Marine Products 2008 Q4 Results
Marine Products Corporation (NYSE:MPX) announced its unaudited results for the quarter ended December 31, 2008. Marine Products is a manufacturer of fiberglass boats under two brand names: sterndrive and inboard pleasure boats by Chaparral, including Premiere Sport Yachts, SSi Wide Techs, SSX Bowriders, Sunesta Wide Techs and Xtremes, Signature Cruisers, and outboard sport fishing boats by Robalo.
For the quarter ended December 31, 2008, Marine Products generated net sales of $22.7m a 61.4 percent decrease compared to $58.9m last year. The decrease in net sales was due to a 63.3 percent decrease in the number of boats sold, partially offset by a 6.7 percent increase in the average selling price per boat. The increase in average selling price per boat was due to sales of Chaparral's new Premiere 400, several larger Signature cruisers and higher average selling prices of the Sunesta Wide Techs and Xtremes. Gross profit for the quarter was $2.35m or 10.3 percent of net sales, compared to $12.3m, or 20.9 percent of net sales, in the prior year. Gross profit as a percentage of net sales declined compared to the prior year due to cost inefficiencies resulting from lower production volumes and higher retail incentives.
Operating loss for the quarter was $1.8m, compared to operating income of $4.9m in the fourth quarter of last year, due to lower gross profit, partially offset by lower selling, general and administrative expenses. Selling, general and administrative expenses in the fourth quarter of 2008 decreased by 43.5 percent compared to the prior year due to the variable nature of many of these expenses, including incentive compensation and warranty expense, which declined with lower sales and profitability. In addition, salaries and research and development expenses were lower due to cost control measures instituted during 2008. These decreases were partially offset by costs recorded during the quarter associated with repurchasing dealer inventory under Marine Products' agreements with third-party floorplan lenders.
Net loss for the quarter ended December 31, 2008 was $1.1m compared to net income of $4m in the prior year. Diluted loss for the quarter was $0.03 per share compared to $0.11 diluted earnings per share in the prior year.
Net sales for the twelve months ended December 31, 2008 were $175.6m a 28.1 percent decrease compared to the year ended December 31, 2007. Net income for the twelve-month period decreased 53.8 percent to $7.58m or $0.21 diluted earnings per share compared to $16.4m or $0.43 diluted earnings per share in the prior year.
Richard A. Hubbell, Marine Products' Chief Executive Officer stated, "The pleasure boating industry's downturn continued, and in fact deepened, during the fourth quarter of 2008, marking three full years of depressed conditions for our industry. Negative consumer sentiment increased during the quarter as the problems in the financial system surfaced, and the availability of credit for dealers and consumers became even tighter than it had been. During the quarter we decreased our production levels significantly. We accomplished this, but the resulting low level of unit production created manufacturing inefficiencies. These inefficiencies, along with high retail incentives during the quarter, caused us to realize an operating loss for the first time in our history.
Hubbell continued, "The winter boat show season is a very important indicator for us, and reports of attendance and sales at the early winter shows do not give us any reason to be hopeful about the upcoming retail selling season. In addition, we continue to see signs that the ongoing financial crisis is damaging the availability of floorplan lending for our dealers, which is vital to our operations. As stated above, we incurred costs during the quarter under these floorplan lending agreements for the repurchase of dealer inventory. We do not anticipate the return of strength to our industry until the credit markets stabilize and some measure of consumer confidence returns.
"As we have stated earlier during 2008, we continue to be pleased with the reception of our 2009 models by industry observers, dealers and consumers. During this prolonged downturn in our industry, we have developed appealing new models and taken advantage of our position as one of the strongest and best-managed manufacturers in our industry. We believe that in the long run we will capture greater market share and emerge from this downturn even stronger than in the past. As one means of preserving capital to support our operations and long-term goals, yesterday our Board of Directors reduced our quarterly dividend from $0.065 per share to $0.01 per share. This type of conservative management style has and will continue to benefit shareholders of Marine Products as our debt-free balance sheet, with a high balance of cash and investment-grade marketable securities, has given us the financial strength to operate in this stagnant environment, continue to produce appealing products for our consumers and to continue to capture market share."
