8-K
Marine Products Group, LLC (MPX)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
| FORM 8-K |
|---|
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 24, 2024
MARINE PRODUCTS CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 1-16263 | 58-2572419 |
|---|---|---|
| (State or Other Jurisdiction<br>of Incorporation) | (Commission File Number) | (IRS Employer<br>Identification No.) |
2801 Buford Highway NE, Suite 300, Atlanta, Georgia 30329
(Address of principal executive office) (zip code)
Registrant's telephone number, including area code: ( 404 ) 321-7910
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| | |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $0.10 par value | MPX | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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Item 2.02. Results of Operations and Financial Condition.
On October 24, 2024, Marine Products Corporation issued a press release titled “Marine Products Corporation Reports Third Quarter 2024 Financial Results And Declares Regular Quarterly Dividend,” announcing the financial results for the third quarter ended September 30, 2024.
Item 9.01. Financial Statements and Exhibits.
| 99.1 | Press Release dated October 24, 2024 |
|---|---|
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Marine Products Corporation has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Marine Products Corporation | |
|---|---|
| Date: October 24, 2024 | /s/ Michael L. Schmit |
| Michael L. Schmit | |
| Vice President and Chief Financial Officer |
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Third Quarter 2024 Earnings Press Release
Exhibit 99.1
Marine Products Corporation Reports Third Quarter 2024 Financial Results And Declares Regular Quarterly Dividend
ATLANTA, October 24, 2024 – Marine Products Corporation (NYSE: MPX) (the “Company”), a leading manufacturer of fiberglass boats, announced its unaudited results for the third quarter ended September 30, 2024.
* Non-GAAP measures*, including EBITDA, EBITDA margin, and free cash flow are reconciled to the most comparable GAAP measures in the appendices of this earnings release.*
* All comparisons are year-over-year to 3Q:23 unless stated otherwise.
Third Quarter 2024 Results
| ● | Net sales decreased 36% year-over-year to $49.9 million |
|---|---|
| ● | Net income was $3.4 million, down 67% year-over-year, and diluted Earnings Per Share (EPS) was $0.10; net income margin decreased 660 basis points to 6.8% |
| --- | --- |
| ● | Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) was $4.3 million, down 67% year-over-year; EBITDA margin decreased 810 basis points to 8.6% |
| --- | --- |
| ● | Results reflected continued weakness in dealer ordering patterns given soft consumer demand; in response, the Company has reduced costs and adjusted production schedules until demand strengthens |
| --- | --- |
| ● | The Company continued to generate strong cash flow, ending the quarter with approximately $54 million in cash and no debt |
| --- | --- |
Management Commentary
"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.”
“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.
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Third Quarter 2024 Earnings Press Release
3Q:24 Consolidated Financial Results: Year-Over-Year (versus 3Q:23)
Net sales were $49.9 million, down 36%. 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 believes its year-over-year comparisons will likely remain soft in the near term.
Gross profit 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.
Selling, general and administrative expenses were $5.6 million, down 36%, generally in line with the sales decline, and represented 11.3% of net sales, consistent with the prior year. The decrease in SG&A expenses was due to costs that vary with sales and profitability, such as incentive compensation, sales commissions and warranty expense.
Interest income of $634 thousand decreased due to lower cash balances as a result of the Company’s special dividend paid during the second quarter of 2024.
Income tax provision was $820 thousand, or 19.4% of income before income taxes, down 220 basis points.
Net income and diluted EPS were $3.4 million and $0.10, respectively, down from $10.4 million and $0.30, respectively, in 3Q:23. Net income margin was 6.8%, down 660 basis points.
EBITDA was $4.3 million, down from $13.0 million; EBITDA margin was 8.6%, down 810 basis points.
Balance Sheet, Cash Flow and Capital Allocation
Cash and cash equivalents were $53.5 million at the end of 3Q:24, with no outstanding borrowings under the Company’s $20 million revolving credit facility.
Net cash provided by operating activities and free cash flow were $24.9 million and $21.3 million, respectively, year-to-date through 3Q:24.
Payment of dividends totaled $38.8 million year-to-date through 3Q:24, including a special dividend of $0.70 per share paid during the second quarter. The Board of Directors declared a regular quarterly dividend of $0.14 per share payable on December 10, 2024, to common stockholders of record at the close of business on November 11, 2024.
