Q1 2025 Marine Products Corp Earnings Call
Okay.
Good morning, and thank you for joining us for the Marine products Corporation's first quarter 'twenty to 'twenty five earnings conference call.
Operator: Good morning, and thank you for joining us for the Marine Products Corporation's first quarter 2025 earnings conference call.
Operator: Today's call will be hosted by Ben Palmer, President and CEO, and Mike Schmit, Chief Financial Officer. At this time, all participants are in the listen-only mode.
Speaker Change: Today's call will be hosted by Ben Palmer, President and CEO, and Mike Smith, Chief Financial Officer.
At this time all participants are in a listen only mode.
Operator: Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for you to queue up your questions.
Speaker Change: 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.
Operator: I would like to advise everyone that this conference call is being recorded.
Speaker Change: I would like to advise everyone that this conference call is being recorded.
Michael Schmit: I will now turn the call over to Mr. Schmit. Thank you and good morning. Before we begin, I want to remind you that some of the statements that will be made on this call could be forward-looking in nature and reflect a number of known and unknown risks. Please refer to our press release issued today along with our 2024 10-K and other public filings to outline those risks. all of which can be found at www.marineproductscorp.com.
Schmidt: I'll now turn the call over to Mr. Schmidt.
Schmidt: Thank you and good morning.
Speaker Change: Before we begin I want to remind you that some of the statements that will be made on this call could be forward looking in nature and reflect a number of known and unknown risks.
Speaker Change: Please refer to our press release issued today, along with our 2025 or sorry, our 2024 10-K and other public filings that outline those risks.
Speaker Change: All of which can be found at www Dot Marine Products' Corp Dot com.
Michael Schmit: In today's earnings release and conference call, we'll be referring to several non-GAAP measures of operating performance and liquidity. We believe these non-GAAP measures allow us to compare performance consistently over various periods. Our press release issued today, and our website, contains... reconciliations of these non-GAP ventures to the most directly comparable GAP venture.
Speaker Change: In today's earnings release and conference call, we'll be referring to several non-GAAP measures of operating performance and liquidity we.
Speaker Change: We believe these non-GAAP measures allow us to compare performance consistently over various periods.
Speaker Change: Our press release issued today and our website contain rec.
Speaker Change: Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures.
Ben Palmer: I will now turn the call over to our President and CEO, Ben Palmer. Thanks, Mike. And thank you all for joining our call. First quarter results were down compared to prior year. However, our trends are beginning to stabilize following significant top line declines last year. For context, in 2024, our quarterly sales declines were in the low 30% to low 40% range. following unprecedented post-COVID demand through the mid part of 2023. Whereas in the first quarter of 2025 sales were down 15% year-over-year. On a more positive note, sales were up 23% sequentially compared to the fourth quarter of 2020.
Speaker Change: I will now turn the call over to our President and CEO Ben Palmer.
Ben Palmer: Thanks, Mike.
Speaker Change: You all for joining our call.
Speaker Change: First quarter results were down compared to prior year. However, our trends are beginning to stabilize following significant topline declines last year.
Speaker Change: For context in 2024, our quarterly sales declines were in the low 30, percents low 40% range following unprecedented post COVID-19 demand through the mid part of 2023.
Speaker Change: Whereas in the first quarter of 2025 sales were down 15% year over year.
Speaker Change: On a more positive note sales were up 23% sequentially compared to the fourth quarter of 2024.
Ben Palmer: As we said last quarter, we are seeing some signs of stabilization, and we still believe we are in a position to see year-over-year sales growth in the second half of the year. While that trend is headed in the right direction, we are still in a challenging, uncertain environment. Marine industry continues to work through elevated levels of channel inventory, an unclear interest rate environment, and now uncertainty with respect to tariff impact. However, we are still cautiously optimistic that we have reached a draw. We are focused on managing costs and production levels as tightly as possible, maximizing cash flow, and positioning ourselves for improved demand in the future.
Speaker Change: As we said last quarter, we are seeing some signs of stabilization and we still believe we're in position to see year over year sales growth in the second half of the year.
