Marine Products reports 2Q results

Marine Products Corp., the builder of Chaparral and Robalo boats, today announced a more than $20 million increase in second-quarter net sales.

For the quarter that ended June 30, Atlanta-based Marine Products had net sales of $31.68 million, compared with $8.19 million a year earlier. The increase in net sales was attributable to a significant increase in the number of boats sold and lower retail incentive costs, compared with the prior year, partially offset by a 14.3 percent decrease in the average selling price per boat.

The decrease in average selling price per boat was largely attributable to the sale of fewer Premiere Sport Yachts during the quarter, as well as a change in model mix in the Sunesta and Signature Cruiser lines, the company said.

Gross profit for the quarter was $6.6 million, or 20.8 percent of net sales, compared with a gross loss of $3.97 million in the prior year. The gross profit resulted from higher sales, lower retail incentive costs and increased efficiencies attributable to higher production levels.

"We operated at significantly higher production levels, compared to the prior year, in response to retail demand for new models and lower dealer inventories," the company said in a statement.

Net income for the quarter was $2.47 million, compared with a net loss of $3.84 million in the prior year. The company moved from a loss to a profit because of higher operating profits, partially offset by an increase in the income tax provision and slightly lower interest income.

Earnings per share for the quarter were 7 cents, compared with a loss of 11 cents a share in the prior year.

Net sales for the six-month period were $56.17 million, a 162 percent increase from the first six months of 2009.

"Lean dealer inventories benefited Marine Products Corporation during the second quarter. Sales to dealers of all of our models increased in the second quarter of 2010, as compared to the prior quarter and the prior year. Our higher production and resulting production efficiencies, as well as substantially lower dealer incentives and our continued cost containment efforts, have allowed us to achieve profitability during the second quarter of 2010," CEO Richard Hubbell said in a statement.

"Although unit sales to our dealers during the quarter increased significantly year over year and increased by more than 25 percent sequentially, our field inventories have continued to decrease, compared to the end of the first quarter of 2010, as well as at the same time last year," he added. "We are pleased by the result of our efforts to reduce dealer inventories, which improves their financial condition and allows them to accept new updated products when the retail selling environment improves."

Hubbell also said the company anticipates that U.S. retail boat sales will decline 10 to 20 percent this year, compared with 2009. He attributes this to the recession and additional weakness in the Gulf region because of the oil spill.

"The 2011 model year officially started in late June. Our annual dealer meeting will occur in August and we believe that our dealers will respond positively to our new models," Hubbell said. "However, given the uncertainty caused by fluctuating consumer confidence and the continued industry-wide depressed retail selling environment, we plan to reduce production during the third quarter in order to maintain an acceptable level of dealer inventories and preserve the value of our brands."


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