Marine Products(US:MPX)2023-02-27 20:29Financial Performance - Marine Products' net sales increased by $83.0 million or 27.8% in 2022 compared to 2021, driven by a 4.0% increase in the number of boats sold and a 23.7% increase in the average gross selling price per boat [132]. - The total number of boats sold in 2022 was 4,331, with an average gross selling price per boat of $76.8 thousand, compared to 4,165 boats sold in 2021 at an average price of $62.1 thousand [131]. - Gross profit margin improved to 24.6% in 2022 from 22.9% in 2021, while selling, general and administrative expenses as a percentage of net sales increased to 11.0% from 10.7% [131]. - Domestic net sales reached $355.4 million in 2022, a 26.0% increase, while international net sales surged by 61.2% to $25.6 million [132]. Cash and Liquidity - Cash and cash equivalents increased to $43.2 million at December 31, 2022, up from $14.1 million at the end of 2021 [137]. - The Company has approximately $150 million available for capital needs through its shelf registration statement and maintains a strong liquidity position [144]. - As of December 31, 2022, the Company had no outstanding borrowings under its $20 million revolving credit facility, which matures in November 2026 [145]. - The Company's aggregate repurchase obligation with financing institutions was approximately $12.3 million as of December 31, 2022 [151]. Market Presence and Sales - Retail sales in the boating segments increased by approximately 3.5% in 2022 compared to the prior year [124]. - Robalo's market share in the 18 to 36 foot outboard sport fishing boat market was 4.2%, while Chaparral's market share in the 19 to 34 foot sterndrive category was 19.8% [125]. - The company plans to attend more boat shows in 2023 due to the easing of COVID-19 restrictions, which is expected to enhance market presence [128]. Production and Supply Chain - Supply chain disruptions have delayed production and deliveries, impacting working capital requirements significantly since Q3 2021 [129]. Warranty and Internal Controls - Warranty expense as a percentage of net sales was 1.5% in 2022, an increase from 1.2% in 2021 [156]. - The Company has a lifetime limited structural hull warranty, a five-year structural deck warranty, and a one-year limited warranty for all boats sold to dealers [176]. - The warranty liability is considered a critical audit matter due to the high degree of estimation uncertainty related to anticipated future warranty claims [177]. - The audit procedures included evaluating the design and testing the operating effectiveness of controls over the warranty liability estimation process [179]. - The Company maintained effective internal control over financial reporting as of December 31, 2022, according to the independent auditor's report [164]. Corporate Governance and Compliance - The Company has been audited by Grant Thornton LLP since 2004, ensuring compliance with PCAOB standards [179]. - The Company revised its contractual agreement with an employee to a monthly payment of 7% of profits, down from 10% in prior periods [141]. - The Company has a stock buyback program authorizing the repurchase of 8,250,000 shares, with 1,570,428 shares remaining available for repurchase as of December 31, 2022 [142]. - The Company holds no derivative financial instruments and maintains investments primarily in money market funds, indicating low market risk exposure [158]. - The financial statements of Marine Products Corporation for the years ended December 31, 2022, and 2021 present a fair view of the company's financial position and operations [171]. - Total cost of sales incentives recorded as a percentage of gross sales was 5.6% in 2022, down from 6.7% in 2020 [155].