Speaker Change: While that trend is headed in the right direction, we are still in a challenging and uncertain environment.
Speaker Change: Grain industry continues to work through elevated levels of channel inventory and unclear unclear interest rate environment.
Speaker Change: Now uncertainty with respect to tariff impacts.
Speaker Change: However, we are still cautiously optimistic that we've reached a trough.
Speaker Change: We are focused on managing costs and production levels as tightly as possible maximizing cash flows and positioning ourselves for improved demand in the future.
Speaker Change: Channel inventory has been the most pressing challenge, we and our peers have faced over the past 18 months or so.
Ben Palmer: Channel Inventory has been the most pressing challenge we and our peers have faced over the past 18 months. A few months ago, we disclosed our field inventory units were down 15% when comparing to the end of 23 to the end of 24, and we are pleased to report that our first quarter channel inventories were down 18% versus the year ago. So we continue to make progress and are comfortable where we stand from a channel inventory perspective. has been a collaborative effort with our dealers, balancing the need for smooth production schedules and fixed cost absorbers. with the hesitation from the dealer network in taking more inventory without visible near-term demand catalyst.
Speaker Change: A few months ago, we disclosed our field inventory units were down 15% when comparing to the end of 'twenty three to the end of 'twenty four and we are pleased to report that our first quarter channel inventories were down 18% versus the year ago quarter.
Speaker Change: So we continue to make progress and are comfortable where we stand from a channel inventory perspective.
Speaker Change: This has been a collaborative effort with our dealers balancing the need for smooth production schedules and fixed cost absorption.
Speaker Change: With the hesitation from the dealer network and taking more inventory without visible near term demand catalysts.
Ben Palmer: Conservatism and Prudence continue to be our approach.
Speaker Change: Conservatism and prudence continue to be our approach.
We know tariffs are top of mind for investors and it's too soon to project anything definitively given the ongoing nature of negotiations to this point.
Ben Palmer: We know tariffs are top of mind for investors, and it's too soon to project anything definitively given the ongoing nature of negotiations to this point. From an input cost standpoint, key purchases would be engines, navigation systems, stainless steel, aluminum, and fiberglass. is highly likely that tariffs on these items and other materials would result in model price increases. We have limited visibility on the outcome, but are doing everything possible to keep an open dialogue with our government representatives, trade associations, and vendor partners. Together we are communicating the potential negative impacts of tariffs on our industry and hoping for as much relief as possible.
Speaker Change: From an input cost standpoint, keep purchases would be engines navigation systems stainless steel aluminum aluminum environment Wes.
Speaker Change: It is highly likely that tariffs on these items and other materials would result in multiple price increases.
Speaker Change: We have limited visibility on the outcome, but are doing everything possible to keep an open dialogue with our government representatives trade associations and vendor partners.
Speaker Change: Together, we are communicating the potential negative impacts of tariffs on our industry and hoping for as much relief as possible.
Speaker Change: Regarding interest rates, while we had originally been hoping for steady rate reliefs the outlook for rates remains unclear as the fed balances economic impacts from tariffs and trade policy on inflation and the growth outlook. It's fair to say that we hope for lower rates, but acknowledged that if rates come down it could be in response to a deteriorating does.
Ben Palmer: Regarding interest rates, while we had originally been hoping for steady rate relief, the outlook for rates remains unclear as the Fed balances economic impacts from tariffs and trade policy on inflation and the growth outlook. It's fair to say that we hope for lower rates, but acknowledge that if rates come down, it could be in response to a deteriorating domestic economy, which would inherently be unfavorable. As we pass from the spring selling season into summer we will be in close touch with our dealers on our model year 2026 rollout. In the current environment, we will proceed carefully, being mindful of channel inventory and dealer and consumer appetite for new boats.
Speaker Change: <unk> economy, which would inherently be unfavorable.
Speaker Change: As we passed from the spring selling season in the summer we will be in close touch with our dealers on our model year 2026 rollout.
