[PART I. FINANCIAL INFORMATION](index=4&type=section&id=Part%20I.%20Financial%20Information) [ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS%20(UNAUDITED)) This section presents Marine Products Corporation's unaudited consolidated financial statements and related notes [Consolidated Balance Sheets – As of June 30, 2025, and December 31, 2024](index=4&type=section&id=Consolidated%20Balance%20Sheets%20%E2%80%93%20As%20of%20June%2030%2C%202025%2C%20and%20December%2031%2C%202024) This statement provides a snapshot of the company's assets, liabilities, and equity at specific points in time, highlighting changes in financial position Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $50,171 | $52,379 | | Total current assets | $131,136 | $109,994 | | Total assets | $173,245 | $171,247 | | Total current liabilities | $44,286 | $18,924 | | Total liabilities | $46,014 | $42,244 | | Total stockholders' equity | $127,231 | $129,003 | | Common stock outstanding (shares) | 34,996,050 | 34,707,304 | [Consolidated Statements of Operations – for the three and six months ended June 30, 2025 and 2024](index=5&type=section&id=Consolidated%20Statements%20of%20Operations%20%E2%80%93%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202025%20and%202024) This statement details the company's revenues, expenses, and net income over specific periods, reflecting operational performance Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net sales | $67,698 | $69,547 | $126,700 | $138,887 | | Gross profit | $12,909 | $13,174 | $23,862 | $27,158 | | Operating income | $4,811 | $5,750 | $7,424 | $10,992 | | Net income | $4,162 | $5,585 | $6,368 | $10,182 | | Basic EPS | $0.12 | $0.14 | $0.18 | $0.28 | | Diluted EPS | $0.12 | $0.14 | $0.18 | $0.28 | - Net sales decreased by **2.7%** for the three months ended June 30, 2025, and by **8.8%** for the six months ended June 30, 2025, compared to the prior year periods[9](index=9&type=chunk) - Net income saw a significant decline, decreasing by **25.4%** for the three-month period and **37.5%** for the six-month period year-over-year[9](index=9&type=chunk) [Consolidated Statements of Stockholders' Equity – for the three and six months ended June 30, 2025 and 2024](index=6&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity%20%E2%80%93%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202025%20and%202024) This statement outlines changes in the equity section of the balance sheet, including common stock, retained earnings, and other comprehensive income Consolidated Statements of Stockholders' Equity Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Common Stock | $3,499 | $3,471 | | Retained Earnings | $123,732 | $125,532 | | Total Stockholders' Equity | $127,231 | $129,003 | **Changes for Six Months Ended June 30, 2025:** * Stock issued for stock incentive plans, net: **$1,141 thousand** * Stock purchased and retired: **$(1,055) thousand** * Net income: **$6,368 thousand** * Cash dividends paid: **$(9,795) thousand** - Total stockholders' equity decreased from **$129,003 thousand** at December 31, 2024, to **$127,231 thousand** at June 30, 2025[11](index=11&type=chunk) [Consolidated Statements of Cash Flows – for the six months ended June 30, 2025 and 2024](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20%E2%80%93%20for%20the%20six%20months%20ended%20June%2030%2C%202025%20and%202024) This statement reports the cash generated and used by the company through its operating, investing, and financing activities Consolidated Statements of Cash Flows Highlights (in thousands) | Activity | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net cash provided by operating activities | $9,165 | $19,737 | | Net cash used for investing activities | $(523) | $(1,661) | | Net cash used for financing activities | $(10,850) | $(34,897) | | Net decrease in cash and cash equivalents | $(2,208) | $(16,821) | | Cash and cash equivalents at end of period | $50,171 | $55,131 | - Net cash provided by operating activities decreased by **$10.6 million (53.6%)** year-over-year, primarily due to lower net income and unfavorable working capital changes[14](index=14&type=chunk)[100](index=100&type=chunk)[107](index=107&type=chunk) - Net cash used for financing activities significantly decreased due to a special dividend paid in the second quarter of 2024[14](index=14&type=chunk)[109](index=109&type=chunk) [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide detailed explanations of the accounting policies, significant judgments, and additional information supporting the financial statements - The unaudited interim financial statements are prepared in accordance with GAAP for interim information and Form 10-Q instructions, and operating results for the six months ended June 30, 2025, are not indicative of full-year results[16](index=16&type=chunk) - A group including directors Amy R. Kreisler and Timothy C. Rollins controls **over 50%** of the Company's voting power[19](index=19&type=chunk) - The Company is assessing the potential impact of ASU 2024-03 (Disaggregation of Income Statement Expenses), effective for 2027 annual reports[20](index=20&type=chunk) - Revenue is primarily generated from selling fiberglass motorized boats and accessories and parts to independent dealers, recognized upon transfer of title[21](index=21&type=chunk)[22](index=22&type=chunk) Net Sales Disaggregation (in thousands) | Category | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Boats and accessories | $66,216 | $68,166 | $123,890 | $136,629 | | Parts | $1,482 | $1,381 | $2,810 | $2,258 | | **Total Net Sales** | **$67,698** | **$69,547** | **$126,700** | **$138,887** | | Domestic Sales | $65,812 | $65,281 | $120,079 | $129,683 | | International Sales | $1,886 | $4,266 | $6,621 | $9,204 | - The effective tax rate for the six months ended June 30, 2025, increased to **23.7%** from **20.0%** in the prior year, primarily due to detrimental discrete adjustments[40](index=40&type=chunk) - The Company is evaluating the financial impact of the recently passed 'One Big Beautiful Bill Act' (OBBBA) on corporate taxation[41](index=41&type=chunk)[112](index=112&type=chunk) Inventory Composition (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :----------------------- | :------------ | :---------------- | | Raw materials and supplies | $31,353 | $29,686 | | Work in process | $12,094 | $9,950 | | Finished goods | $7,738 | $10,324 | | **Total Inventories** | **$51,185** | **$49,960** | - The Supplemental Executive Retirement Plan (SERP) was **terminated in Q4 2024**, with participant balances expected to be distributed within the **next 12 months**, reclassifying related assets and liabilities to current[47](index=47&type=chunk)[115](index=115&type=chunk) - The Company has a **$20.0 million** revolving credit facility with Truist Bank, maturing **November 12, 2026**, with **no outstanding borrowings** as of June 30, 2025, and is in compliance with all covenants[53](index=53&type=chunk)[57](index=57&type=chunk)[58](index=58&type=chunk) - The aggregate maximum repurchase obligation under floor plan financing agreements with third-party lenders was **$39.8 million** as of June 30, 2025[63](index=63&type=chunk)[121](index=121&type=chunk) - A regular cash dividend of **$0.14 per share** was declared on July 22, 2025, payable September 10, 2025[68](index=68&type=chunk)[116](index=116&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=22&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses financial condition, operations, key performance indicators, market trends, strategic responses, and outlook [OVERVIEW](index=22&type=section&id=OVERVIEW) This section provides a high-level summary of the company's business, recent financial performance, and strategic focus - Marine Products Corporation manufactures recreational fiberglass powerboats (Chaparral and Robalo) sold through independent dealers in the US and internationally[71](index=71&type=chunk) - Consolidated net sales decreased **2.7%** in Q2 2025 year-over-year, driven by a **13% decrease in unit sales volume**, partially offset by a **10% price/mix increase**[74](index=74&type=chunk)[82](index=82&type=chunk) - Net income for Q2 2025 decreased to **$4.2 million ($0.12 diluted EPS)** from **$5.6 million ($0.14 diluted EPS)** in Q2 2024[74](index=74&type=chunk)[89](index=89&type=chunk) - The company is focusing on cost reduction and aligning production with lower demand levels amidst elevated interest rates and a more balanced market[74](index=74&type=chunk) [OUTLOOK](index=22&type=section&id=OUTLOOK) This section discusses the company's expectations for future performance, considering economic trends, market conditions, and strategic initiatives - Higher selling prices and rising interest rates have increased boat ownership costs, curbing consumer demand after several years of strong post-pandemic sales[75](index=75&type=chunk) - Production levels have been adjusted to align with expected demand, but dealers remain cautious about inventory levels[75](index=75&type=chunk) - Future financial results depend on economic trends, demand for discretionary products, interest rates, incentive programs, new model launches, and manufacturing cost management[76](index=76&type=chunk) - Further interest rate relief may be necessary to stimulate increased consumer demand for new boat purchases[76](index=76&type=chunk) [HOW WE EVALUATE OUR OPERATIONS](index=24&type=section&id=HOW%20WE%20EVALUATE%20OUR%20OPERATIONS) This section describes the key financial and non-GAAP metrics used by management to assess the company's operational performance and financial health - The Company evaluates operating performance using **Earnings per share** and non-GAAP financial measures: **Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)**, **EBITDA margin**, and **free cash flow**[78](index=78&type=chunk) - **EBITDA** and **EBITDA margin** are used for consistent performance comparison across periods, while **free cash flow** assesses the ability to generate additional cash from operations[78](index=78&type=chunk) - **Non-GAAP measures** should be considered in addition to, not as substitutes for, **GAAP** financial performance and liquidity measures[79](index=79&type=chunk) [RESULTS OF OPERATIONS](index=24&type=section&id=RESULTS%20OF%20OPERATIONS) This section provides a detailed analysis of the company's financial performance, comparing current period results to prior periods Key Operating and Financial Statistics (in thousands, except per share and number of boats sold) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net sales | $67,698 | $69,547 | $126,700 | $138,887 | | Net income | $4,162 | $5,585 | $6,368 | $10,182 | | Net income margin | 6.1% | 8.0% | 5.0% | 7.3% | | Earnings per share | $0.12 | $0.14 | $0.18 | $0.28 | | Total number of boats sold | 641 | 737 | 1,266 | 1,507 | | Average gross selling price per boat | $94.1 | $85.7 | $89.7 | $83.0 | | EBITDA | $5,598 | $6,452 | $9,000 | $12,376 | | EBITDA margin | 8.3% | 9.3% | 7.1% | 8.9% | | Free cash flow | $(2,031) | $3,044 | $8,642 | $18,076 | [THREE MONTHS ENDED JUNE 30, 2025 COMPARED TO THREE MONTHS ENDED JUNE 30, 2024](index=24&type=section&id=THREE%20MONTHS%20ENDED%20JUNE%2030%2C%202025%20COMPARED%20TO%20THREE%20MONTHS%20ENDED%20JUNE%2030%2C%202024) This subsection analyzes the financial performance for the second quarter of 2025 compared to the same period in the prior year - Net sales decreased by **$1.8 million (2.7%)** due to a **13% decrease in unit sales volume**, partially offset by a **10% price/mix increase**[82](index=82&type=chunk) - Cost of goods sold decreased by **$1.6 million (2.8%)**, with COGS as a percentage of net sales improving slightly to **80.9%** from **81.1%** due to manufacturing cost efficiencies[85](index=85&type=chunk) - Selling, general and administrative expenses increased by **$674 thousand (9.1%)** to **$8.1 million**, primarily due to higher R&D investments and incentive compensation accruals[86](index=86&type=chunk) - Net income decreased to **$4.2 million ($0.12 diluted EPS)** from **$5.6 million ($0.14 diluted EPS)**, with net income margin declining to **6.1%** from **8.0%**[89](index=89&type=chunk) - Net cash (used for) provided by operating activities decreased by **$5.4 million** to **$(1.6) million**, driven by lower net income and unfavorable working capital changes[91](index=91&type=chunk) [SIX MONTHS ENDED JUNE 30, 2025 COMPARED TO SIX MONTHS ENDED JUNE 30, 2024](index=26&type=section&id=SIX%20MONTHS%20ENDED%20JUNE%2030%2C%202025%20COMPARED%20TO%20SIX%20MONTHS%20ENDED%20JUNE%2030%2C%202024) This subsection analyzes the financial performance for the first six months of 2025 compared to the same period in the prior year - Net sales decreased by **$12.2 million (8.8%)** due to a **16% decrease in unit sales volume**, partially offset by a **7% price/mix increase**[92](index=92&type=chunk) - Cost of goods sold decreased by **$8.9 million (8.0%)**, with COGS as a percentage of net sales increasing to **81.2%** from **80.4%**[93](index=93&type=chunk) - Selling, general and administrative expenses increased by **$272 thousand (1.7%)** to **$16.4 million**, primarily due to higher R&D investments and incentive compensation accruals[95](index=95&type=chunk) - Net income decreased to **$6.4 million ($0.18 diluted EPS)** from **$10.2 million ($0.28 diluted EPS)**, with net income margin declining to **5.0%** from **7.3%**[98](index=98&type=chunk) - Net cash provided by operating activities decreased by **$10.6 million** to **$9.2 million**, driven by lower net income and unfavorable working capital changes[100](index=100&type=chunk) [Non-GAAP Financial Measures](index=28&type=section&id=Non-GAAP%20Financial%20Measures) This section presents financial measures not prepared in accordance with GAAP, along with reconciliations to their most directly comparable GAAP measures - The Company provides reconciliations for **non-GAAP measures (EBITDA, EBITDA margin, free cash flow)** to their most directly comparable **GAAP measures**[101](index=101&type=chunk)[104](index=104&type=chunk) Reconciliation of Net Income to EBITDA (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income | $4,162 | $5,585 | $6,368 | $10,182 | | Add: Income tax provision | $1,125 | $1,044 | $1,974 | $2,540 | | Add: Depreciation and amortization | $787 | $702 | $1,576 | $1,384 | | Less: Interest income, net | $476 | $879 | $918 | $1,730 | | **EBITDA** | **$5,598** | **$6,452** | **$9,000** | **$12,376** | | EBITDA margin | 8.3% | 9.3% | 7.1% | 8.9% | Reconciliation of Operating Cash Flow to Free Cash Flow (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net cash (used for) provided by operating activities | $(1,604) | $3,822 | $9,165 | $19,737 | | Capital expenditures | $(427) | $(778) | $(523) | $(1,661) | | **Free cash flow** | **$(2,031)** | **$3,044** | **$8,642** | **$18,076** | [LIQUIDITY AND CAPITAL RESOURCES](index=29&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section discusses the company's ability to generate and manage cash, its financial flexibility, and sources of funding - The Company believes its existing cash, strong capitalization, operating cash flow, and revolving credit facility will provide **sufficient capital for at least the next twelve months**[110](index=110&type=chunk) [Cash Flows](index=29&type=section&id=Cash%20Flows) This subsection analyzes the company's cash inflows and outflows from operating, investing, and financing activities - Cash and cash equivalents decreased from **$52.4 million** at December 31, 2024, to **$50.2 million** at June 30, 2025[107](index=107&type=chunk) - Net cash provided by operating activities for the six months ended June 30, 2025, decreased by **$10.6 million** compared to the prior year, primarily due to lower net income and unfavorable working capital changes[107](index=107&type=chunk) - Net cash used for investing activities decreased by **$1.1 million** due to lower capital expenditures[109](index=109&type=chunk) - Net cash used for financing activities significantly decreased due to a special dividend paid in Q2 2024[109](index=109&type=chunk) [Financial Condition and Liquidity](index=31&type=section&id=Financial%20Condition%20and%20Liquidity) This subsection assesses the company's overall financial health, including its assets, liabilities, and ability to meet short-term obligations - The Company filed a Form S-3 shelf registration statement on April 23, 2025, effective May 5, 2025, allowing for up to **$150 million** in securities offerings[111](index=111&type=chunk) - The Company is evaluating the financial impact of the 'One Big Beautiful Bill Act' (OBBBA) on corporate taxation[112](index=112&type=chunk) [Cash Requirements](index=31&type=section&id=Cash%20Requirements) This subsection details the company's anticipated future cash needs for capital expenditures, dividends, and other operational activities - Expected capital expenditures for 2025 are approximately **$2.0 to $3.0 million**, with **$523 thousand** spent through June 30, 2025[113](index=113&type=chunk) - **1,570,428 shares** remain available for repurchase under the Company's stock repurchase program; **no shares were repurchased** in Q2 2025 or Q2 2024[114](index=114&type=chunk) - The Company plans to distribute Supplemental Executive Retirement Plan (SERP) participant balances within the **next 12 months**[115](index=115&type=chunk) - A regular quarterly cash dividend of **$0.14 per share** was declared on July 22, 2025[116](index=116&type=chunk) [OFF BALANCE SHEET ARRANGEMENTS](index=31&type=section&id=OFF%20BALANCE%20SHEET%20ARRANGEMENTS) This