Marine Products Corp (MPX) Q3 2024 Earnings Call Highlights: Navigating Challenges with ...

GuruFocus News
3 min read

In This Article:

  • Revenue: $49.9 million, down 36% compared to the third quarter of 2023.

  • Gross Profit: $9.2 million.

  • Gross Margin: 18.4%, down 630 basis points from the previous year.

  • SG&A Expenses: $5.6 million, down 36% from the previous year.

  • SG&A as a Percentage of Sales: 11.3%, consistent with last year's third quarter.

  • Diluted EPS: $0.1, down from $0.3 last year.

  • EBITDA: $4.3 million, down from $13 million last year.

  • Operating Cash Flow: $24.9 million year-to-date.

  • Free Cash Flow: $21.3 million year-to-date.

  • CapEx: $3.6 million in the third quarter, with a full-year expectation of approximately $5 million.

  • Cash on Balance Sheet: Over $53 million at the end of the third quarter.

Release Date: October 24, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Marine Products Corp (NYSE:MPX) has taken decisive measures to manage costs and production, including manufacturing headcount reductions and scaled-back production, to align with current demand.

  • The company has extended promotional programs and enhanced third-party floorplan financing to support dealers and incentivize consumers.

  • Marine Products Corp (NYSE:MPX) celebrated Chaparral's 60th anniversary and unveiled new models, colors, features, and options, receiving positive feedback from dealers.

  • Despite a challenging market, the company has maintained a strong cash position, ending the third quarter with over $53 million in cash on the balance sheet.

  • The company has returned significant cash to investors through regular and special dividends, demonstrating a commitment to shareholder value.

Negative Points

  • Sales for the third quarter of 2024 were down 36% compared to the same period in 2023, driven by a 40% decrease in the number of boats sold.

  • Gross profit decreased significantly, with a gross margin of 18.4%, down 630 basis points from the previous year.

  • The company is experiencing under absorption of fixed costs, impacting profitability despite efforts to control labor expenses.

  • Dealer caution regarding new orders persists, reflecting ongoing weak consumer demand in the marine industry.

  • The company faces challenges with order payout patterns and has seen some minor ordering delays due to recent hurricanes.

Q & A Highlights

Q: How did retail performance trend throughout the quarter, and do you think the recent improvements mark the bottom of the downturn? A: Ben M Palmer, President and CEO, noted that while there were positive signs such as a 13% decline in field inventory, it's difficult to pinpoint specific models driving this. The team has effectively managed production levels, but it's too early to declare a bottom in the downturn.

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