Marine Products Corp., manufacturer of Robalo and Chaparral boats, today reported a 78.9 percent drop in net sales for the first quarter.
The results reflect "the very difficult environment in which the recreational boating industry finds itself," CEO Richard A. Hubbell said in a statement.
He said the financial crisis of the fourth quarter caused consumers to halt virtually all large discretionary spending. Marine Products' net sales fell to $13.8 million in the first quarter, which ended March 31, compared to $65.5 million in the year-ago quarter.
The company reported a net loss of $2.5 million, or 7 cents per diluted share, compared to net income of $4.1 million, or 11 cents per diluted share, in the prior year. The net loss in the 2009 quarter was due to an operating loss and lower interest income, partially offset by an income tax benefit.
Hubbell said the company worked closely with its dealers throughout the first quarter to manage their inventory levels and monitor their financial conditions. He noted that dealer inventories at the end of the quarter were about 11 percent lower than at the end of 2008 and 35 percent lower than the same time last year.
However, based on weak winter boat show results and other indicators from dealers, Hubbell said he does not expect improvement in the near term. The strategy now, he continued, is to produce "an appropriate quantity" of current-year models to meet firm demand, while continuing "a prudent amount" of new-model development for the 2010 model year.
"To support this strategy, we are producing our current-year models at a very low but steady production level," he said. "Also, we recently developed a new retail incentive program to be in effect during the 2009 spring retail selling season designed to reduce field inventory further."
To preserve its working capital through the current slump, the company's board of directors voted yesterday to suspend Marine Products' quarterly dividend.
In other company news, Marine Products expanded its board to 10 and elected Larry L. Prince as a new director. Prince serves as the chairman of the Executive Committee of the Board of Directors of Genuine Parts Co.; chairman of the board from 1990 through February 2005; and CEO from 1989 through August 2004. He also serves as a director of Crawford & Co., and SunTrust Banks.
"Larry Prince is a highly experienced and very successful business leader," said R. Randall Rollins, chairman of the Marine Products board, in a statement.