section describes contractual arrangements that have a material effect on the company's financial position but are not recognized on the balance sheet - The Company guarantees varying amounts of dealer debt for floor plan financing with third-party lenders, with obligations becoming effective upon dealer default[117](index=117&type=chunk) - The aggregate maximum repurchase obligation with all floor plan financing institutions was **$39.8 million** as of June 30, 2025[121](index=121&type=chunk) - **No material financial impact** was associated with repurchases under these contractual agreements during the six months ended June 30, 2025, and 2024[119](index=119&type=chunk) [CERTAIN RELATED PARTY TRANSACTIONS](index=33&type=section&id=CERTAIN%20RELATED%20PARTY%20TRANSACTIONS) This section discloses transactions between the company and its affiliates, management, or other related parties - RPC, Inc. charged the Company **$552 thousand** for administrative costs for the six months ended June 30, 2025 (vs **$590 thousand** in 2024)[123](index=123&type=chunk) - Net operating costs for the jointly owned corporate aircraft (255 RC, LLC) were **$76 thousand** for the six months ended June 30, 2025 (vs **$82 thousand** in 2024)[124](index=124&type=chunk) - A group including directors Amy R. Kreisler and Timothy C. Rollins controls **over 50%** of the Company's voting power[125](index=125&type=chunk) - A Form S-3 shelf registration was filed for the resale of up to **24,419,029 shares** of common stock held by LOR, Inc. and its affiliates[126](index=126&type=chunk) [CRITICAL ACCOUNTING POLICIES](index=35&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES) This section highlights accounting policies that require significant judgment and estimation, which could materially impact financial results - There have been **no significant changes** to the critical accounting policies since the Company's annual report on Form 10-K for the year ended December 31, 2024[130](index=130&type=chunk) [IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS](index=35&type=section&id=IMPACT%20OF%20RECENT%20ACCOUNTING%20PRONOUNCEMENTS) This section discusses the potential effects of newly issued accounting standards on the company's financial statements - Refer to Note 2 of the Consolidated Financial Statements for details on recent accounting pronouncements, including expected adoption dates and effects[131](index=131&type=chunk) [SEASONALITY](index=35&type=section&id=SEASONALITY) This section explains how seasonal factors, such as weather and consumer behavior, influence the company's quarterly operating results - Quarterly operating results are affected by weather and general economic conditions, with the **second quarter historically recording the highest sales volume** and the **fourth quarter the lowest**[132](index=132&type=chunk) - Results for any single quarter are not necessarily indicative of results to be expected in future periods[132](index=132&type=chunk) [INFLATION](index=35&type=section&id=INFLATION) This section addresses the impact of inflation on the company's costs, pricing strategies, and consumer demand - Increases in interest rates, linked to higher inflation, have reduced retail demand for smaller boats and increased carrying costs for dealers[133](index=133&type=chunk) - Market prices of raw materials and components remain **elevated** due to post-pandemic supply chain disruptions and general inflation, leading to **historically high product prices**[134](index=134&type=chunk) - The rising cost of boat ownership may make it difficult to raise prices further, potentially impacting sales and profit margins[134](index=134&type=chunk) [FORWARD-LOOKING STATEMENTS](index=35&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section provides cautionary language regarding statements about future events, which are subject to risks and uncertainties - This section contains forward-looking statements based on management's assumptions, which are predictions and not guarantees of future performance[135](index=135&type=chunk)[139](index=139&type=chunk) - Actual results, developments, and business decisions may differ from forward-looking statements due to various risk factors[139](index=139&type=chunk) - Key risk factors include economic conditions, credit availability, consumer confidence, business interruptions, increased interest rates, supply chain disruptions, competition, and regulatory changes[139](index=139&type=chunk)[142](index=142&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=39&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The Company is exposed to interest rate risk through its revolving credit facility but had no outstanding interest-bearing advances as of June 30, 2025. It does not use derivative financial instruments and anticipates no material changes in market risk exposures or management - The Company is subject to interest rate risk from its credit facility but had **no outstanding interest-bearing advances** as of June 30, 2025[143](index=143&type=chunk) - Marine Products does not hold derivative financial instruments and does not expect any **material changes** in market risk exposures or how those risks are managed[144](index=144&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=39&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management, including the CEO and CFO, evaluated the effectiveness of the Company's disclosure controls and procedures as of June 30, 2025, concluding they were effective at a reasonable assurance level. No material changes in internal control over financial reporting occurred during the second quarter of 2025 - The Company's disclosure controls and procedures were evaluated and deemed **effective at a reasonable assurance level** as of June 30, 2025[146](index=146&type=chunk) - **No material changes** in internal control over financial reporting were identified during the second quarter of 2025[147](index=147&type=chunk) [PART II. OTHER INFORMATION](index=41&type=section&id=Part%20II.