Conference Call Information
Marine Products Corporation will hold a conference call today, October 24, 2024, at 8:00 a.m. Eastern Time to discuss the results for the quarter. Interested parties may listen in by accessing a
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Third Quarter 2024 Earnings Press Release
live webcast in the investor relations section of Marine Products’ website at www.marineproductscorp.com. Additionally, the live conference call can be accessed by calling (888) 660-6357, or (929) 201-6127 for international callers, and using conference ID number 9979064. A replay will be available in the investor relations section of Marine Products’ website beginning approximately two hours after the call.
About Marine Products
Marine Products Corporation is a leading manufacturer of high-quality fiberglass boats under the brand names Chaparral and Robalo. Chaparral’s sterndrive models include SSi Sportboats and SSX Luxury Sportboats, and the SURF Series. Chaparral’s outboard offerings include OSX Luxury Sportboats and the SSi Outboard Bowriders. Robalo builds an array of outboard sport fishing models, which include Center Consoles, Dual Consoles and Cayman Bay Boats. The Company continues to diversify its product lines through product innovation. With these premium brands, a solid capital structure, and a strong independent dealer network, Marine Products Corporation is prepared to capitalize on opportunities to increase its market share and generate superior financial performance to build long-term shareholder value. For more information on Marine Products Corporation visit our website at www.marineproductscorp.com.
Forward Looking Statements
Certain statements and information included in this press release constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include statements that look forward in time or express management’s beliefs, expectations, hopes or strategies. In particular, such statements include, without limitation: our view that our industry remains challenged by continued soft consumer demand and tepid dealer order flow; our plans to continue to monitor our costs and production flow to minimize the impact of weak sales during demand lulls; our belief that decreases in interest rates are an important first step toward lowering floor plan carrying costs for dealers and financing costs for consumers; our belief that until we reach a period of increased demand, we plan to remain focused on operations, margins, quality and innovation; our belief that we are well positioned to navigate the current headwinds, while still providing attractive dividends to our shareholders in the meantime, and exploring growth investments in the business; our belief that our year-over-year comparisons will likely remain soft in the near term; and our expectation that year-over-year changes in gross margin will be less pronounced in the near-term as comparisons to prior year periods become less difficult. Risk factors that could cause such future events not to occur or our strategies not to succeed as expected include the following: negative economic conditions, unavailability of credit and possible decreases in the level of consumer confidence impacting discretionary spending; business interruptions due to, e.g., adverse weather conditions, supply chain disruptions and/or further increased interest rates; our retail incentives and allowances may not successfully increase consumer demand as anticipated, due to negative impacts to the overall economy, industry or competition, our adjustments to production levels may not match demand; increased cost of boat ownership makes it more difficult to raise prices in the future to compensate for increased costs; our new model launches may not match dealer and consumer preferences, which are inherently uncertain; and our ability to manage manufacturing costs may be constrained in light of lower production levels. Additional factors that could cause the actual results to differ materially from management’s projections, forecasts, estimates and expectations are contained in Marine Products’ Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission (the “SEC”) for the year ended December 31, 2023.
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Third Quarter 2024 Earnings Press Release
For information about Marine Products Corporation or this event, please contact:
Mark Chekanow, CFA
Vice President, Investor Relations
(404) 419-3809
mchekano@marineproductscorp.com
Michael L. Schmit
Chief Financial Officer
(404) 321-7910
irdept@marineproductscorp.com
MARINE PRODUCTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands except per share data)
| | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | **** | Three Months Ended | | Nine Months Ended | |||||||||
| September 30, | **** | 2024 | | 2023 | | **** | 2024 | **** | 2023 | ||||
| | | | (Unaudited) | | | (Unaudited) | | | | (Unaudited) | | | (Unaudited) |
| | | | | | | | | | | | | | |
| Net sales | | $ | 49,850 | | $ | 77,786 | | | $ | 188,737 | | $ | 312,858 |
| Cost of goods sold | | **** | 40,668 | | 58,548 | | | **** | 152,397 | | 235,942 | ||
| Gross profit | | **** | 9,182 | | 19,238 | | | **** | 36,340 | | 76,916 | ||
| Selling, general and administrative expenses | | **** | 5,642 | | 8,789 | | | **** | 21,809 | | 35,495 | ||
| Gain on disposition of assets, net | | **** | (50) | | (1,962) | | | **** | (51) | | (1,962) | ||
| Operating income | | **** | 3,590 | | 12,411 | | | **** | 14,582 | | 43,383 | ||
| Interest income, net | | **** | 634 | | 860 | | | **** | 2,364 | | 2,066 | ||
| Income before income taxes | | **** | 4,224 | | 13,271 | | | **** | 16,946 | | 45,449 | ||
| Income tax provision | | **** | 820 | | 2,868 | | | **** | 3,360 | | 9,176 | ||
| Net income | | $ | 3,404 | | $ | 10,403 | | | $ | 13,586 | | $ | 36,273 |
| | | | | | | | | | | | | | |
| EARNINGS PER SHARE ^(1)^ | | **** | **** | | | | | ||||||
| Basic | | $ | 0.10 | | $ | 0.30 | | | $ | 0.37 | | $ | 1.05 |
| Diluted | | $ | 0.10 | | $ | 0.30 | | | $ | 0.37 | | $ | 1.05 |
| | | | | | | | | | | | | | |
| AVERAGE SHARES OUTSTANDING ^(2)^ | | **** | **** | | | | | ||||||
| Basic | | **** | 34,713 | | 34,467 | | | **** | 34,683 | | 34,435 | ||
| Diluted | | **** | 34,713 | | 34,467 | | | **** | 34,683 | | 34,435 |
^(1)^ Earnings per share includes a reduction of $0.02 for the nine months ended September 30, 2024, resulting from the allocation of earnings attributable to participating securities under the two-class method required by GAAP. Special dividend paid in the prior quarter resulted in a reduction of $957 due to earnings attributable to participating securities for the nine months ended September 30, 2024.
