MPX - Earnings call 4 2023 | Marine Products Corporation

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Operator

Good morning, and thank you for joining us for Marine Products Corporation's Fourth Quarter 2023 Financial Earnings Conference Call. Today's call will be hosted by Ben Palmer, President and CEO; and Mike Schmit, Chief Financial Officer.

[Operator Instructions] I would like to advise everyone that this conference call is being recorded. I would now turn the call over to Mr. Schmit.

Michael Schmit

Thank you, and good morning.

reflect want will you call be forward-looking nature I the some could begin, known in that of statements made and we to risks. that remind of be and Before unknown number a on this press that Please filings at along with other those www.marineproductscorp.com. be found risks, all issued our refer release today, XX-K XXXX to and can our outline public of which

press and release, measures today's We we'll referring In in earnings measures non-GAAP performance and to compare over non-GAAP of these our operating to performance liquidity. call believe several us various be allow consistently periods.

release CEO, the website contain most Ben Palmer. press to turn reconciliations to GAAP today comparable over measures now measures. I'll non-GAAP Our and directly the issued and of President our call these our

Ben Palmer

and morning. Thank you, good

I to appreciate that some begin, the this we you want morning. [indiscernible] call remind joining everybody Before

the adjusted results multiyear response of Our through have we post-COVID reflect meet retail excess as channel inventory. demand works the boat the to boost consumer fourth ongoing subsides. In current order production sales slowdown, as patterns normalization quarter to the retail

now we in steady production and balance are sales. believe We of a

the are However, to prior year. position the comparisons quarter long-term versus persist sustainable declines growth. the sound our difficult focus year-over-year near financial results fourth The on will decisions to showed significant meantime, term. In making and we likely operational company for

current our a together schedule shipment we with programs and foremost, in reduction net facilitate production dealer should incentive and now believe inventories. First our

later While the that justify first still would a step-up early, we during in production seeing are flow order quarter.

much dealer the we recent of into with and the encouraging boat we our we are level too get from comfortable product channel. feedback not were calendar inventory, products an the say as year is that in pushing in as sign I'd So shows. With disciplined field regard to the positive start

incentives, and in launched comment which other the do normal fourth a a manufacturers doing minimal we've had program these fourth further inventory, buying, impact high. same. retail we quarter a level activities results will We outsized few To returned to years. historically the on to that promotional programs. are as move dealer overall these bit we past see the inventories dealer an stimulate reflected of get sense However, reinitiating [ quarter ] been Mike

the We've inventory. payments rates. somewhat the uncertainty for previously not talked about and dealers cuts we reality our clarity their within new also and The we and will higher unclear, economic outlook possible of of finance areas direction more a rate comfortable. Despite control. boats, rates who more the interest affect remains focused cost of but of help rate hope consumers will monthly business of consumers magnitude carrying get the interest environment, only on Rates the on remain choppy

new improvements to innovative support R&D continue differentiate in will marketplace. the to to products in design and invest ourselves We features,

materials example, we over leading as believe well benefits. product safety leadership and helped our For are delivering additional the our premium market reputation showcasing as innovation comfort interior maintain years. share has for us We and

have we our very pleased existing yet by than in or our Second, dealer education tools. recently to conferences customer We and them relationships training distribution, further. selling existing ] most latest intensive see hosted our our dealer strengthen we even with [ opportunities believe arming to overlapping and infrastructure. room dilute Rather we pursuing are competitive with dealers grow network that existing

We success continued Robalo positioning Chaparral are partnerships showrooms. in for with and to them, consistently their our committed elevating

collaborative from We look to advanced training conducted and of also efforts. sharing these result incredible as a our service forward we repair events, dealer feedback more in received for We dealer technical these and personnel. success

automation our plants. selective Another investment we're of is making

workers to safer tasks robotics physical a demands. quality production craftsmen our allows areas of on drive reduce and using increasingly We are This focus perform our leverage that skill drives to certain and unnecessary to environment maximum the consistency. and

In this installation later slated addition a for have solar we panel our inside facilities, year. significant investments to

benefits environmental the the sizable needs of site. This we this at to portion supply of capability our sources, savings. energy Georgia alternative our will Beyond a drive expect manufacturing equipment using have some project cash energy to Nashville,

So to before margin as we turning in the focus in I'd reiterate our ] [ business the call continue that of possible we health confident and the on are over, as assess preserving our we'll just environment. to opportunities much invest that as

of the overview Mike will Now financial provide an results.