%20Other%20Information) [ITEM 1. LEGAL PROCEEDINGS](index=41&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) Marine Products is involved in routine litigation but does not anticipate that the outcome of these proceedings will have a material adverse effect on its financial position, results of operations, or liquidity - The Company is involved in litigation in the ordinary course of business[149](index=149&type=chunk) - Management believes the outcome of such litigation will **not have a material adverse effect** on the Company's financial position, results of operations, or liquidity[149](index=149&type=chunk) [Item 1A. RISK FACTORS](index=41&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 - **No material changes** from the risk factors previously disclosed in the Company's 2024 Annual Report on Form 10-K[150](index=150&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=41&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) There were no unregistered sales of equity securities or use of proceeds to report during the period - **None**[151](index=151&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=41&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) There were no defaults upon senior securities to report during the period - **None**[152](index=152&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=41&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to Marine Products Corporation - **Not Applicable**[153](index=153&type=chunk) [ITEM 5. OTHER INFORMATION](index=41&type=section&id=ITEM%205.%20OTHER%20INFORMATION) This section reports that no directors or officers adopted or terminated Rule 10b5-1 trading arrangements during Q2 2025. Additionally, the Board of Directors approved amended and restated bylaws on July 22, 2025, which include various procedural and disclosure enhancements - **No director or officer adopted or terminated** a Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[154](index=154&type=chunk) - The Board of Directors **approved and adopted amended and restated bylaws on July 22, 2025**, which became effective the same day[155](index=155&type=chunk) - Amendments to the bylaws include deleting provisions for closing stock transfer books, removing fee shifting provisions, enhancing stockholder nomination/proposal procedures, and providing flexibility for stock certificate signatures and record dates[155](index=155&type=chunk)[156](index=156&type=chunk) [ITEM 6. Exhibits](index=42&type=section&id=ITEM%206.%20Exhibits) This item lists all exhibits filed with the Form 10-Q, including corporate governance documents, certifications, and XBRL data files - Exhibit 3.2 is the **Amended and Restated By-laws** of Marine Products Corporation dated July 22, 2025[158](index=158&type=chunk) - Includes **Section 302 certifications** for the Chief Executive Officer and Chief Financial Officer, and **Section 906 certifications** for both[158](index=158&type=chunk) - Includes **Inline XBRL Instance Document** and related taxonomy extension documents[158](index=158&type=chunk) [Signatures](index=43&type=section&id=Signatures) The report is duly signed on behalf of Marine Products Corporation by its President and Chief Executive Officer, Ben M. Palmer, and its Vice President, Chief Financial Officer and Corporate Secretary, Michael L. Schmit, on July 24, 2025 - The report was signed by Ben M. Palmer, President and Chief Executive Officer, and Michael L. Schmit, Vice President, Chief Financial Officer and Corporate Secretary[162](index=162&type=chunk) - The signing date for the report was **July 24, 2025**[162](index=162&type=chunk)

Financial Data and Key Metrics Changes - Second quarter sales decreased by 3% to $67.7 million, driven by a 13% decrease in the number of boats sold, partially offset by a 10% increase in price and mix [10] - Gross profit decreased to $12.9 million, but gross profit margin increased by 20 basis points to 19.1% [10] - SG&A expenses rose by 9% to $8.1 million, with SG&A as a percentage of sales increasing by 130 basis points to 12% [11] - Diluted EPS fell to $0.12 from $0.14 in the previous year [11] - EBITDA decreased to $5.6 million from $6.5 million last year [12] - Year-to-date operating cash flow was $90.2 million, with free cash flow at $8.6 million [12] - The company ended the quarter with $50 million in cash and no debt [12] Business Line Data and Key Metrics Changes - The company noted that retail sales declined industry-wide during the first four months of 2025, but managed to reduce field inventory by 11% year over year [6] - The introduction of new models last year was well received, and the company is excited about the 2026 model year rollout with several portfolio-wide changes [8][14] Market Data and Key Metrics Changes - The company observed that channel inventory levels are stabilizing, and there are positive signs of declining inventory levels [5] - Interest rates remain elevated, but potential rate cuts could stimulate spending among dealers and consumers [6][8] Company Strategy and Development Direction - The company is focused on positioning its brands for improved future demand and maximizing returns on investments [6] - There is an ongoing evaluation of acquisition opportunities and partnerships to enhance the company's portfolio [14] - The company aims to maintain strong relationships with dealers regarding channel inventory management [9] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the industry working through excess inventory and the potential for improved sales in the second half of 2025 [5] - The company is closely monitoring tariff changes and their impact on input costs, including engines and materials [7] - Management highlighted the importance of maintaining dialogue with government representatives regarding trade negotiations [8] Other Important Information - The company plans to demonstrate new models to dealers at the August year meeting [14] - The company has maintained a strong balance sheet, positioning itself as a buyer of choice for high-quality assets [14] Q&A Session Summary - There were no questions during the Q&A session [15]

