Marine Products Corp., the Atlanta-based builder of Chaparral and Robalo boats, reported lower net sales but a higher net profit for the third quarter.
Net income for the quarter that ended Sept. 30 was $1.2 million, a 20 percent increase from $1 million in the quarter a year earlier. The company said net income rose primarily because operating profits were higher. Diluted earnings per share were 3 cents for the third quarter this year and last year.
Marine Products said it generated net sales of $22.25 million during the quarter, a 7.4 percent decrease from $24.03 million a year earlier. The company said the decline was attributable to a 22 percent decrease in the number of boats sold, partially offset by a 20 percent increase in the average selling price per boat.
Marine Products said average selling prices improved among most of its product lines, particularly among Chaparral SSi and SSX sportboats, because of higher unit sales of several of the larger boats in that model lineup.
“There were several positive developments during the quarter which improved our financial results and encouraged us regarding the near-term selling environment for our products in spite of the lower unit sales generated during the quarter,” Marine Products CEO Richard A. Hubbell said in a statement.
“First, we realized strong unit sales in our Chaparral 327, 287 and 267 SSX models. These boats carry higher average selling prices and contributed to generating higher gross profit in the third quarter of 2011 than in the third quarter of last year. In addition, we received strong dealer orders for our new 2012 Chaparral H2O Sport and Fish & Ski Boats at our annual dealer conference. We believe that this new entry-level Chaparral lineup will allow us to achieve a number of our objectives related to improved manufacturing cost efficiencies, meeting dealer requests for entry-level models and increasing retail market share. Our success during the quarter with some of our larger models, as well as strong indications regarding the near-term future sales of the H2O models, have encouraged us to increase production during the fourth quarter in order to meet these meaningful increases in demand.”
Marine Products said gross profit for the quarter was $4.63 million, or 20.8 percent of net sales, compared with $4.08 million, or 17 percent, in the prior year. The company said the increase was the result of a favorable model mix of fewer small boats and more larger boats. That mix yielded higher average unit selling prices and higher gross profit margins than during the prior year’s quarter. To a lesser extent, favorable materials usage variances also improved profitability, the company said.
These positive factors were partially offset by reduced production efficiencies from lower production volumes.
Operating profit rose to $1.49 million from $1.18 million in the third quarter last year because of higher gross profit, partially offset by slightly higher selling, general and administrative expenses, the company said.
Net sales for the nine-month period that ended Sept. 30 were $78.5 million, a decrease of 2.1 percent from the first nine months of 2010. Net income for the nine-month period was $3.1 million, or 8 cents a diluted share, compared with $3.39 million, or 9 cents a share, in the prior year.