Q3 2020 Marine Products Corp Earnings Call

Good morning, and thank you for joining us for Marine products Corporation's third quarter 2020 financial earnings Conference call.

Today's call will be hosted by Rick Hubbell, President and CEO and Ben Palmer Chief Financial Officer also present is Jim Landers, Vice President of corporate services at.

At this time all participants are in a listen only mode.

Following the presentation, we will conduct a question and answer session and instructions will be provided at that time for you to queue up for questions.

I'd like to advise everyone that this conference call is being recorded Jim will get us started by reading the forward looking disclaimer.

Thank you and good morning, before we get started today I would like to remind everyone that some of the statements that we will make on this call may be forward looking in nature and reflect a number of known and unknown risks I'd like to refer you to our press release issued today are 2019, 10-K, and other SEC filings that outline outline those.

Yes.

All of these are available on our website at marine products core Dot com.

If you've not received our press release and would like to see it. Please visit our website again at marine products Corp. Dot com for a copy we will make a few comments about the quarter and then will be available for your questions now I will turn the call over to our president and CEO Rick Hubbell.

Jim Thanks.

We issued our earnings press release for the third quarter to 2020 this morning.

Palmer, our CFO will discuss the financial results in more detail in a moment.

Before I summarize the quarter I'd like to take a moment to recognize or Randall Walgreens or chair he passed away during the third quarter.

Following a short hills.

Randall held this position that marine products and its Chris its predecessor since 1986.

He was proud of our company's success and reputation for quality and we will miss him.

Now onto a discussion of marine products third quarter results.

We completed a full quarter of production.

And sales following our temporary operational suspension during the second quarter due to concerns over coking coal.

COVID-19 pandemic.

In contrast to other years here at this point in the boating season, we have a very high dealer order backlog.

Most of which has been sold at retail and low dealer inventory.

For these reasons, we are continuing to operate at the highest feasible operational levels as we entered the third or fourth.

Recreational boating sales continue to benefit from the effects of code of the Cuban pandemic.

Which is restricting vacation travel and recreational activities in crowded environment, forcing individuals and households to remain isolated.

As a result of this extraordinary situation.

We are seeing the highest dealer and consumer demand we have seen in years.

As we review our market share at the end of the third quarter I'm pleased to report that chaparral continues to be a market share leader units Stern drive recreational boat category.

Robalo also continues to be a market share leader in the outboard category.

And the combination of chaparral and robalo outboard models continue to hold the highest outboard boat market share in their size category.

We announced this morning that our board of directors yesterday declared a regular quarterly cash dividend of eight cents per share.

Let's say special year end cash dividend of four cents per share.

Board of directors continues to believe that both the dividend level and the special year end dividend.

Represent a prudent and tangible way to to reward our shareholders with that overview I'd like to turn it over to our CFO, Ben Palmer I think you're right.

Net sales for the third quarter, a 2020 were 68.8 million, 4.8% decrease compared to the third quarter of last year.

Unit sales declined by 10.4% as compared to the third quarter of last year.

This decline was partially offset by an improved model mix, which which resulted in increased average selling prices of 7.8% gross.

Gross profit in the third quarter was 16.2 million, an increase of 3.1% compared to the third quarter of 19.

Gross margin during the quarter was 23.6% compared to 21.8% and the third quarter 2019.

Gross margin as a percentage of net sales increased due to an improved model mix, yielding average selling prices higher average selling prices during the quarter when compared to the prior year.

Selling general and administrative expenses were 7.9 million in the third quarter of 2020, an increase of 1.9 billion compared to 6 million in the third quarter of last year.

These expenses were higher due to a state research and development payroll tax credit that was 1.2 million lower.

During the third quarter of 2020 as compared to the prior year.

As well as a $963000 and deferred compensation expense associated with the accelerated vesting of restricted stock.

Due to the death of our company's Germany.

These expenses were 11.5% of net sales in the third quarter of 2020 compared to 8.4% of net sales in the third quarter of 19.

For the quarter ended September 32020, we reported net income of 6.5 million a decrease of 16.8% compared net income of $7.9 million in the third quarter of 19.

Diluted earnings per share were 19 cents in the third quarter of 2020 compared to 23 cents in the prior year.

Our effective tax rate.

This quarter was 21.8% compared to 19.8% in the prior year.

Our international sales decreased by 29.9% and accounted for only 3.1% of total sales during the quarter.

Compared to 4.3% of total sales in the third quarter of 2019.

Our international sales decreased and all of our international markets.

Cash balance at the end of the third quarter was 29 million an increase of $6 million compared to 23 million at the end of the third quarter of 2019.

As Rick mentioned dealer inventory levels were significantly lower at the end of the third quarter 2020.

Then at the end of the second quarter of 2020, or the third quarter of last year, our order backlog in units.

Was higher than it has been in many years, we believe that our retail sales have increased in line with industry growth during the first three quarters of 2020.

Because of the reduction in dealer inventories in spite of the fact that traditional retail selling season has ended.

Our dealers still report yet low field inventories and are eager to restock their inventory with that I'll turn it back over to Rick for a few closing remarks.

Thank you Ben.

We approach the 2021 model year in the winter boat show season, with a great deal of optimism.

And are evaluating opportunities to increase production levels to satisfy near term demand levels.

However, our interest increasing.

Production at this time is tempered.

By manufacturing capacity constrains labor availability and supply chain conserves.

We're also uncertain about the feasibility of in person boat shows and are working closely with our dealers to plan for.

Alternative means to market or 2021 products to dealers and consumers.

Despite of these concerns were very happy to be operating at a high demand market with quality brands and a dominant market share.

I'd like to thank you for joining us this morning, and we would be happy to take any questions you may have.

Thank you as a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound or hash key. Please standby we comply with you in a roster.

Again, if youd like to ask a question that star one on your telephone keypad.

We have no questions in queue I'll turn the call back over to Jim Landers for closing remarks.

Okay. Thank you and we know some people have called in to listen So we appreciate you calling in to listen please let US know if you have any questions and I hope everybody has a good day. Thanks.

Ladies and gentlemen, thank you for participating in the conference call will be replayed on Marine products Corp, Dot com within two hours. Following the completion of the call you may now disconnect.

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