[Marine Products Corporation Second Quarter 2025 Financial Results](index=1&type=section&id=Marine%20Products%20Corporation%20Reports%20Second%20Quarter%202025%20Financial%20Results) [Second Quarter 2025 Highlights and Management Commentary](index=1&type=section&id=Second%20Quarter%202025%20Highlights%20and%20Management%20Commentary) The company reported a 3% year-over-year decrease in net sales to $67.7 million and a 25% decline in net income, citing stabilized market demand but ongoing macroeconomic caution Q2 2025 Key Financial Metrics (vs. Q2 2024) | Metric | Q2 2025 | Change (YoY) | | :--- | :--- | :--- | | Net Sales | $67.7 million | -3% | | Net Income | $4.2 million | -25% | | Diluted EPS | $0.12 | -14.3% (from $0.14) | | Net Income Margin | 6.1% | -190 bps | | EBITDA | $5.6 million | -13% | | EBITDA Margin | 8.3% | -100 bps | - Management stated that second-quarter results reflected a stabilization of demand and a more balanced environment, with sales growing sequentially from the lows of the second half of 2024[4](index=4&type=chunk) - The company remains cautious due to ongoing risks from tariffs and macroeconomic factors, which affect dealer and consumer confidence[4](index=4&type=chunk) - The company ended the quarter with a strong balance sheet, holding approximately **$50.2 million in cash** and **no debt**, enabling continued investment in the business[4](index=4&type=chunk)[5](index=5&type=chunk) [Detailed Financial Performance Analysis](index=2&type=section&id=Detailed%20Financial%20Performance%20Analysis) A 3% decline in net sales was driven by lower unit volume offset by higher prices, while increased SG&A expenses contributed to lower net income despite improved gross margins - Net sales decreased by **3% to $67.7 million**, resulting from a 13% drop in unit volume, largely counteracted by a 10% favorable price/mix adjustment[6](index=6&type=chunk) - Gross profit was $12.9 million, down 2%, but **gross margin improved by 20 basis points to 19.1%** as production schedules stabilized, leading to manufacturing cost efficiencies[7](index=7&type=chunk) - **SG&A expenses increased by 9% to $8.1 million**, representing 12.0% of net sales, mainly due to higher R&D investments and the timing of incentive compensation accruals[7](index=7&type=chunk) - **Net income fell to $4.2 million** with a **diluted EPS of $0.12**, down from $5.6 million and $0.14 in Q2 2024, while the net income margin contracted by 190 basis points to 6.1%[8](index=8&type=chunk) [Balance Sheet, Cash Flow, and Capital Allocation](index=2&type=section&id=Balance%20Sheet%2C%20Cash%20Flow%2C%20and%20Capital%20Allocation) The company maintained a strong debt-free balance sheet with $50.2 million in cash, generated $8.6 million in free cash flow, and continued shareholder returns via dividends - The company ended the quarter with **$50.2 million in cash** and cash equivalents and had **no outstanding borrowings** under its $20 million revolving credit facility[10](index=10&type=chunk) Year-to-Date Cash Flow and Capex (through Q2 2025) | Metric | Amount | | :--- | :--- | | Net Cash from Operating Activities | $9.2 million | | Free Cash Flow | $8.6 million | | Expected Full Year 2025 Capex | ~$3 million | - Dividends paid totaled **$9.8 million year-to-date**, and the Board of Directors declared a regular quarterly dividend of $0.14 per share[11](index=11&type=chunk) [Financial Statements](index=5&type=section&id=Financial%20Statements) This section presents the unaudited consolidated statements of operations, balance sheets, and cash flows for the periods ending June 30, 2025, and 2024 [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) The income statement shows a year-over-year decline in net sales and net income for both the second quarter and the first six months of 2025 Six Months Ended June 30 (in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net sales | $126,700 | $138,887 | | Gross profit | $23,862 | $27,158 | | Operating income | $7,424 | $10,992 | | Net income | $6,368 | $10,182 | | Diluted EPS | $0.18 | $0.28 | [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) The balance sheet as of June 30, 2025, reflects total assets of $173.2 million, stockholders' equity of $127.2 million, and a strong cash position Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $50,171 | $52,379 | | Inventories | $51,185 | $49,960 | | Total current assets | $131,136 | $109,994 | | Total assets | $173,245 | $171,247 | | Total liabilities | $46,014 | $42,244 | | Total stockholders' equity | $127,231 | $129,003 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations decreased significantly in the first half of 2025, with financing activities primarily consisting of dividend payments and stock repurchases Cash Flow Summary - Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $9,165 | $19,737 | | Net cash used for investing activities | ($523) | ($1,661) | | Net cash used for financing activities | ($10,850) | ($34,897) | | Net decrease in cash | ($2,208) | ($16,821) | [Non-GAAP Financial Measures Reconciliation](index=8&type=section&id=Non-GAAP%20Financial%20Measures%20Reconciliation) This section provides reconciliations of non-GAAP measures like EBITDA and free cash flow to their comparable GAAP figures to clarify operating performance - The company uses non-GAAP measures like EBITDA, EBITDA margin, and free cash flow, believing they help investors compare operating