Marine Products Corp 1Q 2009 Results
Marine Products Corporation (NYSE:MPX) announced its unaudited results for the quarter ended March 31, 2009. 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 March 31, 2009, Marine Products generated net sales of $13,806,000, a 78.9 percent decrease compared to $65,542,000 last year. The decrease in net sales was due to a decrease of 77.9 percent in the number of boats sold and additional costs recorded during the quarter of our winter retail incentive program. Gross loss for the quarter was $58,000, compared to a gross profit of $13,464,000, or 20.5 percent of net sales, in the prior year.
The gross loss for the quarter was due to very low production levels and sales to dealers, which resulted in significant production inefficiencies, as well as the additional costs of retail incentives. Unit sales among all models declined significantly compared to the prior year, although average gross selling price per boat was unchanged.
Operating loss for the quarter was $4,757,000, compared to an operating profit of $5,205,000 in the first quarter last year due to a gross loss partially offset by lower selling, general and administrative expenses. Selling, general and administrative expenses in the first quarter of 2009 decreased by 43.1 percent due primarily to the variable nature of many of these expenses as well as ongoing cost reduction measures.
Net loss for the quarter ended March 31, 2009 was $2,486,000, a decrease compared to net income of $4,132,000 in the prior year. The net loss was due to an operating loss and lower interest income, partially offset by an income tax benefit. Diluted loss per share for the quarter was $0.07, a decrease compared to $0.11 diluted earnings per share in the prior year.
Richard A. Hubbell, Marine Products' Chief Executive Officer, stated, "Marine Products' first quarter 2009 results reflect the very difficult environment in which the recreational boating industry finds itself, as the financial crisis of the fourth quarter of 2008 caused consumers to halt virtually all large discretionary purchases. During the first quarter we worked closely with our dealers to manage their inventory levels and monitor their financial conditions. We also held discussions with current and potential floorplan lenders regarding those relationships. We made progress on dealer inventory reductions during the quarter, and dealer inventories at the end of the quarter were approximately 11 percent lower than at the end of 2008 and 35 percent lower than the same time last year.
"The winter boat show season was weak overall, with average attendance and sales down by more than 30 percent. Based on this important indicator as well as more current indicators from our dealers, we do not anticipate improvement in our business in the near term. Our strategy is to produce an appropriate quantity of current-year models in order to meet firm demand and preserve the value of our brand names, while continuing a prudent amount of new model development for the 2010 model year. To support this strategy, we are producing our current-year models at a very low but steady production level. Also, we recently developed a new retail incentive program to be in effect during the 2009 spring retail selling season designed to reduce field inventory further. The execution of these strategies requires that we build on our strength of strong capitalization as much as possible. With this in mind, our Board of Directors voted to suspend Marine Products' quarterly dividend at its regular meeting held yesterday. With our enduring capital strength and management expertise, we believe that we are uniquely positioned to increase market share as other competitors do not have our stamina or ability to produce appealing products."