Q2 2025 Marine Products Corp Earnings Call
Operator: 2nd 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 a listen-only mode.
Good morning, and thank you for joining us for Marine Products. Corporation, second quarter 2025 earnings conference call.
Speaker Change: Today is call will be hosted by Ben Palmer, president and CEO and Mike Schmidt Chief Financial Officer.
Operator: Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for you to queue up for questions.
Speaker Change: At this time, all participants are listen-only mode. Following, the presentation, we will conduct a question and answer session.
Operator: I would like to advise everyone that this conference call is being recorded.
Speaker Change: Instructions will be provided at that time for you to queue up for questions.
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 that outline those risks. all of which can be found at www.marineproductscorp.com.
Speaker Change: I would like to advise everyone that this conference call is being recorded.
Schmidt: I will now turn the call over to Mr. Schmidt.
Schmidt: Thank you and good morning.
Schmidt: 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.
Schmidt: Please refer to our press release issued today along with our 2024, 10K and other public filings that outline those risks.
Schmidt: All of which can be found at www.marine.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-gap measures allow us to compare performance consistently over various periods. Our press release and our website contain reconciliations of these non-GAP measures to the most directly comparable GAP measures.
In today's earnings release and conference call will 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.
Ben Palmer: I'll now turn the call over to our President and CEO, Ben Palmer. Thanks, Mike. Thank you for joining our call this morning. Second quarter sales were down slightly compared to the prior year. However, the year over year declines have moderated as our production levels have stabilized. While much uncertainty exists in the macro environment with tariffs, interest rates, and the general economy. We have seen positive signs including declining channel We are cautiously optimistic that the industry is working through excess inventory and that more certainty over model year 2026 pricing allows for better planning. Interest rates have remained elevated, and any sustained decrease could be another catalyst for dealers and consumers to increase.
Schmidt: Our press release and our website contained. Reconciliations of these non-gaap measures to the most directly comparable, gaap measures.
Ben Palmer: Ben Palmer.
Mike: Mike uh thank you for joining our call this morning.
Mike: Second quarter sales were down slightly compared to the prior year. However, the year-over-year declines have moderated as our production levels have stabilized,
Mike: while much uncertainty exists in the macro environment with tariffs interest rates and the general economy,
We have seen positive signs including including declining Channel inventory.
We are cautiously optimistic that the industry is working through excess inventory and that more certainty over model year, 2026 pricing allows for better planning.
Interest rates have remained elevated and any sustained decrease could be another Catalyst for dealers and consumers to increase spending.
Ben Palmer: Our focus remains on positioning our brands for improved future demand, production efficiencies and maximizing our returns on investment. continue to manage our production relative to channel inventory. Despite industry-wide retail sales declines during the first four months of 2025 versus the prior year, we've been able to reduce our field inventory by 11% year-over-year. continue to partner closely with our dealers, but we note they remain cautious with regards to their levels. Because field inventory levels are reasonable, our retail promotional activity continues at typical levels. Tariffs remain top of mind. However, continued changes and ongoing negotiations make it very challenging to precisely plan it.
Mike: Our Focus remains on positioning, Our Brands for improved future demand production, efficiencies and maximizing our Returns on investments.
Mike: We continue to manage our production relative to channel inventory.
Mike: despite industry-wide retail sales declines during the first 4 months of 2025, versus the prior year, we've been able to reduce our field inventory by 11% year-over-year
Mike: We continue to partner closely with our dealers, but we know they remain cautious with regards to their levels of inventory.
Mike: Cfield inventory levels are reasonable our retail promotional activity continues at typical levels.
Ben Palmer: From an input cost standpoint, key purchases are engines, navigation systems, stainless steel, aluminum, and fiber. Suppliers have provided pricing for the new model year products, but major tariff changes could cause a revaluation by suppliers. We maintain dialogue with our government representatives and trade associations, but have limited visibility on the ultimatum. Interest rates continue to make headlines, with pressure coming to reduce rates while the Fed has remained cautious. The market now expects rate cuts in the coming months, but it may take some time for any rate relief to work through the industry. generate meaningful improvement in retail.
