Marine Products(US:MPX)2019-07-31 20:30Financial Performance - Net sales for the second quarter of 2019 increased by $1.7 million or 1.9% compared to the same period in 2018, driven by a 10.0% increase in average selling price per boat, despite a 7.6% decrease in unit sales [81]. - Operating income for the second quarter of 2019 rose by $0.2 million or 2.0% compared to the same period in 2018, primarily due to higher gross profit, partially offset by increased selling, general and administrative expenses [86]. - The average selling price per boat for the second quarter of 2019 was $52.9 thousand, up from $48.1 thousand in the same period of 2018, reflecting a favorable model mix [81]. - Domestic net sales increased by 7.0% to $83.2 million in the second quarter of 2019, while international sales decreased by 40.5% to $5.5 million due to tariffs and a strong U.S. dollar [81]. - For the six months ended June 30, 2019, net sales increased by $7.2 million or 4.4% compared to the same period in 2018, with domestic sales up 7.3% to $160.1 million [88]. Expenses and Costs - Selling, general and administrative expenses for the second quarter of 2019 were $9.0 million, an increase of 8.7% from $8.3 million in the same period of 2018, primarily due to higher sales-related expenses and research and development costs [85]. - The cost of goods sold for the second quarter of 2019 was $68.3 million, representing 77.0% of net sales, down from 77.6% in the same period of 2018 [84]. Tax and Cash Flow - The effective tax rate for the second quarter of 2019 was 18.3%, down from 20.0% in the same period of 2018, primarily due to higher tax-exempt investment gains [87]. - Marine Products expects to continue benefiting from the Tax Cuts and Jobs Act, estimating an annual effective tax rate in the low 20% range for 2019 [78]. - Cash and cash equivalents increased to $13.0 million as of June 30, 2019, compared to $8.7 million at December 31, 2018, due to a change in investment strategy [95]. - Cash provided by investing activities for the six months ended June 30, 2019, was approximately $6.0 million, a slight decrease from $6.2 million used in the same period in 2018 [98]. - Cash used for financing activities increased by approximately $4.0 million for the six months ended June 30, 2019, primarily due to a 20% increase in quarterly common stock cash dividends and increased share repurchases [99]. Share Repurchase and Capital Expenditures - The company expects capital expenditures in 2019 to be approximately $3.0 million, with $1.7 million already spent by June 30, 2019 [101]. - As of June 30, 2019, the company has repurchased a total of 6,407,295 shares under its stock repurchase program, with 1,842,705 shares remaining available for repurchase [103]. - The company has a maximum repurchase obligation of approximately $22.1 million as of June 30, 2019, under various financing institutions [106]. Future Outlook and Market Conditions - The company anticipates stable recreational boating retail demand in 2019 and plans to continue emphasizing its Surf Series and larger boat models to expand its customer base [113]. - The company believes that the liquidity from existing cash, cash equivalents, and marketable securities will be sufficient to meet its requirements for at least the next twelve months [113]. - The company has noted that higher inflation and interest rates could lead to increased costs of boat ownership, potentially affecting consumer purchasing decisions [112]. - The company has not experienced material repurchases of inventory under contractual agreements during the six months ended June 30, 2019 [104].