Good morning, and thank you for joining us for the Marine Products Corporation's First Quarter 2025 Earnings Conference Call. Today's call will be hosted by Ben Palmer, President and CEO, and Michael Schmit, Chief Financial Officer. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for you to queue up for questions. I would like to advise everyone that this conference call is being recorded. I will now turn the call over to Mr. Schmit. Thank you, and good morning.

Before we begin, I want to remind you that some of the statements made on this call could be forward-looking in nature and reflect a number of known and unknown risks. Please refer to our press release issued today along with our 2024 10-K and other public filings that outline those risks, all of which can be found at marineproductscorp.com. In today's earnings release and conference call, we will be referring to several non-GAAP measures of operating performance and liquidity. We believe these non-GAAP measures allow us to compare performance consistently over various periods. Our press release issued today and our website contain reconciliations of these non-GAAP measures to the most directly comparable GAAP measures. I will now turn the call over to our President and CEO, Ben Palmer.

Thanks, Mike. And thank you all for joining our call. First quarter results were down compared to the prior year. However, our trends are beginning to stabilize following significant top-line declines last year. For context, in 2024, our quarterly sales declines were in the low 30% to low 40% range following unprecedented post-COVID demand through the mid-part of 2023. Whereas in the first quarter of 2025, sales were down 15% year over year. On a more positive note, sales were up 23% sequentially compared to the fourth quarter of 2024. As we said last quarter, we are seeing some signs of stabilization, and we still believe we are in a position to see year-over-year sales growth in the second half of the year. While that trend is headed in the right direction, we are still in a challenging and uncertain environment. The marine industry continues to work through elevated levels of channel inventory, an unclear interest rate environment, and now uncertainty with respect to tariff impacts. However, we are still cautiously optimistic that we have reached a trough. We are focused on managing costs and production levels as tightly as possible, maximizing cash flow, and positioning ourselves for improved demand in the future. Channel inventory has been the most pressing challenge we and our peers have faced over the past eighteen months or so. A few months ago, we disclosed our field inventory units were down 15% when comparing the end of 2023 to the end of 2024. And we are pleased to report that our first quarter channel inventories were down 18% versus the year-ago quarter. So we continue to make progress and are comfortable where we stand from a channel perspective. It has been a collaborative effort with our dealers, balancing the need for smooth production schedules and fixed cost absorption with the hesitation from the dealer network in taking more inventory without visible near-term demand catalysts. Conservatism and prudence continue to be our approach. We know tariffs are top of mind for investors, and it is too soon to project anything definitively given the ongoing nature of negotiations to this point. From an input cost standpoint, key purchases would be engines, navigation, stainless steel, aluminum, and fiberglass. It is highly likely that tariffs on these items and other materials would result in model price increases. We have limited visibility on the outcome but are doing everything to keep an open dialogue with our government representatives, trade associations, and vendor partners. Together, we are communicating the potential negative impacts of tariffs on our business and hoping for as much relief as possible. Regarding interest rates, while we had originally been hoping for steady rate relief, the outlook for rates remains unclear as the Fed balances economic impacts from tariffs and trade policy on inflation and the growth outlook. It is fair to say that we hope for lower rates, but acknowledge that if rates come down, it could be in response to a deteriorating domestic economy, which would inherently be unfavorable. As we pass from the spring selling season into summer, we will be in close touch with our dealers on our model year 2026 rollout. In the current environment, we will proceed carefully, being mindful of channel inventory, dealer, and consumer appetite for new boats. We still look forward to delivering new models and feature and design enhancements across both Chaparral and Revolo brands. Regardless of market conditions, our brand reputation is still the lifeblood of our business. Constant innovations and new designs must continue. Fortunately, we have the financial strength to sustain those efforts. Now Mike will provide an overview of the financial results.

Thanks, Ben. Shifting to the first quarter, with year-over-year comparisons for the first quarter of 2024, sales were down 15% to $59 million, driven by a 19% decrease in the number of boats sold. Price and mix netted to a positive 4%. We know the quarterly sales decreases have been easing for the past several quarters. And as Ben mentioned, we see potential to deliver sales growth versus the prior year in the second half of 2025. Gross profit decreased to $11 million with a gross profit margin of 18.6%, down 60 basis points. The decline is due to lower volumes and reduced fixed cost absorption, which more than offset the favorable price and mix effects. SG&A expenses were $8.3 million in the quarter, down 5% or $400,000 compared to last year's first quarter. These expenses decreased primarily due to costs that vary with sales and profitability, such as incentive compensation, sales commissions, and warranty expense. SG&A as a percentage of sales was 14.1%, up 150 basis points compared to the prior year's first quarter, due to fixed overhead and reduced sales. Our tax rate was 27.8% in the quarter and is likely to be slightly below this level for the remainder of the year. Diluted EPS was $0.06 in the first quarter, down from $0.13 last year. EBITDA was $3.4 million, down from $5.9 million. In the quarter, we generated strong operating cash flow of $10.8 million and free cash flow of $10.7 million. CapEx was just under $100,000 in the period, and while we expect lower CapEx this year compared to last, it will likely pick up in the coming quarters and track toward $3 million for the full year. We paid $4.9 million in dividends and finished the quarter with cash of $57 million and no debt. On another topic, you may have seen the company has filed an S-3 registration statement with the SEC, which includes the registering of the Rollins Family Control Group shares. The Rollins family has been a longtime shareholder with ongoing representation on our board. They have always been very supportive of the company, and we do not believe this changes that relationship. We view the registration of the control group shares as good corporate housekeeping. I'll now turn it back over to Ben for a few closing remarks.

Thank you, Mike. Recent results have been a challenge for us and the marine industry overall. However, our discipline and focus on cash generation remain intact. We are still actively seeking acquisitions to expand our business and have ample liquidity to take advantage of opportunities as they arise. We are looking at various boat categories where we do not have existing products and believe we will be a buyer of choice for owners of quality assets looking for an exit. On a separate note, we would like to welcome Steve Lewis to our board of directors after being elected this week. Steve retired from the law firm Troutman Pepper, formerly Troutman Sanders, in 2023, where he had served in various leadership roles, including chairman and CEO. At the same time, Gary Rollins and Pam Rollins have retired from our board. We thank them for their years of contributions, leadership, and service. In closing, I want to always thank our dealers for their continued collaboration and support, and our employees for their dedication and hard work. That concludes our prepared remarks. With that, operator, please open the line for any questions.

I will now turn the call back over to Ben Palmer. Please go ahead.

Thank you, operator. Appreciate you listening in on the call today, and you have a good rest of the day and look forward to touching base soon. Take care.

Today's call will be available for replay on marineproductscorp.com within two hours following the completion of the call. Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.