Marine Products(US:MPX)2022-07-29 16:37Financial Performance - Net sales for the second quarter of 2022 were $95.8 million, a 42.5% increase compared to the second quarter of 2021, driven by a 15.0% increase in units sold and a 22.2% increase in average selling price per boat [74][88]. - Operating income for the second quarter of 2022 increased by 78.1% to $13.1 million from $7.4 million in the same period of 2021 [76][92]. - For the six months ended June 30, 2022, net sales increased by $26.8 million or 18.4% compared to the same period in 2021 [97]. - Operating income for the six months ended June 30, 2022 was $22.3 million, an increase of 28.16% compared to $17.4 million in the same period in 2021 [100]. - Net cash provided by operating activities increased by $11.1 million to $17.2 million for the six months ended June 30, 2022, compared to $6.1 million in the same period in 2021 [103]. - Cash and cash equivalents at June 30, 2022 were $21.6 million, compared to $14.1 million at December 31, 2021 [103]. Sales and Pricing - The average selling price per boat during the second quarter of 2022 was $74.9 thousand, up from $61.3 thousand in the same period of 2021 [87]. - Average selling price per boat for the six months ended June 30, 2022 increased by 25.5% compared to the same period in 2021 [97]. - Domestic net sales increased by 38.0% to $88.0 million, while international net sales surged by 124.5% to $7.8 million in the second quarter of 2022 [89]. Costs and Expenses - Cost of goods sold as a percentage of net sales improved to 76.0% for the second quarter of 2022, down from 78.3% in the same period of 2021 [75][90]. - Selling, general and administrative expenses for the second quarter of 2022 were $9.9 million, a 36.4% increase from $7.2 million in the same period of 2021 [91]. Future Outlook and Strategy - The company plans to continue producing a smaller number of models in the 2023 model year to increase production efficiency [81]. - The company anticipates that inflation and rising interest rates may impact retail demand for recreational boats, but does not expect this to affect production and sales in the near term due to strong dealer order backlogs [126]. - The company expects to continue paying cash dividends to common stockholders, subject to industry conditions and financial performance [112]. Capital and Investments - Capital expenditures for 2022 are expected to be approximately $3.6 million, with $0.8 million spent through June 30, 2022 [109]. - The company declared a quarterly cash dividend of $0.12 per share payable on September 9, 2022, to common stockholders [112]. - 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 June 30, 2022 [111]. - The company believes its liquidity, strong capitalization, and cash generated from operations will be sufficient to meet its requirements for at least the next twelve months [108]. Risks and Challenges - Supply chain disruptions have impacted production and sales, with ongoing challenges expected to continue throughout 2022 [83][85]. - The company faces risks from the COVID-19 pandemic, economic conditions, and supply chain disruptions [130]. - Rising commodity prices, including hydrocarbons, copper, and steel, could negatively impact profit margins [130]. - Higher inflation may lead to increased interest rates, affecting consumer demand for boats [130]. - The company is subject to competition from other boat manufacturers and dealers [130]. - Potential liabilities for personal injury or property damage claims could arise from product use [130]. - The company may encounter challenges in identifying suitable acquisition candidates or strategic partners [130]. - Anti-takeover provisions in governance documents could complicate tender offers or takeover attempts [130]. Market and Financial Instruments - Marine Products does not hold any derivative financial instruments, minimizing exposure to significant market risk [131]. - The company maintains investments primarily in money market funds, which are not subject to interest rate risk exposure [131]. - There are no expected material changes in market risk exposures or management strategies [131].