^(2)^ Includes participating securities which are share-based payment awards with non-forfeitable rights to dividends. Under the two-class method, average shares outstanding shown above were reduced by participating securities of 880 for the nine months ended September 30, 2024.
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Third Quarter 2024 Earnings Press Release
MARINE PRODUCTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| | | | | | | |
|---|---|---|---|---|---|---|
| | (in thousands) | |||||
| | | September 30, | | December 31, | ||
| | **** | 2024 | **** | 2023 | ||
| | | (Unaudited) | | | | |
| ASSETS | | | ||||
| Cash and cash equivalents | | $ | 53,533 | | $ | 71,952 |
| Accounts receivable, net | | **** | 5,445 | | 2,475 | |
| Inventories | | **** | 52,599 | | 61,611 | |
| Income taxes receivable | | **** | 217 | | 361 | |
| Prepaid expenses and other current assets | | **** | 3,696 | | 2,847 | |
| Total current assets | | **** | 115,490 | | 139,246 | |
| Property, plant and equipment, net | | **** | 23,942 | | 22,456 | |
| Goodwill | | **** | 3,308 | | 3,308 | |
| Other intangibles, net | | **** | 465 | | 465 | |
| Deferred income taxes | | **** | 9,936 | | 8,590 | |
| Retirement plan assets | | | 18,117 | | | 15,379 |
| Other long-term assets | | **** | 5,058 | | 4,358 | |
| Total assets | | $ | 176,316 | | $ | 193,802 |
| | | | | | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | ||||
| Liabilities | | | | | | |
| Accounts payable | | $ | 8,060 | | $ | 6,071 |
| Accrued expenses and other liabilities | | **** | 16,576 | | 16,496 | |
| Total current liabilities | | **** | 24,636 | | 22,567 | |
| Retirement plan liabilities | | **** | 21,206 | | 17,998 | |
| Other long-term liabilities | | **** | 1,683 | | 1,649 | |
| Total liabilities | | **** | 47,525 | | 42,214 | |
| | | | | | | |
| Stockholders' Equity | | | | | | |
| Preferred stock | | | — | | — | |
| Common stock | | **** | 3,471 | | 3,447 | |
| Capital in excess of par value | | — | | — | ||
| Retained earnings | | **** | 125,320 | | 148,141 | |
| Total stockholders' equity | | **** | 128,791 | | 151,588 | |
| Total liabilities and stockholders' equity | | $ | 176,316 | | $ | 193,802 |
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Third Quarter 2024 Earnings Press Release
MARINE PRODUCTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| | | | | | | | | |
|---|---|---|---|---|---|---|---|---|
| | | (in thousands) | | | ||||
| Nine Months Ended September 30, | **** | | 2024 | | 2023 | | | |
| | | | (Unaudited) | | | (Unaudited) | | |
| OPERATING ACTIVITIES | | **** | | | | |||
| Net income | | $ | 13,586 | | $ | 36,273 | | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | **** | **** | | | | ||
| Depreciation and amortization | | **** | 2,088 | | 1,750 | | | |
| Pension settlement loss | | | — | | | 2,277 | | |
| Working capital | | | 7,406 | | | 3,348 | | |
| Other operating activities | | | 1,802 | | | (3,470) | | |
| Net cash provided by operating activities | | **** | 24,882 | | 40,178 | | | |
| | | **** | | | | | | |
| INVESTING ACTIVITIES | | | | | | | | |
| Capital expenditures | | **** | (3,574) | | (8,405) | | | |
| Proceeds from sale of assets | | **** | 51 | | 1,129 | | | |
| Net cash used for investing activities | | **** | (3,523) | | (7,276) | | | |
| | | | | | | | | |
| FINANCING ACTIVITIES | | **** | **** | | | | ||
| Payment of dividends | | | (38,845) | | (14,458) | | | |
| Cash paid for common stock purchased and retired | | | (933) | | (910) | | | |
| Net cash used for financing activities | | | (39,778) | | (15,368) | | | |
| | | | | | | | | |
| Net (decrease) increase in cash and cash equivalents | | **** | (18,419) | | 17,534 | | | |
| Cash and cash equivalents at beginning of period | | **** | 71,952 | | 43,171 | | | |
| Cash and cash equivalents at end of period | | $ | 53,533 | | $ | 60,705 | | |
