Analyst's Rating History on MPX ● Strong Buy . Buy . Hold . Sell . Strong Sell My Rating History on MPX (Seeking Alpha) Waiting for an Industry Recovery After the Covid pandemic peak in demand, the boating industry has been left in crumbles as interest rates have risen. Manufactures have taken an especially large hit as dealerships are churning through excess inventories bought during the pandemic. While significant signs were already seen in December as of my previous article, the struggles have widened in ...

Part I. Financial Information [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited Q1 2024 statements show a significant decline in sales and net income year-over-year [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets grew to $204.0 million, driven by an increase in cash and cash equivalents Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $81,225 | $71,952 | | Inventories | $55,210 | $61,611 | | Total current assets | $147,956 | $139,246 | | Total assets | $204,038 | $193,802 | | **Liabilities & Equity** | | | | Accounts payable | $13,064 | $6,071 | | Total current liabilities | $31,506 | $22,567 | | Total liabilities | $52,656 | $42,214 | | Total stockholders' equity | $151,382 | $151,588 | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Q1 2024 net sales fell 41.7% to $69.3 million, leading to a 60.2% drop in net income Q1 2024 vs Q1 2023 Performance (in thousands, except per share data) | Metric | Q1 2024 | Q1 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Net sales | $69,340 | $118,914 | -41.7% | | Gross profit | $13,984 | $29,022 | -51.8% | | Operating income | $5,242 | $14,489 | -63.8% | | Net income | $4,597 | $11,549 | -60.2% | | Diluted EPS | $0.13 | $0.34 | -61.8% | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations decreased to $15.9 million in Q1 2024 from $26.9 million in Q1 2023 Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $15,915 | $26,946 | | Net cash used for investing activities | ($883) | ($1,789) | | Net cash used for financing activities | ($5,759) | ($5,727) | | **Net increase in cash** | **$9,273** | **$19,430** | | **Cash at end of period** | **$81,225** | **$62,601** | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail a significant drop in boat sales, a higher effective tax rate, and a $28.4 million repurchase obligation Disaggregation of Net Sales (in thousands) | Source | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Boats and accessories | $68,463 | $117,719 | | Parts | $877 | $1,195 | | **Total Net Sales** | **$69,340** | **$118,914** | Warranty Accrual Analysis (in thousands) | Description | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Balance at January 1 | $7,078 | $5,699 | | Payments made | ($965) | ($1,063) | | Warranty provision | $1,073 | $1,739 | | Balance at March 31 | $7,214 | $6,487 | - The company has contractual repurchase agreements with floor plan financing institutions with an aggregate maximum repurchase obligation of **$28.4 million** as of March 31, 2024[67](index=67&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 41.7% sales decline to lower unit volume and compressed gross margins Key Operating Statistics (Q1 2024 vs Q1 2023) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Total number of boats sold | 770 | 1,278 | | Average gross selling price per boat (in thousands) | $80.4 | $82.4 | | Gross profit margin percent | 20.2% | 24.4% | | Operating income (in thousands) | $5,242 | $14,489 | - Net sales for Q1 2024 **decreased by 41.7%** compared to Q1 2023, primarily due to a **39.7% decrease in unit sales volumes**[76](index=76&type=chunk)[84](index=84&type=chunk) - Selling, general and administrative (SG&A) expenses **decreased by 39.8% to $8.7 million**, mainly due to lower variable costs and a prior-year pension settlement charge[87](index=87&type=chunk) - The company expects capital expenditures in 2024 to be approximately **$5.0 million**[96](index=96&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports minimal market risk exposure, with no outstanding debt or derivative instruments - As of March 31, 2024, there were **no outstanding interest-bearing advances** on the company's credit facility, which bears interest at a floating rate[118](index=118&type=chunk) - The company holds **no derivative financial instruments** and does not expect any material changes in its market risk exposures[119](index=119&type=chunk) [Item 4. Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2024 - Based on an evaluation as of March 31, 2024, the CEO and CFO concluded that the company's **disclosure controls and procedures were effective**[121](index=121&type=chunk) - **No material changes** in internal control over financial reporting occurred during Q1 2024[122](index=122&type=chunk) Part II. Other Information [Item 1. Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) Current litigation is not expected to have a material effect on the company's financial position - Marine Products does not believe that the outcome of ordinary course litigation will have a **material effect** on its financial condition or results[125](index=125&type=chunk) [Item 1A. Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors have been identified since the 2023 annual report - **No material changes** to risk factors have occurred since the 2023 Form 10-K filing[126](index=126&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 85,444 shares in Q1 2024 related to taxes on vested restricted shares - In Q1 2024, **85,444 shares were repurchased** at an average price of $10.62, related to taxes on vested restricted shares[127](index=127&type=chunk)[128](index=128&type=chunk) - **No shares were repurchased** in the open market under the company's stock buyback program during Q1 2024, with **1,570,428 shares remaining** for repurchase[127](index=127&type=chunk) [Item 6. Exhibits](index=36&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including required certifications - Exhibits filed include **CEO and CFO certifications** (31.1, 31.2, 32.1) and Inline XBRL files (101 series)[133](index=133&type=chunk)

Financial Data and Key Metrics Changes - First quarter sales decreased by 42% to $69.3 million, driven by a 40% decrease in the number of units sold, with a negative price mix impact of 2% [31] - Gross profit decreased by 52% to $14 million, with a gross margin of 20.2%, down 420 basis points year-over-year [17] - EBITDA was $5.9 million, down from $15 million, with an EBITDA margin decreasing by 410 basis points to 8.5% [32] - Diluted EPS was $0.13, down from $0.34 in the previous year [8] Business Line Data and Key Metrics Changes - SG&A expenses were $8.7 million, down 40% or $5.8 million compared to the first quarter of last year, primarily due to costs that vary with sales and profitability [8] - The company is focusing on maintaining production levels appropriate to current demand, with a production scale back of around mid-30% below peak production rates in the first half of 2023 [28] Market Data and Key Metrics Changes - Retail incentives remain attractive, with positive sales trends observed among dealers, particularly for larger priced boats purchased by cash buyers [6] - Dealer inventory levels are still