Speaker Change: In the current environment. We will proceed carefully being mindful of channel inventory and dealer and consumer appetite for new boats, but still look forward to delivering new models and feature and design enhancements across both chaparral and robalo brands.
Ben Palmer: We still look forward to delivering new models and feature and design enhancements across both Chaparral and Revalo brands. Regardless of market conditions, our brand reputation is still the lifeblood of our business. Constant innovations and new designs must continue. And fortunately, we have the financial strength to sustain those efforts.
Speaker Change: Regardless of market conditions, our brand reputation is still the lifeblood of our business.
Speaker Change: Cost of innovations and new designs must continue and Fortunately, we have the financial strength to sustain those efforts now.
Michael Schmit: Now Mike will provide an overview of the financial results. Thanks, Ben. shifting to the first quarter with year-over-year comparisons to the first quarter of 2024. Sales were down 15% to $59 million, driven by a 19% decrease in the number of votes sold. price and mix netted to a positive 4%. We know that quarterly sales decreases have been easing for the past several quarters.
Speaker Change: Now Mike will provide an overview of the financial results.
Mike Smith: Thanks Ben.
Mike Smith: Shifting to the first quarter with year over year comparisons to the first quarter of 2024.
Mike Smith: Sales were down 15% to $59 million.
Mike Smith: Driven by a 19% decrease in the number of boats sold.
Mike Smith: Price and mix netted to a positive 4%.
Ben Palmer: We know the quarterly sales decreases have been easy for the past several quarters and as Ben mentioned, we see potential to deliver sales growth versus the prior year in the second half of 2025.
Michael Schmit: And as Ben mentioned, we see potential to deliver sales growth versus the prior year in the second half of 2025. Gross profit decreased to $11 million with gross profit margin of 18.6% down 160 basis The decline is due to lower volumes and reduced fixed cost absorption, which more than offset the favorable price and mix. SG&A expenses were $8.3 million in the quarter, down 5% or $400,000 compared to last year's first quarter. These expenses decreased primarily due to costs that vary with sales and profitability, such as incentive compensation, sales commissions, and warranty. SG&A as a percentage of sales was 14.1 percent, up 150 basis points compared to the prior year's first quarter due to fixed overhead and reduced sales.
Ben Palmer: Gross profit decreased to $11 million with gross profit margin of 18, 6% down 160 basis points.
Ben Palmer: The decline is due to lower volumes and reduced fixed cost absorption, which more than offset the favorable price and mix effects.
Ben Palmer: SG&A expenses were $8 3 million in the quarter down, 5% or $400000 compared to last year's first quarter.
Ben Palmer: These expenses decreased primarily due to costs that vary with sales and profitability.
Ben Palmer: Jazz incentive compensation sales commissions and warranty expense.
Ben Palmer: SG&A as a percentage of sales was 14, 1% up 150 basis points compared to the prior year's first quarter due to fixed overhead and reduced sales.
Ben Palmer: Our tax rate was 27, 8% in the quarter and is likely to be slightly below this level for the remainder of the year.
Michael Schmit: Our tax rate was 27.8% in the quarter and is likely to be slightly below this level for the remainder of the year. Diluted EPS was $0.06 in the first quarter, down from $0.13 last year. EBITDA was $3.4 million, down from $5.9 million. In the quarter, we generated strong operating cash flow of $10.8 million and free cash flow of $10.7 million. CapEx was just under $100,000 in the period. And while we expect lower CapEx this year compared to last, it will likely pick up in the coming quarters and track toward $3 million for the full year.
Ben Palmer: Diluted EPS was fixed at cents in the first quarter down from 13 cents last year.
Ben Palmer: EBITDA was $3 $4 million down from $5 $9 million.
Ben Palmer: In the quarter, we generated strong operating cash flow of $10 8 billion and free cash flow of $10 7 million.
Ben Palmer: Capex was just under $100000 in the period and while we expect lower Capex. This year compared to last it will likely pick up in the coming quarters and track toward $3 million for the full year.
Yes.
Ben Palmer: We paid $4 $9 million in dividends and finished the quarter with cash of $57 million and no debt.
