Q2 2021 Marine Products Corp Earnings Call

Okay.

Good morning, and thank you for joining us from Marine products Corporation's second quarter, 2021 financial earnings Conference call.

Today's call will be hosted loyalty Hubbell president and.

And CEO and Ben Palmer, Chief Financial Officer also 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 a question and answer session and.

Instructions will be provided.

And 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 Charlotte and good morning.

Before we get started today I'd like to remind everyone that some of.

The statements that we will make on this call may be forward, looking and nature and reflect a number of known and unknown risks and <unk>.

To refer you to our press release issued today, our 2020.10-K and other SEC filings that outline those risks all of these are available on our website at www Dot Marine products Corp Dot com.

If you've not received our press release and would like 1 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 Thank you.

We issued our earnings.

<unk> release for the second quarter of 2021 this morning.

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

And now a few highlights on the quarter.

Marine products Corporation's second quarter 2021 results reflect the continuation of extraordinary.

<unk> pretty high demand, which we expect beyond the 2021 retail selling season.

Recently reported data indicate that retail sales on our product categories have increased 28% so far this year.

We have participated in that growth and I am pleased to report continued.

Ordinary strong market share and both of our brands.

Unit sales to our dealers during the second quarter were almost 59% higher.

Then in the second quarter of last year.

While we have to remember that our manufacturing facility was closed for almost half of the second.

New order last year due to Covid related safety concerns this retail sales growth.

Unit sales growth is still very strong and speaks to the strength.

Of the recreational boating market, our management team, our dealer network and the appeal of our products.

Our backlog of firm orders and other retail and the indications remain at historically high levels.

And our dealers report that they have the lowest inventory and years.

These are positive indicators excuse me.

Especially at the end of what was traditionally.

The retail selling season, and the recently reported market share statistics for the 12 months ended March 31.2021.

Indicated both our outboard and stern drive market shares increased compared to the previous reporting period.

Robalo continues to hold the highest market.

In the 16 to 36 foot outboard category.

And the combination of robalo and chaparral outboards hold 6.9% of that market.

Our chaparral stern drives hold 17, 1% of the market and their size range and a slight increase from the.

Sure he is reporting periods and.

The chaparral brands counting both outboard and stern drive boats hold the highest market share amongst sport boats and its size range.

We also announced this morning that our board of directors yesterday declared a regular quarterly dividend of 12 <unk> per share.

With that overview I'll now turn it over to our CFO Ben Palmer. Thank you.

Correct.

Net sales for the second quarter of 2021 were $67.3 million on.

64, 8% increase compared to the second quarter from last year.

And net sales increased by 58, 8% during the.

A quarter as we generated higher sales across all our models average selling prices increased by 7.5% due to a model mix, which included more larger boats.

Gross profit and the second quarter was $14.6 million and increase of 86, 5% compared to the second quarter of 2020.

Gross margin during the quarter was 21, 7% compared to 19, 2% and the second quarter of 2020.

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

But partially offset by continued supply chain disruptions and higher material costs as.

As a percentage of net sales.

Selling general and administrative expenses were $7.2 million and the second quarter of 2021.

And increase of $1.5 million compared to $5.8 million and the second quarter of last year.

These expenses were higher due.

<unk> expenses, which vary with sales and profit.

Such as sales commissions and incentive compensation and warranty expense.

Diluted earnings per.

The Bill and were 17 and the second quarter of 2021, 3 times to 5 diluted earnings per share that we recorded and the second quarter of last year.

Our effective tax rate during the second quarter of 2021 was 21, 4% compared to 18, 3% and the second quarter of the prior year.

For sure and we project our full year 2021 effective tax rate of approximately 20%.

Our international sales accounted for 5.1 percentage of total sales during the quarter and increased 73, 2% compared to the second quarter of last year.

Our cash balance at the end of the second quarter was 28.

$8.6 million and increase of $6 million compared to $22.6 million at the end of the second quarter of 2020.

While cash flow was strong we note that our inventories on hand at the end of the second quarter of 2021 were significantly higher than normal.

Reflecting delayed shipments of substantially complete.

Due to supply chain disruptions.

Partially offsetting this increased inventory balance was lower accounts receivable from sales from rapid sales of dealer inventory and very prompt floor plan lender payments.

We estimate that our delayed shipments during the second quarter negatively impacted.

<unk>, our net sales and earnings by 10% to 15%.

And we believe that during the next quarter. All of these units will be completed and shipped to dealers, resulting in higher sales and earnings and would otherwise be generated by current.

First quarter production levels.

As Rick mentioned, our order backlog has been has remained.

<unk>, but equally high levels and dealer inventories are extremely low with that I will turn it back over to Rick for a few closing remarks. Thanks.

Thanks Ben.

The extraordinary global developments that have ushered in a new level of demand and recreational boating for continuing into the second half of 2021.

And unfortunately supply chain constraints aren't.

Another the temporary component of the same macro developments that are positively affecting us.

We are managing these issues by coordinating with our suppliers to maximize our production, while maintaining quality and minimizing inefficiencies.

So we are focused on communicating effectively with our dealers regarding their delivery expectations. We are coordinating order flow and planning our production out over the next 9 months to allocated equitably to our dealer network.

To maintain our relationship with them and ensure the highest.

And retail customer satisfaction and possible.

We are introducing our 2022 model lineup this month.

And we have streamlined it by about 25% in order to create more efficient production and delivery schedules, while maintaining our product lineup with strong consumer.

Sumer appeal.

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

As a reminder to ask a question you will need to press star 1 on your telephone.

Draw your question basketball and Keith please standby and when we.

Compile the Q&A rusting.

Again, if you would like to ask a question just press star 1 on your telephone keypad.

There are no question at this time I would now like to turn the conference back to Mr.

And lenders.

Thank you Charlotte and thanks for everyone, who called and is and is listening in and watching we appreciate it before we hang up I am going to ask you. We told you about our corporate web site at the beginning of this I will ask you if you're interested and a new boat to visit our product websites chaparral boats.

Boots Dot com and.

And robalo Dot com.

Inventory is very low, but we have a great build a boat feature on there so it might be fun to get on that and figure out and kind of boat you want and send it to your local dealer and get in line for a new boat. We think that's a great idea. So thank.

Mr. Chen everybody have a good day to talk to you soon.

Participants on the conference will.

The replay on Marine products Corp, <unk> com within 2 hours following the completion of the call. This concludes today's conference call. Thank you for participating you may now disconnect.

Connect.

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