high, but the company is comfortable with its product levels in the dealer network [15][24] Company Strategy and Development Direction - The company is executing operational projects during the current slowdown to improve efficiencies and maintain production capabilities [5][52] - There is a focus on returning capital to investors through dividends, with a $0.14 per share regular quarterly dividend and a $0.70 per share special dividend approved [9][33] Management Comments on Operating Environment and Future Outlook - Management noted that the first quarter results showed stability on the top line and some improvement in profitability compared to the previous quarter, but year-over-year comparisons remain challenging [4] - The company is optimistic about the upcoming selling season and expects to see improvements in sales as the season progresses [22][36] Other Important Information - The company ended the first quarter with over $80 million in cash, indicating ample liquidity for future investments and strategic acquisitions [33] - The passing of the long-time Head of Investor Relations was acknowledged, highlighting the impact on the company [14] Q&A Session Summary Question: Can you provide insight on your production schedule for the rest of the year? - Management indicated they are comfortable with current production levels and are hopeful for an increase as new model years roll out [20][36] Question: What progress has been made regarding dealer inventory levels? - Management stated they are comfortable with their production rate relative to retail sales and are encouraged by improvements in sales as the season progresses [22][24] Question: Will promotions continue throughout the selling season? - Management confirmed that they expect incentive programs to remain in place for the next couple of quarters, adjusting as necessary [40] Question: How is the health of dealer partners amid recent news? - Management reported strong relationships with dealers, who are managing their businesses well despite high inventory levels [41]

[First Quarter 2024 Earnings Press Release](index=1&type=section&id=First%20Quarter%202024%20Earnings%20Press%20Release) Marine Products Corporation reported a challenging first quarter 2024, with significant year-over-year declines in sales and profitability due to market normalization, high dealer inventory, and increased interest rates [Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) Marine Products Corporation reported a challenging first quarter 2024, with significant year-over-year declines in sales and profitability due to market normalization, high dealer inventory, and increased interest rates [Management Commentary](index=1&type=section&id=Management%20Commentary) Management acknowledged the market normalization and high inventory, implementing production adjustments and retail incentives, while expressing optimism for new products and returning capital to shareholders - Management noted that first quarter results reflect a normalization of post-pandemic demand, leading to unfavorable year-over-year financial comparisons[5](index=5&type=chunk) - The industry faces an uncertain demand environment, high retail channel inventory, and increased financing costs for consumers and dealers due to higher interest rates[5](index=5&type=chunk) - The Company has implemented retail incentive programs, modified boat production schedules to manage channel inventory, and adjusted its cost structure[5](index=5&type=chunk) - Despite challenges, the company was encouraged by Spring boat shows and new product excitement, particularly for larger, higher-priced boats, and remains optimistic about new boat sales[5](index=5&type=chunk) - The Board approved a **special dividend of $0.70 per share**, in addition to the **regular quarterly dividend of $0.14 per share**, returning approximately **$29 million** to shareholders[6](index=6&type=chunk)[7](index=7&type=chunk) - With **no debt** and over **$80 million in cash**, the company maintains ample liquidity for organic growth investments and strategic acquisitions[7](index=7&type=chunk) [First Quarter 2024 Key Highlights](index=1&type=section&id=First%20Quarter%202024%20Key%20Highlights) Key financial metrics for Q1 2024 showed substantial year-over-year declines in sales, net income, and EPS, reflecting softer demand and elevated inventory, despite significant cash returns to shareholders First Quarter 2024 Key Financial Highlights (YoY Comparison) | Metric | 1Q 2024 | 1Q 2023 | Change (YoY) | | :----- | :------ | :------ | :----------- | | Net Sales | $69.3 million | $118.9 million | -42% | | Net Income | $4.6 million | $11.5 million | -60% | | Diluted EPS | $0.13 | $0.34 | -61.8% | | Net Income Margin | 6.6% | 9.7% | -310 bps | | EBITDA | $5.9 million | $15.0 million | -61% | | EBITDA Margin | 8.5% | 12.6% | -410 bps | - Results were impacted by softer consumer demand, dealer ordering patterns due to higher interest rates, and elevated industry-wide channel inventory[6](index=6&type=chunk) - The Board of Directors approved a **regular quarterly dividend of $0.14 per share** and a **special dividend of $0.70 per share**, payable in 2Q:24, totaling approximately **$29 million** in cash return to shareholders[6](index=6&type=chunk)[7](index=7&type=chunk) [Consolidated Financial Results (Year-Over-Year Comparisons)](index=2&type=section&id=1Q%3A24%20Consolidated%20Financial%20Results%3A%20Year-Over-Year%20Comparisons) Marine Products Corporation experienced a significant decline in its first quarter 2024 financial results compared to the prior year, driven by reduced net sales volume, lower gross margins due to manufacturing inefficiencies and retail incentives, and a corresponding drop in net income and EBITDA [Net Sales](index=2&type=section&id=Net%20Sales) Net sales decreased significantly year-over-year, primarily due to a 40% reduction in boat units sold and a 2% negative price/mix impact from retail incentives and dealer inventory reduction efforts Net Sales Performance (YoY) | Metric | 1Q 2024 | 1Q 2023 | Change (YoY) | | :----- | :------ | :------ | :----------- | | Net Sales | $69.3 million | $118.9 million | -42% | | Boats Sold | -40% | N/A | -40% | | Price/Mix | -2% | N/A | -2% | - The decrease in net sales was primarily due to a **40% decrease in the number of boats sold**[8](index=8&type=chunk) - Price/mix was down **2%**, reflecting retail incentives and lower average selling prices, further impacted by dealer efforts to reduce inventories due to higher floor plan carrying costs[8](index=8&type=chunk) [Gross Profit](index=2&type=section&id=Gross%20Profit) Gross profit and margin declined year-over-year due to lower sales volumes, manufacturing inefficiencies, and higher retail incentives, though showing sequential improvement from the prior quarter Gross Profit Performance (YoY & QoQ) | Metric | 1Q 2024 | 1Q 2023 | Change (YoY) | 4Q 2023 | | :----- | :------ | :------ | :----------- | :------ | | Gross Profit | $14.0 million | $29.0 million | -52% | N/A | | Gross Margin | 20.2% | 24.4% | -420 bps | 19.0% | - The year-over-year gross margin change reflected lower sales volumes, associated manufacturing cost inefficiencies, and higher