Michael Schmit: We paid $4.9 million in dividends and finished the quarter with cash of $57 million in no debt.
Ben Palmer: On another topic you may have seen the company has filed an S. Three registration statement with the SEC, which includes the registry of the Rollins family control group shares.
Michael Schmit: On another topic, you may have seen the company has filed an S3 registration statement with the SEC, which includes the registering of the Rollins Family Control Group share. The Rollins family has been a longtime shareholder with ongoing representation on our board. They have always been very supportive of the company, and we do not believe this changes that relationship. We view the registration of the control group shares as good corporate housing.
Ben Palmer: The Rollins family has been a longtime shareholder with ongoing representation on our board.
Ben Palmer: They have always been very supportive of the company and we do not believe this changes that relationship.
Ben Palmer: We view the registration of the control group shares and good corporate housekeeping.
Ben Palmer: I'll now turn it back over to Ben for a few closing remarks. Thank you, Mike. Recent results have been a challenge for us and the marine industry overall. However, our discipline and focus on cash generation remains intact. We are still actively seeking acquisitions to expand our business. and have ample liquidity to take advantage of opportunities as they arise.
Ben Palmer: I'll now turn it back over to Ben for a few closing remarks. Thank you Mike.
Ben Palmer: Recent results have been a challenge for us in the marine industry overall.
Ben Palmer: However, our disciplined focus on cash generation remains intact.
Ben Palmer: We are still actively seeking acquisitions to expand our business and have ample liquidity to take advantage of opportunities as they arise.
Ben Palmer: We're looking at various boat categories where we don't have existing products and believe we will be a buyer of choice for owners of quality assets looking for next generation On a separate note, we'd like to welcome Steve Lewis to our Board of Directors after being elected this week. Steve retired from the law firm Troutman-Pepper, formerly Troutman-Sanders, in 2023, where he had served in various leadership roles, including chairman and CEO.
Ben Palmer: We're looking at various boat categories, where we don't have existing products and believe we will be a buyer of choice for owners of quality assets looking for an exit.
Ben Palmer: On a separate note we'd like to welcome Steve Lewis Our board of directors after being elected this week Steve.
Steve retired from the law firm Troutman Pepper, formerly dropping Sanders and 2023, where he had served in various leadership roles, including chairman and CEO.
Ben Palmer: At the same time, Gary Rollins and Pam Rollins have retired from our board. We thank them for their years of contributions, leadership, and service.
Ben Palmer: At the same time, Gary Rollins and Pam Wrongs have retired from our board.
Ben Palmer: We thank them for their years of contributions leadership and service.
Ben Palmer: In closing I want.
Ben Palmer: In closing, I want to always thank our dealers for their continued collaboration and support, and our employees for their dedication and hard work. That concludes our prepared remarks.
Ben Palmer: I'll always think our dealers for their continued collaboration and support and our employees for their dedication and hard work.
Ben Palmer: That concludes our prepared remarks.
Operator: With that, operator, please open the line for any questions. At this time, in order to ask a question, please press star, then the number one on your telephone keypad.
Ben Palmer: Operator, please open the line for any questions.
Ben Palmer: At this time in order to ask a question. Please press Star then the number one on your telephone keypad.
Ben Palmer: I will now turn the call back over to Ben Palmer. Please go ahead.
Ben Palmer: I will now turn the call back over to Ben Palmer. Please go ahead. Thank you, operator.
Ben Palmer: Thank you operator.
Ben Palmer: Appreciate you listening in on the call today and hope you have a good rest of the day and look forward to touching base soon.
Ben Palmer: <unk> listening in on the call today and.
Ben Palmer: Okay have a good rest of the day and look forward to touching baseline figure.
Operator: Today's call will be available for replay on MarineProductsCorp.com within two hours following the completion of the call.
Speaker Change: Today's call will be available for replay on marine products Corp, <unk> com within two hours following the completion of the call ladies and gentlemen that concludes today's call. Thank you all for joining you may now disconnect.
Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining.
Operator: You may now disconnect.
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