Mike: Tariffs remain top of Mind, however, continued changes and ongoing negotiations. Make it very challenging to uh uh precisely plan at this point.
Mike: From an input cost standpoint, keep purchases or engines navigation, systems stainless steel, aluminum and fiberglass.
Mike: suppliers have provided pricing for the new model year products, but major tariff changes could cause a revaluation by suppliers
We maintain dialogue with our government representatives and trade associations, but have limited visibility on the ultimate outcomes.
Mike: Interest rates continue to make headlines with pressure, coming to reduce rates while the FED has remained cautious on inflation concerns.
Mike: Market now, expects rate Cuts in the coming months, but it may take some time for any rate relief to work through the industry and generate meaningful Improvement in retail demand.
Ben Palmer: Our new models, introduced this time last year, were well accepted in the market. We are continuing to build on this.
Mike: Our new models introduced this time last year were well, accepted in the market.
Ben Palmer: We're excited about our 2026 model year rollout, where we've made several portfolio-wide changes. also added some new product. and refreshed a number of our models. Our focus remains on investing in our brand's reputation. being thoughtful on how we are packaging and enhancing our offer. We will continue to work closely with our dealers regarding channel inventory to maintain a healthy relationship as we have always done.
Mike: And we are continuing to build on this demand.
Mike: We excited about our 2026 model year. Roll out where we've made several portfolio. Wide changes.
Also added some new products and refreshed a number of our models.
Mike: Our Focus remains on investing in our Brand's reputation.
And being thoughtful and on how we are packaging and enhanced during enhancing our offerings.
Michael Schmit: Now Mike will provide an overview of the financial results. Thanks, Stan. Our second quarter financial results with comparisons to the second quarter 2024 are as follows. sales were down 3% to $67.7 million. driven by a 13% decrease in the number of boats sold, partially offset by a positive 10% net increase in price and mix.
Mike: We will continue to work closely with our dealers regarding Channel, inventory to maintain a healthy relationship. As we have, always done,
Mike: Now, Mike will provide an overview of the financial results.
Mike: Thanks Ben.
Mike: Our second quarter Financial results with comparisons to the second quarter of 2024 are as follows.
Mike: Sales were down 3% to 67.7 million.
Mike: Driven by a 13% decrease in the number of both sold.
Mike: Partially offset by a positive 10%, net increase in price and mix.
Michael Schmit: We note that quarterly sales have been stabilizing over the past few quarters, as evidenced by the 15 percent sales increase over the first quarter of this year.
Mike: We note that quarterly sales have been stabilizing over the past few quarters as evidenced by the 15% sales, increase over the first quarter of this year.
Michael Schmit: What do you see potential to deliver sales growth versus the prior year in the second half of 2025? Gross profit decreased to $12.9 million, although our gross profit margin percentage of 19.1% was up 20 basis points from the prior year. Our increase in the gross margin percentage versus the prior year was due to better alignment of our cost structure with current production needs, combined with the benefit from the increase in price and mix. SG&A expenses were $8.1 million in the quarter, up 9% or $0.7 million compared to last year's second quarter. SG&E as a percentage of sales was 12% up 130 basis points compared to the second quarter of last year.
Mike: We see potential to deliver sales growth versus the prior year in the second half of 2025.
Mike: Gross profit decreased to 12.9 million. Although our gross profit margin percentage of 19.1% was up, 20 basis points from the prior year.
Mike: Our increase in the gross margin percentage versus the prior year was due to better alignment of our cost structure. With current production needs combined with the benefit from the increase in price and mix.
Mike: Sgna expenses were 8.1 million in the quarter up 9%, or 0.7 million compared to last year's second quarter.
Mike: SG, as a percentage of sales was 12% up, 130 basis points compared to the second quarter of last year.
