Marine Products Corporation Reports Fourth Quarter 2018 Financial Results

ATLANTA, Jan. 23, 2019 /PRNewswire/ -- Marine Products Corporation (MPX) announced its unaudited results for the quarter ended December 31, 2018.  Marine Products is a leading manufacturer of fiberglass boats under two brand names: Chaparral and Robalo. Chaparral's sterndrive models include H2O Sport and Ski & Fish Boats, SSi and SSX Sportboats, Sunesta Sportdecks and Signature Cruisers.  The Chaparral Surf Series includes select models from the SSi, SSX, H2O and Sunesta lineups. Chaparral's outboard offerings include SunCoast Sportdecks and select H2O models. In addition, Chaparral offers jet boats with its Vortex Jet Boats lineup.  Robalo builds outboard sport fishing boats, which include center console, dual console, walkaround cabin and Cayman bay boat models.

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For the quarter ended December 31, 2018, Marine Products generated net sales of $62,062,000, a 5.4 percent decrease compared to $65,591,000 in the same period of the prior year.  The decrease in net sales was due to an 18.1 percent decrease in units sold partially offset by a 14.2 percent increase in the average selling price per boat. Unit sales declines were concentrated in Marine Products' international markets.

Gross profit for the quarter was $13,017,000, a 9.4 percent decrease compared to gross profit of $14,366,000 in the same period of the prior year.  The decrease in gross profit was primarily due to lower net sales.  Gross margin as a percentage of net sales was 21.0 percent in the fourth quarter of 2018, compared to 21.9 percent in the fourth quarter of 2017.  Gross margin as a percentage of net sales declined due to production inefficiencies primarily related to labor.

Operating profit for the quarter was $6,016,000, a decrease of 19.5 percent, compared to $7,470,000 in the fourth quarter of last year.  Selling, general and administrative expenses were $7,001,000 in the fourth quarter of 2018, compared to $6,896,000 in the fourth quarter of 2017. Selling, general and administrative expenses as a percentage of net sales were 11.3 percent in the fourth quarter of 2018 compared to 10.5 percent of net sales during the fourth quarter of 2017. 

Net income and earnings per share for the fourth quarter of 2018 include the benefit of lower corporate tax rates due to Tax Reform. Net income for the fourth quarter of 2018 was $4,728,000, a decrease of $313,000 or 6.2 percent compared to net income excluding the impact of Tax Reform of $5,041,000 in the fourth quarter of 2017.¹  Diluted earnings per share of $0.14 decreased by $0.01 compared to diluted earnings per share excluding the impact of Tax Reform of $0.15 during the fourth quarter of 2017. 

Net sales for the 12 months ended December 31, 2018 were $298,616,000, an increase of 11.7 percent compared to the prior year.  Net income for the 12 months ended December 31, 2018 was $28,488,000 or $0.83 diluted earnings per share, compared to net income excluding the impact of Tax Reform of $20,985,000, or $0.60 diluted earnings per share excluding the impact of Tax Reform in the prior year. 

Richard A. Hubbell, Marine Products' President and Chief Executive Officer stated, "The U.S. recreational boat market continued to be strong through the end of 2018, as the economy remains solid and our customers continue to be excited about our products. Marine Products' U.S. domestic sales declined slightly during the fourth quarter of 2018 compared to the prior year. However, our international sales decreased by more than 50 percent compared to the prior year, to 3.2 percent of total sales, due in large part to the impact of trade tariffs that were enacted during 2018. The impact of the decline in international sales was partially offset by an increase in domestic sales of several of our larger boats, including our larger Chaparral H2O and SSX models and one of our 24-foot Robalo models. On a positive note, our order backlog at the end of the fourth quarter was higher than at the end of the fourth quarter of last year, and dealer inventories were relatively unchanged, reflecting dealer enthusiasm and a strong order outlook for the next few months. In support of this theme, we note that attendance at many of the early 2019 boat shows has been strong.

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