retail incentive costs[9](index=9&type=chunk) - Gross margin increased from **19.0%** reported in 4Q:23, indicating some sequential improvement after the re-initiation of retail incentives[9](index=9&type=chunk) [Selling, General and Administrative Expenses](index=2&type=section&id=Selling%2C%20General%20and%20Administrative%20Expenses) SG&A expenses decreased year-over-year, primarily driven by lower variable costs tied to sales and profitability, and the absence of a prior year pension settlement charge SG&A Expenses (YoY) | Metric | 1Q 2024 | 1Q 2023 | Change (YoY) | | :----- | :------ | :------ | :----------- | | SG&A Expenses | $8.7 million | $14.5 million | -40% | | SG&A as % of Net Sales | 12.6% | 12.2% | +40 bps | - The decrease in SG&A expenses was primarily due to costs that vary with sales and profitability, such as incentive compensation, sales commissions, and warranty expense[10](index=10&type=chunk) - Last year's first quarter results included a non-cash pension settlement charge of **$2.1 million**, which was not present in 1Q 2024[10](index=10&type=chunk) [Interest Income, Income Tax, Net Income and EBITDA](index=2&type=section&id=Interest%20Income%2C%20Income%20Tax%2C%20Net%20Income%20and%20EBITDA) Interest income increased due to higher cash balances, while income tax provision, net income, and EBITDA all saw significant year-over-year declines reflecting the overall challenging financial performance Profitability Metrics (YoY) | Metric | 1Q 2024 | 1Q 2023 | Change (YoY) | | :----- | :------ | :------ | :----------- | | Interest Income, net | $0.851 million | $0.483 million | +76.2% | | Income Tax Provision | $1.5 million | $3.4 million | -55.9% | | Income Tax Rate | 24.6% | 22.9% | +1.7 pp | | Net Income | $4.6 million | $11.5 million | -60% | | Diluted EPS | $0.13 | $0.34 | -61.8% | | Net Income Margin | 6.6% | 9.7% | -310 bps | | EBITDA | $5.9 million | $15.0 million | -61% | | EBITDA Margin | 8.5% | 12.6% | -410 bps | - Interest income increased due to higher cash balances and interest rates[11](index=11&type=chunk) [Balance Sheet, Cash Flow and Capital Allocation](index=2&type=section&id=Balance%20Sheet%2C%20Cash%20Flow%20and%20Capital%20Allocation) Marine Products Corporation maintains a strong financial position with significant cash reserves and no debt, enabling robust cash generation from operations, and demonstrated its commitment to shareholder returns through substantial dividends [Balance Sheet and Liquidity Overview](index=2&type=section&id=Balance%20Sheet%20and%20Liquidity%20Overview) The company ended Q1 2024 with strong liquidity, holding over $81 million in cash and no outstanding debt, reflecting a solid financial foundation despite market challenges Key Balance Sheet Items | Metric | March 31, 2024 | December 31, 2023 | | :----- | :------------- | :---------------- | | Cash and cash equivalents | $81.2 million | $72.0 million | | Total current assets | $148.0 million | $139.2 million | | Total assets | $204.0 million | $193.8 million | | Total current liabilities | $31.5 million | $22.6 million | | Total liabilities | $52.7 million | $42.2 million | | Total stockholders' equity | $151.4 million | $151.6 million | - The company ended 1Q:24 with **$81.2 million in cash and cash equivalents** and **no outstanding borrowings** under its $20 million revolving credit facility, indicating strong liquidity[12](index=12&type=chunk) [Cash Flow and Dividend Declaration](index=2&type=section&id=Cash%20Flow%20and%20Dividend%20Declaration) Operating cash flow remained strong, supporting the declaration of both regular and special dividends totaling approximately $29 million, underscoring the company's commitment to shareholder returns Cash Flow Performance (YoY) | Metric | 1Q 2024 | 1Q 2023 | | :----- | :------ | :------ | | Net cash provided by operating activities | $15.9 million | $26.9 million | | Free cash flow | $15.0 million | $25.2 million | | Payment of dividends | $4.9 million | $4.8 million | - The Board of Directors declared a **regular quarterly dividend of $0.14 per share** and a **special dividend of $0.70 per share**, both payable on June 10, 2024[13](index=13&type=chunk) - These dividends represent an aggregate return of approximately **$29 million of cash** to shareholders[6](index=6&type=chunk)[7](index=7&type=chunk) [Company Information](index=4&type=section&id=Company%20Information) Marine Products Corporation is a leading manufacturer of high-quality fiberglass boats under the Chaparral and Robalo brands, committed to product innovation and market share growth, while providing standard disclosures regarding forward-looking statements and investor contacts [About Marine Products Corporation](index=4&type=section&id=About%20Marine%20Products%20Corporation) Marine Products Corporation manufactures high-quality Chaparral and Robalo fiberglass boats, aiming for market share growth and superior financial performance through innovation and a strong dealer network - Marine Products Corporation manufactures high-quality fiberglass boats under the Chaparral and Robalo brand names[15](index=15&type=chunk) - Chaparral models include SSi Sportboats, SSX Luxury Sportboats, SURF Series, OSX Luxury Sportboats, and SSi Outboard Bowriders[15](index=15&type=chunk) - Robalo builds outboard sport fishing models, including Center Consoles, Dual Consoles, and Cayman Bay Boats[15](index=15&type=chunk) - The company aims to increase market share and generate superior financial performance through product innovation, a solid capital structure, and a strong independent dealer network[15](index=15&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This section outlines forward-looking statements regarding future expectations and potential risks, including uncertain demand, inventory levels, and economic conditions, in compliance with the Private Securities Litigation Reform Act of 1995 - This section includes statements that look forward in time or express management's beliefs, expectations, or hopes, as per the Private Securities Litigation Reform Act of 1995[16](index=16&type=chunk) - Key forward-looking statements include expectations of continued uncertain demand, high inventory levels, company efforts to support dealers and adjust costs, optimism for new products, ample liquidity for growth, and sales normalization[16](index=16&type=chunk) - Risk factors that could cause actual results to differ include supply chain disruptions, negative economic conditions, unavailability of credit, decreased consumer confidence, adverse weather, and increased interest rates[16](index=16&type=chunk) [Conference Call Information & Investor Contact](index=4&type=section&id=Conference%20Call%20Information%20%26%20Investor%20Contact) Details for the Q1 2024 earnings conference call and investor relations contacts are provided, facilitating stakeholder access to company discussions and information - A conference call to discuss Q1 2024 results was held on April 25, 2024, at 8:00 a.m. Eastern Time[14](index=14&type=chunk) - Interested parties could access a live webcast via the investor relations section of Marine Products' website or by phone[14](index=14&type=chunk) - Investor relations contacts are Michael L. Schmit (CFO) and Mark Chekanow (VP, Investor Relations)[17](index=17&type=chunk) [Unaudited Consolidated Financial Statements](index=6&type=section&id=Unaudited%20Consolidated%20Financial%20Statements) This section presents the unaudited consolidated financial statements for Marine Products Corporation, including the Statements of Operations, Balance Sheets, and Statements of Cash Flows, providing detailed financial performance and position for the first quarter of 2024 and comparative periods [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) The Consolidated Statements of Operations detail the company's revenues, costs, and profitability for the three months ended March 31, 2024, and 2023, highlighting significant year-over-year declines Consolidated Statements of Operations (Three Months Ended March 31, in thousands) | Metric | 2024 | 2023 | | :-------------------- | :--- | :--- | | Net sales | $69,340 | $118,914 | | Cost of goods sold | $55,356 | $89,892 | | Gross profit | $13,984 | $29,022 | | Selling, general and administrative expenses | $8,742 | $14,533 | | Operating income | $5,242 | $14,489 | | Interest income, net | $851 | $483 | | Income before income taxes | $6,093 | $14,972 | | Income tax provision | $1,496 | $3,423 | | Net income | $4,597 | $11,549 | | Diluted EPS | $0.13 | $0.34 | | Average Diluted Shares Outstanding | 34,632 | 34,379 | [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) The Consolidated Balance Sheets provide a snapshot of the company's assets, liabilities, and equity as of March 31, 2024, and December 31, 2023, reflecting its financial position Consolidated Balance Sheets (as of March 31, 2024 and December 31, 2023, in thousands) | Metric | March 31, 2024 | December 31, 2023 | | :-------------------- | :------------- | :---------------- | | Cash and cash equivalents | $81,225 | $71,952 | | Accounts receivable, net | $7,749 | $2,475 | | Inventories | $55,210 | $61,611 | | Total current assets | $147,956 | $139,246 | | Property, plant and equipment, net | $22,657 | $22,456 | | Total assets | $204,038 | $193,802 | | Accounts payable | $13,064 | $6,071 | | Accrued expenses and other liabilities | $18,442 | $16,496 | | Total current liabilities | $31,506 | $22,567 | | Total liabilities | $52,656 | $42,214 | | Total stockholders' equity | $151,382 | $151,588 | | Total liabilities and stockholders' equity | $204,038 | $193,802 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The Condensed Consolidated Statements of Cash Flows illustrate the sources and uses of cash from operating, investing, and financing activities for the three months ended March 31, 2024, and 2023 Condensed Consolidated Statements of Cash Flows (Three Months Ended March 31, in thousands) | Metric | 2024 | 2023 | | :-------------------- | :--- | :--- | | Net income | $4,597 | $11,549 | | Net cash provided by operating activities | $15,915 | $26,946 | | Capital expenditures | $(883) | $(1,789) | | Net cash used for investing activities | $(883) | $(1,789) | | Payment of dividends | $(4,852) | $(4,817) | | Cash paid for common stock purchased and retired | $(907) | $(910) | | Net cash used for financing activities | $(5,759) | $(5,727) | | Net increase in cash and cash equivalents | $9,273 | $19,430 | | Cash and cash equivalents at end of period | $81,225 | $62,601 | [Non-GAAP Measures and Reconciliations](index=9&type=section&id=Non-GAAP%20Measures%20and%20Reconciliations) This section provides definitions and explanations for non-GAAP financial measures used by Marine Products Corporation, including EBITDA, EBITDA margin, and free cash flow, along with detailed reconciliations to their most directly comparable GAAP measures [Explanation of Non-GAAP Measures](index=9&type=section&id=Explanation%20of%20Non-GAAP%20Measures) This section clarifies the purpose and limitations of non-GAAP financial measures like EBITDA and free cash flow, emphasizing their role in providing consistent views of operating performance and cash generation - Marine Products Corporation uses non-GAAP financial measures such as EBITDA, EBITDA margin, and free cash flow to provide investors with a consistent view of operating performance across periods and to evaluate the ability to generate additional cash[20](index=20&type=chunk) - These non-GAAP measures should not be considered in isolation or as a substitute for GAAP measures, and free cash flow does not represent residual cash flows available for discretionary expenditures[20](index=20&type=chunk) - A non-GAAP financial measure either excludes amounts included in GAAP or includes amounts excluded from GAAP, with reconciliations provided to the most directly comparable GAAP measures[21](index=21&type=chunk)[22](index=22&type=chunk) [Reconciliation of Net Income to EBITDA](index=9&type=section&id=Reconciliation%20of%20Net%20Income%20to%20EBITDA) This section provides a detailed reconciliation of net income to EBITDA for the three months ended March 31, presenting a non-GAAP view of the company's core operating profitability Reconciliation of Net Income to EBITDA (Three Months Ended March 31, in thousands) | Metric | 2024 | 2023 | | :----- | :--- | :--- | | Net income | $4,597 | $11,549 | | Add: Income tax provision | $1,496 | $3,423 | | Add: Depreciation and amortization | $682 | $523 | | Less: Interest income, net | $851 | $483 | | **EBITDA** | **$5,924** | **$15,012** | | Net income margin | 6.6% | 9.7% | | EBITDA margin | 8.5% | 12.6% | [Reconciliation of Operating Cash Flow to Free Cash Flow](index=10&type=section&id=Reconciliation%20of%20Operating%20Cash%20Flow%20to%20Free%20Cash%20Flow) This section reconciles net cash provided by operating activities to free cash flow for the three months ended March 31, offering insight into the cash available after capital expenditures Reconciliation of Operating Cash Flow to Free Cash Flow (Three Months Ended March 31, in thousands) | Metric | 2024 | 2023 | | :----- | :--- | :--- | | Net cash provided by operating activities | $15,915 | $26,946 | | Capital expenditures | $(883) | $(1,789) | | **Free cash flow** | **$15,032** | **$25,157** |

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 ☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2023 Commission File No. 1-16263 MARINE PRODUCTS CORPORATION (Exact name of registrant as specified in its charter) Delaware (State of Incorporation) 58-2572419 (I.R.S. Employer Identification No.) 2801 ...

Marine Products Corporation (NYSE:MPX) Q4 2023 Earnings Conference Call January 25, 2024 8:00 AM ET Company Participants Mike Schmit - Chief Financial Officer Ben Palmer - President & Chief Executive Officer Jim Landers - Vice President of Corporate Services Conference Call Participants Brandon Rolle - D.A. Davidson Craig Kennison - Baird Operator Good morning, and thank you for joining us for Marine Products Corporation's Fourth Quarter 2023 Financial Earnings Conference Call. Today's call will be hosted b ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2023 Commission File No. 1-16263 MARINE PRODUCTS CORPORATION (exact name of registrant as specified in its charter) Delaware 58-2572419 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number) 2801 Buford Highway, Suite 300, Atlanta, ...