Michael Schmit: due to modestly higher R&D, advertising, and the timing of some incentive-based accruals.
Mike: due to modestly higher R&D advertising and the timing of some incentive based approvals,
Michael Schmit: Our tax rate was 21.3% in the quarter and is likely to be slightly higher than that for the remainder of the year. Diluted EPS was $0.12 in the second quarter, down from $0.14 last year. EBITDA was $5.6 million, down from $6.5 million last year. Year-to-date, we have generated operating cash flow of $9.2 million and free cash flow of $8.6 million. CapEx was only $400,000 during the quarter, and while we expect lower CapEx this year compared to last year, it will likely pick up in the second half of the year and track between $2 and $3 million for the year.
Mike: Our tax rate was 21.3% in the quarter and is likely to be slightly higher than that for the remainder of the year.
Mike: 14 cents last year.
Mike: Ibida was 5.6 million down from 6.5 Million last year.
Mike: Year to date. We have generated operating cash flow of 92.2 million and free cash flow of 8.6 million.
Mike: capex was only 400,000 during the quarter and while we expect lower capex this year compared to last year,
Mike: it will likely pick up in the second half of the year and track between 2 and 3 million for the year.
Michael Schmit: We paid $9.8 million in dividends here today through the second quarter of 2025.
Michael Schmit: And we finished the second quarter with $50 million of cash and no debt.
Mike: We paid 9.8 million in dividends year to date through the second quarter of 2025.
Mike: And we finished the uh second quarter with $50 million of cash and no debt.
Ben Palmer: I'll now turn it back over to Ben for a few closing remarks. Thank you, Mike. The marine industry continues to work through the challenging environment. However, however, we are excited about our 2026 model year, which we announced to our dealers in June. will demonstrate these models to our dealers at our August dealer meeting. We continue to evaluate acquisition opportunities and other partnerships to enhance Marine Products' portfolio. We believe our balance sheet and operational approach make us a buyer of choice for high-quality assets.
Ben Palmer: I'll now turn it back over to Ben for a few closing remarks.
Ben Palmer: Thank you, Mark. The Marine industry continues to work through the challenging environment. However however we are excited about our 2026 model year which we announced to our dealers in June.
Ben Palmer: And we will demonstrate these models to our dealers at our August dealer meeting.
We continue to evaluate acquisition opportunities and other Partnerships to enhance Marine Products portfolio.
Ben Palmer: We believe our balance sheet and operational approach make a supplier of choice for high-quality assets.
Ben Palmer: In closing, I want to thank our dealers for their continued collaboration and support and our employees for their dedication and hard work.
Ben Palmer: In closing, I want to thank our dealers for their continued collaboration, and support and our employees for their dedication and hard work.
Operator: That concludes our prepared remarks and with that operator, please open the line. At this time, if you would like to ask a question, please press star 1 on your telephone keypad. We will pause for a moment to compile the Q&A roster. There are no questions at this time.
Ben Palmer: Uh, that concludes our prepared remarks and without operator, uh, please open the line for any questions.
Speaker Change: At this time, if you would like to ask a question, please press star 1 on your telephone keypad, we will pause for a moment to compile the Q&A roster.
Ben Palmer: I will now turn the call back over to Ben Palmer for closing remarks. Appreciate everybody coming on and listening and hope you have a good day and hope to talk soon. Take care.
Speaker Change: There are no questions at this time. I will now turn the call back over to Ben Palmer for closing remarks.
Ben Palmer: Appreciate everybody, uh, coming on and listening and uh hope you have a good day and hope to talk soon. Take care.
Operator: This concludes today's call.
Operator: A replay of today's events will be available at MarineProductsCorp.com within two hours following the completion of the call. Thank you all for joining.
A replay of today's events will be available at Marine Products, corp.com within 2 hours, following the completion of the call.
Operator: You may now disconnect. Music
Ben Palmer: Thank you all for joining you may now. Disconnect