Marine Products(MPX) - 2025 Q2 - Quarterly Results

Marine Products Corporation Second Quarter 2025 Financial Results Second Quarter 2025 Highlights and Management Commentary 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] - The company remains cautious due to ongoing risks from tariffs and macroeconomic factors, which affect dealer and consumer confidence[4] - 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][5] Detailed Financial Performance Analysis 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] - 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] - 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] - 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] Balance Sheet, Cash Flow, and Capital Allocation 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] 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] Financial Statements 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 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 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 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 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] 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 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] - 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]