Marine Products Corporation (NYSE:MPX) Q3 2023 Earnings Conference Call October 25, 2023 8:00 AM ET Company Participants Mike Schmit - Chief Financial Officer Ben Palmer - President & Chief Executive Officer Jim Landers - Vice President of Corporate Services Conference Call Participants Brandon Rolle - D.A. Davidson Operator Good morning and thank you for joining us for Marine Products Corporation's Third Quarter 2023 Financial Earnings Conference Call. Today's call will be hosted by Ben Palmer, President a ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=Part%20I.%20Financial%20Information) [ITEM 1. FINANCIAL STATEMENTS (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements of Marine Products Corporation, including balance sheets, statements of operations, comprehensive income, stockholders' equity, and cash flows, along with detailed notes explaining accounting policies, recent standards, and specific financial items for the periods ended June 30, 2023, and December 31, 2022 [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) This section presents the company's financial position, including assets, liabilities, and equity, as of June 30, 2023, and December 31, 2022 Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2023 | December 31, 2022 | | :-------------------------- | :-------------- | :------------------ | | Cash and cash equivalents | $66,215 | $43,171 | | Inventories | $61,496 | $73,015 | | Total current assets | $142,768 | $124,998 | | Total assets | $190,277 | $163,715 | | Total current liabilities | $28,417 | $23,590 | | Total liabilities | $46,580 | $39,334 | | Total stockholders' equity | $143,697 | $124,381 | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) This section details the company's financial performance, including net sales, gross profit, operating income, and net income, for the three and six months ended June 30, 2023 and 2022 Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :-------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Net sales | $116,158 | $95,813 | $235,072 | $172,425 | | Gross profit | $28,656 | $22,997 | $57,678 | $41,392 | | Operating income | $16,483 | $13,114 | $30,972 | $22,269 | | Net income | $14,321 | $9,955 | $25,870 | $17,018 | | Basic EPS | $0.42 | $0.29 | $0.75 | $0.50 | | Diluted EPS | $0.42 | $0.29 | $0.75 | $0.50 | | Dividends paid per share | $0.14 | $0.12 | $0.28 | $0.24 | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents the company's comprehensive income, including net income and other comprehensive income adjustments, for the three and six months ended June 30, 2023 and 2022 Consolidated Statements of Comprehensive Income (in thousands) | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :-------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Net income | $14,321 | $9,955 | $25,870 | $17,018 | | Pension adjustment | $97 | $22 | $1,983 | $44 | | Comprehensive income | $14,418 | $9,977 | $27,853 | $17,062 | [Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) This section details the changes in the company's stockholders' equity, including common stock, retained earnings, and accumulated other comprehensive loss, from December 31, 2022, to June 30, 2023 Changes in Stockholders' Equity (in thousands) | Metric | Balance, Dec 31, 2022 | Stock Issued (net) | Stock Purchased (net) | Net Income | Pension Adjustment | Dividends Paid | Balance, June 30, 2023 | | :-------------------------- | :-------------------- | :----------------- | :-------------------- | :--------- | :----------------- | :------------- | :--------------------- | | Common Stock Amount | $3,422 | $32 | $(7) | — | — | — | $3,447 | | Retained Earnings | $122,954 | — | $1,075 | $25,870 | — | $(9,637) | $140,262 | | Accumulated Other Comp. Loss| $(1,995) | — | — | — | $1,983 | — | $(12) | | **Total Stockholders' Equity**| **$124,381** | **$777** | **$(910)** | **$25,870**| **$1,983** | **$(9,637)** | **$143,697** | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section outlines the company's cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2023 and 2022 Consolidated Statements of Cash Flows (in thousands) | Activity | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :-------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $40,785 | $17,157 | | Net cash used for investing activities | $(7,194) | $(798) | | Net cash used for financing activities | $(10,547) | $(8,893) | | Net increase in cash and cash equivalents | $23,044 | $7,466 | | Cash and cash equivalents at end of period | $66,215 | $21,568 | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations of the accounting policies, recent standards, and specific financial items supporting the consolidated financial statements [1. GENERAL](index=8&type=section&id=1.%20GENERAL) This section outlines the basis of financial statement preparation and significant control over voting power - The unaudited consolidated financial statements are prepared in accordance with GAAP and Form 10-Q, and interim results are not indicative of full-year performance[17](index=17&type=chunk) - A group of directors, including Gary W. Rollins, Pamela R. Rollins, Amy Rollins Kreisler, and Timothy C. Rollins, controls over **50% of the Company's voting power**[19](index=19&type=chunk) [2. RECENT ACCOUNTING STANDARDS](index=8&type=section&id=2.%20RECENT%20ACCOUNTING%20STANDARDS) This section discusses the adoption of recent accounting pronouncements and their impact on the financial statements - The Company adopted ASU No. 2021-08 (Business Combinations: Accounting for Contract Assets and Contract Liabilities from Contracts with Customers) in Q1 2023, which had **no material impact** on its consolidated financial statements[20](index=20&type=chunk) [3. NET SALES](index=8&type=section&id=3.%20NET%20SALES) This section details the company's revenue recognition policies and provides a breakdown of net sales by source and geography - Revenue is recognized when control of fiberglass motorized boats, accessories, and parts is transferred to independent dealers, adjusted for dealer incentives[21](index=21&type=chunk)[22](index=22&type=chunk) Net Sales by Major Source (in thousands) | Source | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :-------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Boats and accessories | $114,562 | $94,266 | $232,281 | $169,671 | | Parts | $1,596 | $1,547 | $2,791 | $2,754 | | **Total Net Sales** | **$116,158** | **$95,813** | **$235,072** | **$172,425** | Net Sales by Geography (in thousands) | Geography | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :-------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Domestic | $108,076 | $88,041 | $219,071 | $160,541 | | International | $8,082 | $7,772 | $16,001 | $11,884 | | **Total Net Sales** | **$116,158** | **$95,813** | **$235,072** | **$172,425** | Deferred Revenue (in thousands) | Date | Amount | | :-------------------------- | :----- | | June 30, 2023 | $1,270 | | December 31, 2022 | $1,989 | [4. EARNINGS PER SHARE](index=11&type=section&id=4.%20EARNINGS%20PER%20SHARE) This section provides detailed earnings per share calculations for the three and six months ended June 30, 2023 and 2022 Earnings Per Share Data (in thousands, except per share) | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :-------------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Net income used in calculating EPS | $13,978 | $9,747 | $25,254 | $16,668 | | Shares used in calculating basic/diluted EPS | 33,619 | 33,448 | 33,589 | 33,428 | [5. STOCK-BASED COMPENSATION](index=13&type=section&id=5.