performance and evaluate liquidity consistently over time[19](index=19&type=chunk) Reconciliation of Net Income to EBITDA (in thousands) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net income | $4,162 | $5,585 | | Add: Income tax provision | $1,125 | $1,044 | | Add: Depreciation and amortization | $787 | $702 | | Less: Interest income, net | $476 | $879 | | **EBITDA** | **$5,598** | **$6,452** | Reconciliation of Operating Cash Flow to Free Cash Flow (in thousands) | Line Item | Six Months Ended June 30, 2025 | | :--- | :--- | | Net cash provided by operating activities | $9,165 | | Capital expenditures | ($523) | | **Free cash flow** | **$8,642** | [Corporate Information and Forward-Looking Statements](index=3&type=section&id=Corporate%20Information%20and%20Forward-Looking%20Statements) The company manufactures fiberglass boats under the Chaparral and Robalo brands and outlines key business risks in its forward-looking statements - The company manufactures high-quality fiberglass boats under the **Chaparral** (SSi, SSX, SURF, OSX) and **Robalo** (Center Consoles, Dual Consoles, Cayman Bay Boats) brand names[13](index=13&type=chunk) - The forward-looking statements highlight potential risks including **negative economic conditions, increased tariffs, supply chain disruptions**, and changes in consumer discretionary spending that could affect future results[14](index=14&type=chunk)

Core Insights - Marine Products Corporation reported a 3% year-over-year decline in net sales for Q2 2025, totaling $67.7 million, primarily due to a 13% decrease in the number of boats sold, which was partially offset by a 10% price/mix increase [4][7] - The company experienced a net income of $4.2 million, down 25% from the previous year, with diluted EPS at $0.12, reflecting a net income margin decrease of 190 basis points to 6.1% [7][8] - Management expressed optimism about demand stabilization and upcoming model year 2026 introductions, despite ongoing concerns regarding tariffs and macroeconomic risks [3][4] Financial Performance - Gross profit for Q2 2025 was $12.9 million, a decrease of 2% year-over-year, with a gross margin of 19.1%, which improved by 20 basis points compared to the prior year [5][8] - Selling, general and administrative expenses rose by 9% to $8.1 million, representing 12.0% of net sales, attributed to increased R&D investments and timing of incentive compensation [5][8] - EBITDA for the quarter was $5.6 million, down 13% year-over-year, with an EBITDA margin of 8.3%, a decrease of 100 basis points from the previous year [7][8] Cash Flow and Balance Sheet - The company ended Q2 2025 with cash and cash equivalents of $50.2 million and no debt, with net cash provided by operating activities at $9.2 million and free cash flow at $8.6 million year-to-date [9][10] - Year-to-date dividend payments totaled $9.8 million, with a quarterly dividend of $0.14 per share declared for payment on September 10, 2025 [10] - Total assets as of June 30, 2025, were $173.2 million, with total liabilities at $46.0 million, indicating a strong balance sheet position [16][17] Market Outlook - Management highlighted the importance of a strong balance sheet and disciplined production management to navigate the current market environment, with expectations for capital expenditures of approximately $3 million for the full year 2025 [3][9] - The company is focused on product innovation and diversification to enhance market share and long-term shareholder value [12][13]

Company Overview - Marine Products Corporation has appointed Gary Kolstad to its Board of Directors, bringing extensive board and management experience [1][2] - The company is a leading manufacturer of high-quality fiberglass boats under the brands Chaparral and Robalo, with a diverse product line including sportboats and fishing models [2] Leadership Insights - Richard A. Hubbell, Chairman of the Board, expressed confidence in Kolstad's contributions to the board, highlighting his beneficial experience in previous roles [2] Product and Market Strategy - Marine Products Corporation continues to diversify its product lines through innovation, aiming to increase market share and enhance financial performance [2]

Group 1 - Marine Products Corporation will release its financial results for Q2 2025 on July 24, 2025, before market opens [1] - A conference call to discuss the financial and operating results will take place on July 24, 2025, at 8:00 a.m. Eastern Time [1] - Participants can join the conference call via toll-free number or international dial-in, with a conference ID provided [2] Group 2 - Marine Products Corporation is a leading manufacturer of high-quality fiberglass boats under the brands Chaparral and Robalo [3] - The company offers a diverse range of products, including sterndrive models, outboard offerings, and sport fishing models [3] - Marine Products Corporation aims to increase market share and generate superior financial performance through product innovation and a strong dealer network [3]

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Company Overview - Marine Products Corporation (MPX) is a leading manufacturer of recreational powerboats with key brands Chaparral and Robalo[12] - The company has been building high-quality fiberglass powerboats for more than 60 years[9] - MPX has approximately 600 employees and is headquartered in Atlanta, with a manufacturing facility in Nashville, GA[11] - The company's market capitalization is approximately $300 million[11] Financial Performance - Net sales for the first quarter of 2025 decreased by 15% year-over-year to $59 million[57] - Net income for the first quarter of 2025 was $2206 thousand, down 52% year-over-year, with diluted EPS of $006[57, 58] - EBITDA for the first quarter of 2025 was $3402 thousand, a 43% decrease year-over-year, with an EBITDA margin of 58%[57, 62] - In 2024, approximately 54% of sales were from the Chaparral brand and 46% from the Robalo brand[15] - In 2024, approximately 65% of sales were from outboard propulsion boats, while 35% were from sterndrive propulsion boats[35] - The company ended the first quarter of 2025 with approximately $571 million in cash and no debt[57] Strategy and Outlook - The company plans to begin working with its dealer network for model year 2026 introductions, taking a conservative approach to rollout and inventory management[2] - Full year 2025 capital expenditures are expected to be approximately $3 million[2] - The company has returned approximately $240+ million to shareholders since 2015[29]

