MPX - Earnings call transcript Q3 2019 | Marine Products Corporation

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Operator

Good morning, and thank you for joining us for Marine Products Corporation’s Third Quarter 2019 Financial Earnings Conference Call. Today’s call will be hosted by Rick Hubbell, President and CEO; Ben Palmer, Chief Financial Officer. Also present is Jim Landers, Vice President of Corporate Finance. [Operator Instructions] I would like to advise everyone that this conference call is being recorded.

Jim will get us started by reading the forward-looking disclaimer.

Jim Landers

good and Brittany, you, morning. Thank

forward-looking started Before to and and everyone on unknown which like reflect our be remind filings, risks. XX-K I’d refer release I’d some we this number of you known may make press get XXXX that will the to we issued other risks. and our to today, SEC statements of nature those in like outline call a that today,

www.marineproductscorp.com. are these on available website at of All our

not press a website, We’ll about our you’ve questions. again, at we’ll make comments our If please visit your then received release, few available and www.marineproductscorp.com copy. the for be for quarter a

to I President Rick and turn CEO, call Now will over our Hubbell. the

Rick Hubbell

the CFO, of Palmer, briefly highlights. in I thank morning. Ben discuss discuss this will a third time, operational quarter in Jim, issued moment. release We you. more our XXXX will our financial our the results earnings this detail At for press

the increased the price per units Our net to in a selling decrease increase average sales increases over increased in sales year. during a of during of quarter the X.X% X.X% due boat. sold the slightly prior Net number quarter. the partially second by offset were second These quarter

market We of share continue a to our hold high all in product categories.

products June XX. market sterndrive share for ending months in holds highest Chaparral’s the second XX.X% Our XX their category, the approximately

yesterday shares market regular share X.X%. position morning market to The a a outboard position special third the of Also continue announced in level the share. share the on special its XX,XXX dividend dividend per X.X%. as with a second-largest of of of our its $X.XX reward we Directors continued $X.XX a Board of represents overall market. maintained year-end cash our year-end a of quarter, capital in per cash with the Robalo highest during dividend Directors that to and Chaparral this Robalo declared brand combination the of quarterly the open hold the common outboards to prudent believe stock shareholders. dividend use We and category, share repurchased Board of of plus

I turn Ben CFO, our With it over will Palmer. that overview, to

Ben Palmer

the Thank you, year. million, continued larger the quarter were XXXX. of with decreased with production a focused increased producing of selling models. with quarter Rick. models. prices, XXXX third unchanged of quarter $XX.X during our the million, compared third on Gross relatively third third in Gross the to by was for of X.X%, margin X.X% XX.X% of decreased newer XXXX. of sales compared quarter to sales sales quarter third Average strength Net the decrease $XX.X last in larger Unit as compared profit we quarter again, the in consistent XX.X%

XXXX, third by of a These – general in costs. third Selling, of were in and $X million quarter million compared these $X administrative the due quarter quarter, with higher decreased expenses decrease during the $X.X state last recorded incentives million year. decreases to advertising of expenses third partially $XXX,XXX offset employment-related the and of

expenses in decreased the of to SG&A quarter compared to XXXX the net third a As X.X% X.X% year. sales, last percentage of of in third quarter

year. Interest an with third income $XX,XXX, compared $XXX,XXX third was quarter during of decrease XXXX during XX.X% quarter the the last of

quarter of the $X.XX in quarter year earnings per $X.XX were in the the of X.X% For quarter XX, to third an $X.X compared ended in income with third quarter of increase $X.X September million XXXX. compared Diluted third million, XXXX. of reported income of net we of the net this share

to sales XXXX. the decreased of to quarter third only Products Our increase with net third prior XXXX domestic Marine of third quarter the effective the year compared quarter during rate compared contrast, international to compared In quarter sales tax was during last year. of XXXX that’s the year. third slightly in prior third this quarter the X.X% represented compared in of an net of the in sales XX.X% sales the XX.X% of year, of of XX.X% X.X%

sales by trade year at end end securities quarter quarter cash at of of $XX.X increased markets, third negatively in our the marketable compared the which year. X.X% Canadian impacted $XX the the significantly million, were last International was balance of or tariffs. $XXX,XXX last an and Cash of increase of third million to

the than at selling September retail of quarter during inventories As dealer XXXX, dealer of second strong indicating the XX, lower this season. were end sell-through

last was and third time headcount are dealer However, levels quarter Because the fourth dealer year early reduced backlog inventories monitoring these end of at order have production of inventory the we the in closely than lower. quarter. were this scheduled and and at higher developments,

turn that, back Rick. With I’ll to it over

Rick Hubbell

Ben. in We XXXX our models. held dealers’ annual Thanks, dealer and both August pleased with our conference to reception we’re our

dealers XXX very new our the were Surf dealers we upgrades new an Our our Robalo XXX. model, enthusiastic Among redesign OSX which products, Series about showed Cayman our XXX on OSX, updated Chaparral XXXX. was our for and

focus our line model in are directed toward allow efficiency is will focused that end up presenting lineup us more a and XXXX dealers We than profitability. markets our customers We and believe in and to increase to on model past high years. our demand

our to the demand are you have. to you prepared and morning, thank attention economy for adjust we production us I’d and requirements. to happy general of we’d pay questions be to our this any always, products may like As dealers’ meet for our to and joining take indications close

Operator

[Operator question Instructions] first B. you. Our from Eric comes Wold with Thank Riley.