%20STOCK-BASED%20COMPENSATION) This section outlines the company's stock-based compensation plans, costs, and outstanding non-vested shares - As of June 30, 2023, approximately **777,199 shares were available for grant** under the 2014 Stock Incentive Plan[30](index=30&type=chunk) - In Q1 2023, the Company issued time-lapse restricted shares (vesting over four years) and performance share unit awards to executive officers[31](index=31&type=chunk) Stock-Based Compensation Cost (in thousands) | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :-------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Pre-tax cost | $1,233 | $820 | $2,010 | $1,430 | | After-tax cost | $962 | $639 | $1,568 | $1,115 | - Non-vested restricted shares at June 30, 2023, totaled **839,050**, with a weighted average grant-date fair value of **$13.81**[32](index=32&type=chunk) [6. WARRANTY COSTS AND OTHER CONTINGENCIES](index=13&type=section&id=6.%20WARRANTY%20COSTS%20AND%20OTHER%20CONTINGENCIES) This section describes the company's product warranties, related accruals, and dealer debt guarantees - Marine Products provides a lifetime limited structural hull warranty and a transferable one-year limited warranty for its Chaparral and Robalo products[34](index=34&type=chunk) Warranty Accruals (in thousands) | Metric | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :-------------------------- | :----------------------------- | :----------------------------- | | Balance at January 1 | $5,699 | $4,641 | | Payments made | $(2,091) | $(2,286) | | Provision for the period | $3,495 | $2,328 | | Changes to prior periods | $156 | $104 | | **Balance at June 30** | **$7,259** | **$4,787** | - The Company guarantees varying amounts of dealer debt for floor plan financing, with an aggregate maximum repurchase obligation of approximately **$18.3 million** as of June 30, 2023[38](index=38&type=chunk)[40](index=40&type=chunk) [7. BUSINESS SEGMENT INFORMATION](index=14&type=section&id=7.%20BUSINESS%20SEGMENT%20INFORMATION) This section clarifies that the company operates as a single reportable segment and is not reliant on any single customer or product - The Company operates as a **single reportable segment**, its powerboat manufacturing business, and is not significantly reliant on any single customer or product model[41](index=41&type=chunk) [8. INVENTORIES](index=15&type=section&id=8.%20INVENTORIES) This section provides a detailed breakdown of the company's inventory components as of June 30, 2023, and December 31, 2022 Inventories (in thousands) | Component | June 30, 2023 | December 31, 2022 | | :-------------------------- | :-------------- | :------------------ | | Raw materials and supplies | $34,907 | $37,210 | | Work in process | $13,702 | $14,190 | | Finished goods | $12,887 | $21,615 | | **Total inventories** | **$61,496** | **$73,015** | [9. INCOME TAXES](index=15&type=section&id=9.%20INCOME%20TAXES) This section discusses the company's effective income tax rates and the factors influencing their changes - The effective tax rate decreased to **16.8% for Q2 2023** (from 24.0% in Q2 2022) and to **19.6% for H1 2023** (from 23.5% in H1 2022), primarily due to favorable permanent adjustments and beneficial discrete tax items[45](index=45&type=chunk) [10. PENSION AND RETIREMENT PLANS](index=15&type=section&id=10.%20PENSION%20AND%20RETIREMENT%20PLANS) This section details the company's pension and retirement plan activities, including settlement charges and SERP assets and liabilities - A pre-tax, non-cash pension settlement charge of **$188 thousand** was recognized in Q2 2023 as part of the termination of the Retirement Income Plan[47](index=47&type=chunk) - The Company received approximately **$482 thousand from RPC** as reimbursement for settling RPC's participant liabilities in the Plan during Q2 2023[47](index=47&type=chunk) Supplemental Executive Retirement Plan (SERP) Assets and Liabilities (in thousands) | Metric | June 30, 2023 | December 31, 2022 | | :-------------------------- | :-------------- | :------------------ | | SERP assets (fair value) | $10,643 | $9,881 | | SERP liabilities (fair value) | $16,514 | $14,440 | - Trading gains related to SERP assets were **$425 thousand in Q2 2023** (vs. losses of $1,076 thousand in Q2 2022), and unrealized gains related to SERP liabilities were **$519 thousand in Q2 2023** (vs. losses of $1,060 thousand in Q2 2022)[49](index=49&type=chunk)[50](index=50&type=chunk) [11. FAIR VALUE MEASUREMENTS](index=17&type=section&id=11.%20FAIR%20VALUE%20MEASUREMENTS) This section explains the company's methodology for fair value measurements, particularly for trading securities - The Company uses a three-level hierarchy for fair value measurements, with trading securities (SERP assets) primarily valued using net cash surrender values or net asset values, which approximate fair value[51](index=51&type=chunk)[52](index=52&type=chunk) [12. ACCUMULATED OTHER COMPREHENSIVE LOSS](index=18&type=section&id=12.%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20LOSS) This section presents the changes in accumulated other comprehensive loss and the primary drivers for the period Accumulated Other Comprehensive Loss (in thousands) | Metric | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :-------------------------- | :----------------------------- | :----------------------------- | | Balance at beginning of period | $(1,995) | $(2,576) | | Total activity for the period | $1,983 | $44 | | **Balance at end of period**| **$(12)** | **$(2,532)** | - The significant change in accumulated other comprehensive loss for H1 2023 was primarily due to a **pension settlement loss**, net of taxes[54](index=54&type=chunk) [13. ACCRUED EXPENSES AND OTHER LIABILITIES](index=18&type=section&id=13.%20ACCRUED%20EXPENSES%20AND%20OTHER%20LIABILITIES) This section provides a detailed breakdown of accrued expenses and other liabilities as of June 30, 2023, and December 31, 2022 Accrued Expenses and Other Liabilities (in thousands) | Component | June 30, 2023 | December 31, 2022 | | :-------------------------- | :-------------- | :------------------ | | Accrued payroll and related expenses | $4,288 | $3,753 | | Accrued sales incentives and discounts | $4,111 | $2,485 | | Accrued warranty costs | $7,259 | $5,699 | | Deferred revenue | $1,270 | $1,989 | | Income taxes payable | $1,532 | $342 | | Other | $1,392 | $1,072 | | **Total** | **$19,852** | **$15,340** | [14. NOTES PAYABLE TO BANKS](index=18&type=section&id=14.%20NOTES%20PAYABLE%20TO%20BANKS) This section describes the company's revolving credit facility, interest rates, and compliance with financial covenants - The Company has a **$20.0 million revolving credit facility** with Truist Bank, terminating November 12, 2026[56](index=56&type=chunk) - Interest rates transitioned from LIBOR to Term SOFR plus an applicable percentage (150-250 basis points) effective July 1, 2023[57](index=57&type=chunk) - As of June 30, 2023, the Company had **no outstanding borrowings** and was in compliance with all financial covenants[58](index=58&type=chunk)[59](index=59&type=chunk) [15. SUBSEQUENT EVENT](index=20&type=section&id=15.%20SUBSEQUENT%20EVENT) This section reports a significant event occurring after the reporting period, specifically a declared cash dividend - On July 25, 2023, the Board of Directors declared a regular quarterly cash dividend of **$0.14 per share**, payable September 11, 2023[61](index=61&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Marine Products Corporation's financial performance, condition, and future outlook. It details the company's business strategies, analyzes operating results for the three and six months ended June 30, 2023, discusses liquidity and capital resources, and addresses key factors like market trends, inflation, and forward-looking statements [Business Overview and Strategies](index=21&type=section&id=Business%20Overview%20and%20Strategies) This section describes Marine Products Corporation's core business as a recreational powerboat manufacturer and its strategic monitoring factors - Marine Products Corporation is a leading manufacturer of recreational fiberglass powerboats (Chaparral and Robalo) sold through independent dealers[64](index=64&type=chunk) - Management monitors dealer orders, inventories, production mix, consumer confidence, inflation, interest rates, and boat show activity to optimize financial