Financial Performance - Consolidated net sales decreased 14.9% to $59.0 million for Q1 2025 compared to $69.3 million in Q1 2024, primarily due to a 19% decrease in unit sales[77] - Gross profit decreased to $11.0 million in Q1 2025 from $14.0 million in Q1 2024, reflecting continued weakness in the marine industry[77] - Net income decreased to $2.2 million in Q1 2025, down from $4.6 million in Q1 2024, with diluted earnings per share at $0.06 compared to $0.13[77] - EBITDA for Q1 2025 was $3.4 million, down from $5.9 million in Q1 2024, resulting in an EBITDA margin of 5.8% compared to 8.5%[96] - Total number of boats sold decreased to 625 in Q1 2025 from 770 in Q1 2024, while the average gross selling price per boat increased to $85.1 from $80.4[87] - Selling, general and administrative expenses decreased to $8.3 million in Q1 2025 from $8.7 million in Q1 2024, representing 14.1% of net sales compared to 12.6%[92] - Cash flow from operating activities decreased to $10.8 million in Q1 2025 from $15.9 million in Q1 2024, with free cash flow also decreasing to $10.7 million from $15.0 million[97] Tax and Regulatory Matters - The effective tax rate increased to 27.8% in Q1 2025 from 24.6% in Q1 2024, primarily due to unfavorable permanent adjustments on decreased pretax income[94] - The company filed a shelf registration statement on April 23, 2025, allowing for the offering of securities up to $150 million, subject to market conditions[109] Future Outlook - The company anticipates that sales comparisons to the prior year could begin to turn positive in the second half of 2025 as dealer inventories return to more acceptable levels[83] - The company is actively monitoring dealer inventories and order patterns for an uptick in demand, which may lead to increased production schedules[83] - The company anticipates that inflation and interest rate increases may impact retail demand for boats, particularly smaller models[128] - The company expects capital expenditures in 2025 to be approximately $3.0 million[1] Cash Management and Dividends - Cash provided by operating activities decreased by $5.1 million for the three months ended March 31, 2025, primarily due to a decrease in net income[106] - Working capital generated $6.7 million in cash for the three months ended March 31, 2025, down from $9.5 million in the same period of the prior year[106] - The company has repurchased a total of 6,679,572 shares under its stock repurchase program, with 1,570,428 shares remaining available for repurchase as of March 31, 2025[111] - A regular quarterly cash dividend of $0.14 per share was declared, payable on June 10, 2025, to common stockholders of record as of May 9, 2025[113] - The company expects to continue paying cash dividends to common stockholders, subject to industry conditions and financial performance[1] Risk Factors - The company acknowledges that the cost of boat ownership has risen significantly, which may affect future retail demand and profit margins[1] - The company recognizes that ongoing tariff developments could lead to inflationary pressures impacting costs[1] - The company does not expect any material changes in market risk exposures or how those risks are managed[1] Employee Benefits - The company is currently evaluating funding options for the distribution of participant balances from the terminated Supplemental Executive Retirement Plan, expected to occur between 12 and 24 months after termination[112] - The company has plans to evaluate funding and timing options for distributing the Supplemental Executive Retirement Plan participant balances[1]

Financial Performance - Q1 2025 sales were $59 million, a 15% decline year-over-year, but an improvement from the 30%-40% declines experienced throughout CY2024 [4][11] - Gross profit decreased to $11 million, with a margin of 18.6%, down 60 basis points due to lower volumes and reduced fixed cost absorption [11] - Diluted EPS was $0.06, down from $0.13 in Q1 2024 [11] - EBITDA for Q1 2025 was $3.4 million, down from $5.9 million in Q1 2024 [11] - Operating cash flow was strong at $10.8 million, with free cash flow of $10.7 million [11] Sales and Market Trends - The number of boats sold decreased by 19% year-over-year in Q1 2025 [11] - Channel inventory was down 18% compared to Q1 2024, indicating a reduction in unsold stock [4][9] - Management anticipates potential year-over-year sales growth in the second half of 2025 despite ongoing challenges [4][9] Cost Management and Expenditures - SG&A expenses were $8.3 million, down 5% year-over-year, primarily due to costs that vary with sales and profitability [11] - Capital expenditures for Q1 2025 were under $100,000, with expectations of approximately $3 million for the full year [4][11] Strategic Initiatives - The company is actively seeking acquisitions to expand its business and has ample liquidity to pursue opportunities [5][12] - An S-3 registration statement has been filed, which includes the registering of Rollins Family Control Group shares [5][11] Leadership Changes - Steve Lewis has been elected to the board of directors, while Gary Rollins and Pam Rollins have retired from the board [5][12]