Eric Wold

on what the maybe questions. saw age year-over-year downturn Thank little I bit inventory yes, in to this be seeing want it’s from a see looking a sorry, mix a of their sense given the that to dealers one of replace you up bit? you terms going give from now I where comments, adjust desire in, to and inventory, inventory to us June, in to an on would kind about maybe inventory – a what environment. not and move of of to kind put that, like little you’re guess that I and guess may A good of talk kind kind of also you then, morning. And take you’re question of – looks couple the guess production maybe

Rick Hubbell

and you why Jim, go that. don’t take ahead

Jim Landers

this Sure. Jim. is Eric, Yes.

real We our of practice current and have inventories lean possible. a keeping as as year much model

all in So it’s of the numbers it’s of model cautious some other pretty our the me, year, I – and age in are mix media mean in things. pretty there because Eric, I is the now there is lot of the terms good. of we and front Dealers but seem don’t have inventory bit just not a signals to right inventory, started inventory be but right XXXX are good. a

decent retail sales. And concerns – that December Boat in belied by are of were in some were decent, September boat decent the registrations for the example.

the and to causes production the So us better and cautious indications. get for show We there’s just need signals be mix now few get to some that to about next months. right winter boat season

Eric Wold

landscape the are be the recently Okay. when sales right that? discount prices release, gross interpretation? then, And to in what that you move you and That not to selling about talk decreased needed competitive is inventory on that you’ve indication promotional it press from then the slightly. And seeing you mentioned,

Ben Palmer

is this correct. That’s Eric, Ben. Yes.

time. had comments, we’re of question to yes, with. and We aggressive to And inventory your back particularly very, the Jim’s promotions point pleased with have not aging the in be earlier this our very at

I lot to comes and of pulling think inventory. adding when about there’s decisions pushing their dealers a it to making

cautious, healthy. be now, bit We overly be cautious more financing bit but that everybody, that keeps little pull right companies have prudent, may perhaps, the are may a push and being a

is again, point the right there. inventory of very little And good about a overall in quality our lineup. yes, the decisions are there feel, dealer may bit made. But there at be time, and model We is caution out of this

bit feel, very So a of yes, these model this at out We dealer we’re lineup. of and is quality just good making the point there in time, caution the our again, about there. inventory adjustments little

at as clear a So time, adjust we in ahead. we’ll this and we’re adjustments these just see point little road making

Eric Wold

question Okay. And me. final then from

incentives, that you that future as the us be can that maybe the was situation? is the a well? something And in give sense approximately $X.X On for? periods a one-time what of Is SG&A, state that would million

Ben Palmer

hitting an it it year third Good years’ they so to a of it We incentives or amount time sort appreciate that credits more hit clear of variety incentive, in and no annual the year. of was or all things all of quarter. because Typically, tight be question. number frame. five of that all of – is but to four, we up, this more for reasons. is sort That it through a to very in we do X,XXX this than X,XXX than large a worth no it, would is quarter. but in just again, this had years – wrap a one And here needed a There’s secure number

Eric Wold

And it Okay. typically? for what is us,

Ben Palmer

is What you activities. state It’s a similar R&D program. through. to for? process incentive There tax go it is the related to federal Georgia It’s

a through state collect it, were qualification did we and and incentives process, go approved few to we have coming over months. the those You – we’ll and the

Eric Wold

Perfect. guys. Thanks

Ben Palmer

you. Sure. Thank

Operator

Shawn from Boyd Capital. Mark Next Our question next with comes

Shawn Boyd

taking for me, Good question. guys morning. the you okay? Can Thanks here

Rick Hubbell

Yes.

Shawn Boyd

Great.

orders? curious for about I linearity and how quarter. the was months within you Could Just quarter real about the the impacted briefly talk quick, the that

Jim Landers

is this Shawn, Jim Landers.

not a whole terms of We to of are in there’s lot – make. linearity, comment

tried we schedule our produce to a to manufacturing production which products that, on firm. run smooth-out the Just is a remember way best regular,

and to sell their sales bit. retail a fluctuate public dealers Our the may

whole So there’s we a tell really not can you. lot

see of variation. see to wouldn’t the you If months were lot of quarter, a our you individual

Shawn Boyd

Okay. I appreciate that.