returns[66](index=66&type=chunk) [Outlook](index=21&type=section&id=Outlook) This section provides the company's forward-looking perspective on retail demand, supply chain conditions, and production strategies - Retail demand for new recreational boats is expected to **moderate throughout 2023** due to normalizing consumer behavior, rising interest rates, and higher boat ownership costs[71](index=71&type=chunk) - Supply chain disruptions and labor problems, which hindered output in 2021-2022, began to **moderate in late 2022 and early 2023**, improving the ability to meet demand[74](index=74&type=chunk)[76](index=76&type=chunk) - The Company has increased the average size of models produced and reduced the number of boat designs to enhance production efficiency in response to evolving retail demand[74](index=74&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, including net sales, gross profit, operating income, and key operating statistics for the periods presented Key Operating and Financial Statistics (in thousands, except percentages) | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :---------------------------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Total number of boats sold | 1,243 | 1,121 | 2,521 | 2,037 | | Average gross selling price per boat | $82.2 | $74.9 | $82.3 | $74.2 | | Net sales | $116,158 | $95,813 | $235,072 | $172,425 | | Percentage of cost of goods sold to net sales | 75.3% | 76.0% | 75.5% | 76.0% | | Gross profit margin percent | 24.7% | 24.0% | 24.5% | 24.0% | | Operating income | $16,483 | $13,114 | $30,972 | $22,269 | | Warranty expense | $1,800 | $1,335 | $3,651 | $2,432 | [Three Months Ended June 30, 2023 Compared to Three Months Ended June 30, 2022](index=25&type=section&id=Three%20Months%20Ended%20June%2030%2C%202023%20Compared%20to%20Three%20Months%20Ended%20June%2030%2C%202022) This section compares the company's financial performance for the three months ended June 30, 2023, against the same period in 2022 - Net sales increased by **$20.3 million (21.2%) to $116.2 million**, driven by a **10.9% increase in unit sales** and a **9.7% rise in average selling price per boat**[80](index=80&type=chunk)[81](index=81&type=chunk) - Operating income grew **25.7% to $16.5 million**, while cost of goods sold as a percentage of net sales decreased to **75.3%** due to improved operating efficiencies and a favorable model mix[68](index=68&type=chunk)[69](index=69&type=chunk)[82](index=82&type=chunk)[84](index=84&type=chunk) - The effective tax rate decreased to **16.8%** (from 24.0%) due to favorable permanent adjustments and beneficial discrete tax items[86](index=86&type=chunk) [Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022](index=25&type=section&id=Six%20Months%20Ended%20June%2030%2C%202023%20Compared%20to%20Six%20Months%20Ended%20June%2030%2C%202022) This section compares the company's financial performance for the six months ended June 30, 2023, against the same period in 2022 - Net sales increased by **$62.6 million (36.3%) to $235.1 million**, with unit sales up **23.8%** and average selling price per boat up **10.9%**[87](index=87&type=chunk)[88](index=88&type=chunk) - Operating income rose **39.1% to $31.0 million**, despite a **$2.3 million non-cash pension settlement loss** included in SG&A expenses[92](index=92&type=chunk)[93](index=93&type=chunk) - The effective tax rate decreased to **19.6%** (from 23.5%) due to favorable permanent adjustments and beneficial discrete tax items[95](index=95&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's ability to generate and manage cash, including cash flows, financial condition, and future cash requirements - Cash and cash equivalents increased to **$66.2 million** at June 30, 2023, from $43.2 million at December 31, 2022[96](index=96&type=chunk) - The Company believes existing cash, strong capitalization, cash from operations, and its revolving credit facility will provide **sufficient capital for at least the next twelve months**[100](index=100&type=chunk) - Expected capital expenditures for 2023 are approximately **$8.4 million**, with **$7.2 million spent** through June 30, 2023[101](index=101&type=chunk) [Cash Flows](index=27&type=section&id=Cash%20Flows) This section analyzes the company's cash flow activities from operations, investing, and financing for the six months ended June 30, 2023 and 2022 - Net cash provided by operating activities increased significantly to **$40.8 million for H1 2023** (from $17.2 million in H1 2022), driven by higher net income, a pension settlement loss, and a favorable change in inventory[96](index=96&type=chunk) - Net cash used for investing activities increased to **$7.2 million** (from $0.8 million) due to higher capital expenditures for transportation equipment and warehouse space[97](index=97&type=chunk) - Net cash used for financing activities increased to **$10.5 million** (from $8.9 million) due to increased dividends paid and stock repurchases[98](index=98&type=chunk) [Financial Condition and Liquidity](index=29&type=section&id=Financial%20Condition%20and%20Liquidity) This section discusses the company's overall financial health and its ability to meet short-term and long-term obligations - The Company's liquidity is supported by existing cash, cash equivalents, marketable securities, strong capitalization, and cash generated by operations[100](index=100&type=chunk) [Cash Requirements](index=29&type=section&id=Cash%20Requirements) This section outlines the company's projected capital expenditures, pension contributions, dividend plans, and stock repurchase program - Capital expenditures for 2023 are projected at approximately **$8.4 million**, with **$7.2 million already spent** by June 30, 2023[101](index=101&type=chunk) - The Company does not expect to make any additional contributions to the Retirement Income Plan[101](index=101&type=chunk) - The Company expects to continue paying regular quarterly cash dividends to common stockholders[103](index=103&type=chunk) - As of June 30, 2023, **1,570,428 shares remained available for repurchase** under the Company's stock repurchase program[102](index=102&type=chunk) [Off Balance Sheet Arrangements](index=29&type=section&id=Off%20Balance%20Sheet%20Arrangements) This section describes the company's off-balance sheet commitments, specifically dealer debt guarantees - The Company guarantees varying amounts of dealer debt for floor plan financing, with an aggregate maximum repurchase obligation of approximately **$18.3 million** as of June 30, 2023[104](index=104&type=chunk)[106](index=106&type=chunk) - No material repurchases under these contractual agreements occurred during the six months ended June 30, 2023, and 2022[104](index=104&type=chunk) [Certain Related Party Transactions](index=29&type=section&id=Certain%20Related%20Party%20Transactions) This section discloses transactions with related parties, including administrative costs and pension reimbursements - RPC, Inc. charged the Company approximately **$526 thousand for administrative costs** for H1 2023 (vs. $473 thousand for H1 2022)[107](index=107&type=chunk) - The Company incurred **$40 thousand in net operating costs** for H1 2023 (and H1 2022) from its 50% ownership in 255 RC, LLC, which owns a corporate aircraft[110](index=110&type=chunk) - The Company received approximately **$482 thousand from RPC** during Q2 2023 as reimbursement for settling a portion of RPC's pension participant liabilities[111](index=111&type=chunk) [Critical Accounting Policies](index=31&type=section&id=Critical%20Accounting%20Policies) This section confirms that there have been no significant changes to the company's critical accounting policies - There have been **no significant changes** in the Company's critical accounting policies since the annual report on Form 10-K for the fiscal year ended December 31, 2022[112](index=112&type=chunk) [Impact of Recent Accounting Pronouncements](index=31&type=section&id=Impact%20of%20Recent%20Accounting%20Pronouncements) This section directs