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Third Quarter 2024 Earnings Press Release
Non-GAAP Measures
Marine Products Corporation has used the non-GAAP financial measures of EBITDA, EBITDA margin, and free cash flow in today's earnings release. These measures should not be considered in isolation or as a substitute for performance or liquidity measures prepared in accordance with GAAP. Management believes that presenting these non-GAAP measures enables investors to compare our operating performance consistently over various time periods, and in the case of EBITDA, without regard to changes in our capital structure. Management believes that free cash flow, which measures our ability to generate additional cash from our business operations, is an important financial measure for use in evaluating Marine Products’ liquidity. Free cash flow should be considered in addition to, rather than as a substitute for, net cash provided by operating activities as a measure of our liquidity. Additionally, Marine Products’ definition of free cash flow is limited, in that it does not represent residual cash flows available for discretionary expenditures, due to the fact that the measure does not deduct the payments required for debt service and other contractual obligations or payments made for business acquisitions. Therefore, management believes it is important to view free cash flow as a measure that provides supplemental information to our Condensed Consolidated Statements of Cash Flows.
A non-GAAP financial measure is a numerical measure of financial performance, financial position, or cash flows that either 1) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of operations, balance sheet or statement of cash flows, or 2) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented.
Set forth in the appendices below are reconciliations of these non-GAAP measures with their most directly comparable GAAP measures. These reconciliations also appear on Marine Products Corporation’s investor website, which can be found on the Internet at www.marineproductscorp.com.
Appendix A
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Unaudited) | | Three Months Ended | | Nine Months Ended | ||||||||
| | | September 30, | | September 30, | | September 30, | | September 30, | ||||
| (In thousands) | **** | 2024 | | 2023 | **** | 2024 | **** | 2023 | ||||
| Reconciliation of Net Income to EBITDA | | | | | | |||||||
| Net income | | $ | 3,404 | | $ | 10,403 | | $ | 13,586 | | $ | 36,273 |
| Adjustments: | | | | | ||||||||
| Add: Income tax provision | | **** | 820 | | 2,868 | | **** | 3,360 | | 9,176 | ||
| Add: Depreciation and amortization | | **** | 704 | | 610 | | **** | 2,088 | | 1,750 | ||
| Less: Interest income, net | | **** | 634 | | 860 | | **** | 2,364 | | 2,066 | ||
| EBITDA | | $ | 4,294 | | $ | 13,021 | | $ | 16,670 | | $ | 45,133 |
| | | | | | | | | | | | | |
| Net sales | | $ | 49,850 | | $ | 77,786 | | $ | 188,737 | | $ | 312,858 |
| | | | | | | | | | | | | |
| Net income margin^(1)^ | | | 6.8% | | | 13.4% | | | 7.2% | | | 11.6% |
| | | | | | | | | | | | | |
| EBITDA margin^(1)^ | | | 8.6% | | | 16.7% | | | 8.8% | | | 14.4% |
^(1)^ Net income margin is calculated as net income divided by net sales. EBITDA margin is calculated as EBITDA divided by net sales.
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Third Quarter 2024 Earnings Press Release
Appendix B
| | | | | | | | |
|---|---|---|---|---|---|---|---|
| | | | |||||
| (Unaudited) | | | Nine Months Ended | ||||
| | | | September 30, | | September 30, | ||
| (In thousands) | **** | **** | 2024 | 2023 | |||
| Reconciliation of Operating Cash Flow to Free Cash Flow | | | |||||
| Net cash provided by operating activities | | | $ | 24,882 | | $ | 40,178 |
| Capital expenditures | | | | (3,574) | | | (8,405) |
| Free cash flow | | | $ | 21,308 | | $ | 31,773 |