I down? could order So you the bit think, talk book, flow maybe progressed? I or didn’t what hear order just the quarters about And did at versus little that but year-over-year, you if then the as quarter through much was that the talk end how actually, about quarter a

Jim Landers

Yes.

those detail in we disclosed our XX-K. year statistics only So once actually a in

them fairly qualitative again, comments year. And So we is even during flow the the about throughout quarter. order make

our quarter around sales, decline to If trying maybe sequential get fourth was you believe, last year fourth it third to quarter were I XX%.

to as is to dealers are healthy. much Ben therefore cutting As – inventory one But we at production you don’t too Ben dealer inventory. alluded do thing want and sure stay mentioned, your make really looking have

dealer in maybe is this of production will quarter key fourth pronounced inventory year. healthy. and bit last more than That’s perhaps the sales our decline a the year So be

Ben Palmer

boats. less ship number benefits certainly Obviously, ship production and we that so Ben. in as it as I’ll as We – boats and view. elaborate we’re and interested try adjust for to imagine, right, revenues – in us that. is not quickly. therefore wanting or It’s are a and typically we in out you them quarters, as and that but therefore in production quarter, many Jim’s here third – the are fourth this as is can typically can and on to as quickly production less, we reasonably keep I’ll said, weekly well. we third fourth us moving us that typical in don’t the steady. is longer-term It not produce even and this flow lower do Dealers to absolutely And But orders that record unusual. possible of Jim the it’s pivot near monthly. term and fairly maybe adjust bringing

there’s just-go make a have production. to adjustments to work number if But through you issues, of to

as basis. So that’s fluid on it’s or again, a weekly monthly something even usually as not

unusual – view. for – So the bit we indicated, production it’s selling longer-term little more down as at that a of the are we selling retail season. taking after point, this late or in And not a

bit just a because directly, time, that but time just by they financing in a being this at plan cautious as are this indirectly. being well. point supported little indirectly, companies that’s and They supporting little floor bit at cautious being not are point So the in

Shawn Boyd

kind clear the just business. you And last No, of what have that the done say, sequentially I production this and to kind how versus, overall done and big you the early up, are on Sure. of loud going I they on QX? you’ve roughly cuts wrap appreciate seasonality of year the in into QX, headcount comments would hear that. the just

Jim Landers

on still update give we’ll an on Shawn, that one on to on. process that, we’re have so later

Shawn Boyd

Okay.

I And just from Okay. last guess, question me.

for the us spread there. of maybe areas press shape your the production are the on the maybe of and point But much and I’m don’t in products about guessing the to are know, in certain thinking of at spread? wide comment and elaborate in they terms are sterndrive a in order In particular models cuts, this particular. that helpful? and these the in be kind I the And within higher-end But you focused release the to able in kind could do models would would pretty or if weakness boats be just better I’m maybe anything be

Jim Landers

to I particularly There is particularly based of comment. mean that out book. stands order as being hard not it’s on kind That’s our or anything good. bad

the going to that sales our models think the I seen probably stay so place quarter. in that over our for are past fourth year the – trends we’ve or in

migrated focused but results are a boats. model continues. think towards kind nothing market more And opportunities really there’s have a bit for we That the we that out jumps they got We larger move us, lineup where that financial would necessarily. of

was some that dealer. the got strong of We models are getting reception a geared from newer up. That real the

that by to to their for the we’re So the demand. those wanting inventory meet shows. time winter Dealers scrambling in boat get models new

the that well. and results for part So that’s the driver will focused be something on ultimate as of we’re clearly

Shawn Boyd

– Okay. QX, of QX we’re talking just One in of looking on terms that as decline. here, last I’m kind thing back

– that years mentioned XX% see think XX%, decline quarter-to-quarter, I do last said that. we where you You but don’t you year have

you you I have if go XX% to where an So what was discussed? looking you or of that at that something decline trying I’m previous of you just here back driving XXXX, XXXX, XX% there these up? Or did was to about that years mean, particular I’m to right acquisition kind more understand just –

Jim Landers

years Shawn, are we the fact, we point are seasonal – could industry any catch can business nature can up on. this time. I up the when to wouldn’t things years, nature about of way the and like all very cyclical the where publically talk is years there’s you to those decks and and that. been are we’re in want discuss out point that strength there We later but there’s at nothing boating of many maybe that given that have We and year there – back consumer the keep the it. where that cyclical. economy some boat to But There things. discuss point and demand overshadows those tremendous go correct some mean, where XXXX to scrambling and

good of point, little feel position the about a of this at good we caution but talked about out like we about we bit So feel industry, there. the as there’s

caution and logical the the dealers, be back things more being fourth wouldn’t fourth we may so with deliver all quarter and boats people, If I of of early next there the XXXX. have equal, out wish financing year and to we shipping say, – quarter, Darn, production there, second first lot So in shipping fourth sense. producing to quarter. the won’t behind makes able wish quarters a in the had shipped boats fewer in in and look more boats We companies, is the sell-through there been and be

weakest among calendar are the higher of taken. can well where fourth several there weakest third years is the are quarter than fourth point examples year. your will be the quarter of well quarter, be the but the or where So There some is the as the year

Operator

now there time, will over this for to back no questions. further the turn are closing. At Landers conference Jim I

Jim Landers

appreciate you. and listen Okay. talking thank and to everyone, follow-up good forward who to questions appreciate Brittany, in, the We again, to everybody soon. called day. some a Have look and we

Operator

hours This the call of you, replayed conference call. following on Thank will www.marineproductscorp.com two within the completion everyone. be

may disconnect. You now

Marine Products (MPX) 23 Oct 192019 Q3 Earnings call transcript