Q1 2021 Marine Products Corp Earnings Call

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Name and your company name.

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And your phone number.

One of them to 9603697.

Thank you all doing to your conference.

Thank you.

The conference call today's call will be hosted by Rick Hubbell, President and CEO and Ben Palmer Chief Financial Officer also to present is Jim Landers, Vice President of corporate services. At this time all participants are in a listen only mode. Following the presentation, we will conduct day quest.

<unk> and answer session and instructions will be for Friday at that time for you to queue up for questions I would like to advise everyone that this conference call is being recorded.

Jim will get us started by reading the forward looking disclaimer.

Thank you Ashley and good morning, before we get started today I'd like to remind everyone that some of the statements. We will make homeless call maybe 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 for 2020, 10-K, and other SEC filings of that one outline of Israel.

Risks all of which are available on our website at marine products Corp Dot com.

If you've not received our press release. 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 first quarter of 2021 this morning.

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

Before we start though I'd like to thank our employees for their continued dedication as we continue to design and manufacture peer leading products to satisfy extraordinary dealer in the.

And customer demand.

We are very proud of what we've achieved over the past year and we appreciate all of that you are doing.

Now a few highlights on the quarter.

Marine products Corporation's first quarter 2021 reflects the continued increased interest in recreational boating that we first observed at this time last year as consumers rediscovered boating is a safe enjoyable recreation activity suitable for this for.

For these extraordinary times unit sales during the first quarter were almost 18% higher than the first quarter of last year.

Yes.

We are entering the peak retail selling season with continued high order backlogs, we are manufacturing new product at the highest production rate possible, while still maintaining our quality standards. The recently reported market share statistics for.

The 12 months ended December 31, 2020 indicated that both of our outboard and stern drive market shares increased compared to the previous reporting period.

The robalo continues to hold the highest market share in the 16 to 36 outboard category.

And the combination of Robalo and chaparral outboards holds six 7% of debt market.

Our chaparral stern drives hold 16, 9% of the market and their size range, an increase from the previous reporting period.

We announced this morning that our board of directors yesterday declared a quarterly cash dividend of 12 cents per share representing a 20% increase compared to the prior to the prior quarter with that overview I will now turn it over to our CFO of Ben Palmer. Thank you Rick net.

Net sales for the first quarter of 2021 were $78 4 million, a 32, 6% increase compared to the first quarter of last year.

Net sales increased by 17, 9% during the quarter as we generated higher sales across all our models average selling prices increased by 15, 5% due to a model mix, which included more larger boats.

Gross profit in the first quarter was $18 5 million on increase of 52 five per cent compared to the first quarter of 2020.

Gross margin during the quarter increased to 23, 6% compared to 25% in the first quarter of last year.

Gross margin as a percentage of net sales increased due to the efficiency benefits of higher production.

Favorable model mix compared to the prior year.

Selling general and admin and administrative expenses were $8 4 million in the first quarter of 2021, an increase of $1 2 million compared to $7 3 million in the first quarter of last year. These.

These expenses were higher due to expenses, which vary with sales and profitability such as sales commissions and incentive compensation and warranty expense, partially offset by lower marketing costs in the first quarter as compared to the prior year.

For the quarter ended March 31, 2021, we generated net income of $8 1 million, an increase of 92, 4% compared to net income of $4 2 million in the first quarter of 2020.

Diluted earnings per share were 24 cents double the 12 cents diluted earnings per share that we recorded in the first quarter of last year.

Our effective tax rate during the first quarter of this year was 19, 3% compared to 14, 4% in the first quarter of the prior year the.

The increase in the first quarter's effective tax rate was due to lower beneficial permanent differences, coupled with higher pre tax income this year.

And a similar positive discrete tax adjustment amount of both.

We project a full year of 2021 effective tax rate of approximately 23.

Our international sales accounted for five 1% of total sales during the quarter on increase of 18% compared to the first quarter of the prior year.

Our international sales declined in Canada, but reflected strong increases on a percentage basis and many of our other international markets.

Our cash balance at the end of the first quarter was $35 million, an increase of $14 9 million compared to $20 1 million at the end of the first quarter of 2020, reflecting strong cash flows of the business.

As Rick mentioned, we're entering the peak of the retail selling season with continued high order backlog and strong diesel demand.

Now I'll turn it back over to Rick for a few closing remarks. Thank.

Thank you Ben.

2021 is continuing the the strong trends in demand that first emerged last year at this time when the requirements of social distancing and the canceled and the cancellation of so many organize the activities reveal recreational boating is the perfect alternative activity during these times.

I am pleased that we have transitioned our sales and marketing efforts to web based platforms, while still making the customer experience informative and personal.

We are pleased with strong dealer and consumer interest in all of our models as evidenced by our growing market share. We are also encouraged by the growing number of first time boat buyers, who have purchased of boat during the previous year the.

The demographic profile of these buyers indicates the boating has a wide appeal across a variety of age groups.

There are many reasons to believe the recreational boating is undergoing a positive secular change in demand.

With so many manufacturing businesses. However, we have started to experience supply chain disruptions, which will impact our second quarter 2021 production and sales growth.

We are working with our suppliers to understand these disruptions and continue the most of it.

Efficient manufacturing processes.

Possibly while ensuring high product quality.

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

Yeah.

At this time if you have a question. Please press Star then the number one and your telephone keypad, we'll pause for just a moment to compile the Q&A roster.

And there are no questions at this time I will hand, the call back to Jim Landers for closing remarks.

Thank you Ashley and thanks, everybody, who who call to listen in this morning, We hope everyone has a good day, we will talk to you soon thanks.

As Ray Minder. This conference call will be replayed on Marine products Corp, Dot com within two hours. Following the completion of the call that concludes today's conference. Thank you for your participation you may now disconnect.