation travel, recreational activities, and crowded environments, forcing individuals and households to remain isolated. As a result of this extraordinary situation, we are seeing the highest dealer and consumer demands we have seen in years. As we review our market share at the end of the third quarter, I am pleased to report that Chaparral continues to be a market share leader in its sterndrive recreational boat category. Robalo also continues to be a market share leader in the outboard category. The combination of Chaparral and Robalo outboard models continues to hold the highest outboard boat market share in their size category. We announced this morning that our Board of Directors yesterday declared a regular quarterly cash dividend of $0.08 per share plus a special year-end cash dividend of $0.04 per share. The Board of Directors continues to believe that both the dividend level and the special year-end dividend represent a prudent and tangible way to reward our shareholders. With that overview, I'd like to turn it over to our CFO, Ben Palmer.

Thank you, Rick. Net sales for the third quarter of 2020 were $68.8 million, a 4.8% decrease compared with the third quarter of last year. Unit sales declined by 10.4% as compared to the third quarter of last year. This decline was partially offset by an improved model mix, which resulted in increased average selling prices of 7.8%. Gross profit in the third quarter was $16.2 million, an increase of 3.1% compared to the third quarter of 2019. Gross margin during the quarter was 23.6% compared to 21.8% in the third quarter of 2019. Gross margin as a percentage of net sales increased due to an improved model mix yielding average selling prices, higher average selling prices during the quarter when compared to the prior year. Selling, general, and administrative expenses were $7.9 million in the third quarter of 2020, an increase of $1.9 million compared to $6 million in the third quarter of last year. These expenses were higher due to a state research and development payroll tax credit that was $1.2 million lower during the third quarter of 2020 as compared to the prior year, as well as $963,000 in deferred compensation expense associated with the accelerated vesting of restricted stock due to the death of our Company's Chairman. These expenses were 11.5% of net sales in the third quarter of 2020 compared to 8.4% of net sales in the third quarter of 2019. For the quarter ended September 30, 2020, we reported net income of $6.5 million, a decrease of 16.8% compared to net income of $7.9 million in the third quarter of 2019. Diluted earnings per share were $0.19 in the third quarter of 2020 compared to $0.23 in the prior year. Our effective tax rate this quarter was 21.8% compared to 19.8% in the prior year. Our international sales decreased by 29.9% and accounted for only 3.1% of total sales during the quarter compared to 4.3% of total sales in the third quarter of 2019. Our international sales decreased in all of our international markets. Cash balance at the end of the third quarter was $29 million, an increase of $6 million compared to $23 million at the end of the third quarter of 2019. As Rick mentioned, dealer inventory levels were significantly lower at the end of the third quarter 2020 and at the end of the second quarter of 2020 compared to the third quarter of last year. Our order backlog in units was higher than it has been in many years. We believe that our retail sales have increased in line with industry growth during the first three quarters of 2020 because of the reduction in dealer inventories. In spite of the fact that the traditional retail selling season has ended, our dealers still report low field inventories and are eager to restock their inventories. With that, I'll turn it back over to Rick for a few closing remarks.

Thank you, Ben. We approach the 2021 model year in the winter boat show seasons with a great deal of optimism, and we're evaluating opportunities to increase production levels to satisfy the near-term demand levels. However, our interest in increasing production at this time is tempered by manufacturing capacity constraints, labor availability, and supply chain concerns. We are also uncertain about the feasibility of in-person boat shows and are working closely with dealers to plan for alternative means to market our 2021 products to dealers and consumers. In spite of these concerns, we are very happy to be operating in a high-demand market with quality brands and a dominant market share. I would like to thank you for joining us this morning, and we will be happy to take any questions you may have.

Thank you. We have no questions in the queue. I'll turn the call back over to Jim Landers for closing remarks.

Okay, thank you. And we know some people had called in to listen, so I appreciate you calling in to listen. Please let us know if you have any questions and hope everybody has a good day. Thanks.

Ladies and gentlemen, thank you for participating. The conference call will be replayed on our website within two hours following the completion of the call. You may now disconnect.