readers to the notes to financial statements for details on recent accounting pronouncements - Refer to Note 2 in the accompanying Consolidated Financial Statements for a description of recent accounting pronouncements[113](index=113&type=chunk) [Seasonality](index=31&type=section&id=Seasonality) This section explains how seasonal factors and economic conditions influence the company's quarterly operating results - The Company's quarterly operating results are affected by weather and general economic conditions, with the **second quarter historically recording the highest sales volume**[114](index=114&type=chunk) [Inflation](index=31&type=section&id=Inflation) This section discusses the impact of inflation on costs and pricing flexibility, and its potential effect on retail demand - Inflation led to increased raw material, component, and transportation costs in 2021-2022, prompting the Company to increase product prices[115](index=115&type=chunk) - Cost pressures began to ease in late 2022 and early 2023, but higher boat ownership costs and increased interest rates may now impact retail demand for smaller boats and limit future pricing flexibility[115](index=115&type=chunk)[116](index=116&type=chunk) [Forward-Looking Statements](index=31&type=section&id=Forward-Looking%20Statements) This section highlights that the report contains forward-looking statements and outlines the risks that could cause actual results to differ - This section contains forward-looking statements regarding future performance, market conditions, operational plans, and financial expectations, subject to various risks and uncertainties[117](index=117&type=chunk)[120](index=120&type=chunk) - Actual results may differ from projections due to factors such as supply chain issues, economic conditions, interest rates, consumer confidence, competition, and regulatory changes[121](index=121&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Marine Products Corporation holds no derivative financial instruments and maintains investments primarily in money market funds, which are not subject to significant interest rate risk. The Company does not anticipate any material changes in market risk exposures or their management - The Company holds **no derivative financial instruments** and maintains investments primarily in money market funds, which are not subject to interest rate risk[124](index=124&type=chunk) - No material changes in market risk exposures or their management are expected[124](index=124&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) The Company's management, including the CEO and CFO, evaluated the effectiveness of its disclosure controls and procedures as of June 30, 2023, concluding they were effective at a reasonable assurance level. No material changes in internal control over financial reporting were identified during the quarter - Disclosure controls and procedures were evaluated and deemed **effective at a reasonable assurance level** as of June 30, 2023[125](index=125&type=chunk)[126](index=126&type=chunk) - No material changes in internal control over financial reporting occurred during the most recent fiscal quarter[127](index=127&type=chunk) [PART II. OTHER INFORMATION](index=36&type=section&id=Part%20II.%20Other%20Information) [ITEM 1. LEGAL PROCEEDINGS](index=36&type=section&id=Item%201.%20Legal%20Proceedings) Marine Products Corporation is involved in routine litigation but does not anticipate that the outcome of such proceedings will have a material effect on its financial position, results of operations, or liquidity - The Company is involved in litigation in the ordinary course of business[130](index=130&type=chunk) - The outcome of such litigation is **not expected to have a material effect** on the Company's financial position, results of operations, or liquidity[130](index=130&type=chunk) [ITEM 1A. RISK FACTORS](index=36&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, 2022, and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 - **No material changes** from the risk factors previously disclosed in the 2022 Form 10-K and Q1 2023 Form 10-Q[131](index=131&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Company reports no unregistered sales of equity securities and no use of proceeds from such sales during the period - **No unregistered sales of equity securities** or use of proceeds occurred[132](index=132&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=36&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) The Company reports no defaults upon senior securities during the period - **No defaults upon senior securities** occurred[133](index=133&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=36&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Marine Products Corporation - This item is **not applicable**[134](index=134&type=chunk) [ITEM 5. OTHER INFORMATION](index=36&type=section&id=Item%205.%20Other%20Information) During the three months ended June 30, 2023, no director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q2 2023[135](index=135&type=chunk) [ITEM 6. EXHIBITS](index=37&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, Section 302 and 906 certifications, and Inline XBRL data files - Exhibits include corporate governance documents (Articles of Incorporation, By-laws), Section 302 and 906 certifications for CEO and CFO, and Inline XBRL documents[138](index=138&type=chunk) [SIGNATURES](index=38&type=section&id=Signatures) The report is duly signed by the President and Chief Executive Officer, and the Vice President, Chief Financial Officer and Corporate Secretary, certifying its contents - The report was signed by Ben M. Palmer (President and CEO) and Michael L. Schmit (VP, CFO, and Corporate Secretary) on July 28, 2023[142](index=142&type=chunk)

Financial Data and Key Metrics Changes - Net sales for Q2 2023 were $116.2 million, a 21% increase compared to Q2 2022, driven by an 11% increase in unit sales and a 10% increase in average selling prices [7][8] - Gross profit in Q2 2023 was $28.7 million, a 25% increase from the same quarter last year, with a gross margin of 24.7%, up from 24% in Q2 2022 [7][8] - EBITDA for Q2 2023 was $17.1 million, a 26% increase compared to Q2 2022, while net income rose to $14.3 million, a 44% increase from $10 million in the same quarter last year [8] - Diluted earnings per share were $0.42 in Q2 2023, compared to $0.29 in Q2 2022 [8] Business Line Data and Key Metrics Changes - The company reported a favorable mix of boats shipped, contributing to the increase in sales and profitability [5][7] - Selling, general and administrative expenses for Q2 2023 were $12.2 million, a 23% increase compared to $9.9 million in Q2 2022, representing 10.5% of net sales [20] Market Data and Key Metrics Changes - International sales accounted for approximately 7% of total sales in Q2 2023, increasing by 4% compared to the same quarter last year [21] - Dealer inventories are trending towards normalized levels but remain below pre-pandemic levels, allowing dealers to meet current demand [18][21] Company Strategy and Development Direction - The company aims to balance production with dealer and retail demand, adjusting production as necessary [10] - The introduction of 2024 models is designed to appeal to retail customers while ensuring efficient production [10] - The company maintains a strong market share, with Chaparral sterndrive achieving the number one position in its size category [10] Management's Comments on Operating Environment and Future Outlook - Management noted that retail boat sales are adjusting to normalized levels and expressed optimism about dealer inventories and backlogs [10] - Concerns were raised regarding potential headwinds from consumer confidence due to higher interest rates and possible economic slowdown [21] Other Important Information - The Board of Directors declared a regular quarterly cash dividend of $0.14 per share [18] Q&A Session Summary - There were no questions during the Q&A session [24]