Michael Schmit

start and go quick few financial with more the the for into a then quarter. highlights Thanks, I'll year Ben. about fourth some detail

cash up down versus X% net sales was and $XXX million. operating to free and EPS Diluted XXXX. $X.XX, after new XXXX, was trailers. was year. were CapEx up strong CapEx in slightly million, flow free $X.XX of for and We $XX some the million year full in $XX Operating flow last year. the investments cash flow million $XX $XX warehouses was million, included For EBITDA cash and generated

million dividends $XX of no and XXXX finished in million $XX with paid we year, we the and debt. During cash

million, as higher The quarter cover I'll fourth price our boats of which XX% costs. quarter a the selling sales reflected average Now of mix results, gross to year-over-year comparisons by fell in XX% with increases driven X%, $XX.X Net in decrease to XXXX. to fourth our increased as changes input cover boats well by sold.

incentives was recorded during this However, retail offset the by gain increased quarter.

a launched boats in we remained which that mentioned, to in we our dealers' incentive to applies sold prior boats quarter, the Ben we during new program that had shipped well as inventories quarter the dealers quarters. as retail As during

gross decreased margin points. basis gross While had a more a $XX.X or to on profit line relatively with million XX% a down was minor XXX of the program impact, top XX% our impact there noticeable margin. Gross

incentive to to and to in sales nearly million was in fallen exacerbated incentive would profit, XXX the While the incentives and dealers shipped retail by represented the net quarters. the about to of sold, gross quarter boats fourth the contraction. Furthermore, $X launch. basis equating gross program of X/X in reduction reduction prior point majority the related the boats profit decline margin due have in The quarter program

Now quarterly gross better and that million $X.X incentives commissions million down also sequential compensation, margins that production gross expect term EBITDA volume XX% last our now expenses incentive we SG&A the financial normalized don't current schedule year. year. compared stable cost warranty profitability improvements $X.XX going and guidance, changes reduction have next costs directionally, quarter in the expense. Diluted back EPS should or forward. explicit to have support will quarter, be $X.X and and and EBITDA it and relatively turn with adjusted our in sales over sales impacts decreased in align normalized due expenses But $X.X such margin and with $X.XX to the closing as with less XX% points quarter, vary comparisons challenging likely of were forward. I'll These demand, Ben down the quarters. to we going we last same believe incentives XXX give fourth we significant margin be to sales while was are remarks. for basis million for to down the few decreasing activities Year-over-year to X.X%. to was near a that couple in

Ben Palmer

I'd capital a to closing, comments. of In Mike. mention make you, I'll strategic allocation. Thank like couple

our for maintained our cash $X.XX per dividend attractive have we shareholders. quarterly share First,

attractive yield have offers an We capital and return. tangible compelling financial a our dividend sound investors profile believe

solid with cash. second cash free $XX full liquid year with million sheet million year, and still $XX the had we of some debt of ended while over which a Next, in challenges, balance XXXX half no the generated flow. We it a highly was

may well to One makers the of the seek an of be benefits positioned tide recent we the turns, disciplined environment of to boat is invest that during are opportunistically. Silver and of and as an conservative being exit. lining willingness market private soft increasing buoyancy current prudently

peak recent cash valuations it that resulted years, has While at us in in accumulation discipline the caused transaction are earnings pass we our to on a to looking has deploy. elevated on

brand that in targeting distribution complementary we're of in enhance and and a our are would M&A capabilities And choice positioning marketing the manufacturers the manufacturing and high-quality landscape. capabilities. interested portfolio increase buyer increasing We ourselves as our very our scale boat of

we to it investment not identify we While our difficult opportunities, long-standing do say to capital shareholders. practice continue likely significant to identify we're pinpoint returning timing, do not -- to fair that of if is

line employees like Robalo's believe Chaparral's our have good to year showcasing We best success. the we dedication. wholeheartedly orders feedback for boat we boat questions, shows before and over operator, great We So of in open questions. makers received and thank call that, weeks. With the commitment and of I'd recent underpin turn looking we're their pride, to and some the products coming from the our teamwork a please for and in to forward industry; and the new

Operator

of from [Operator first Rollé line Instructions] question Brandon comes Your with D.A. Davidson. the

Brandon Rollé

where your to And is it comfortable you you X on to the on where elevated? your be production months with inventory to production levels, but was the a could just levels, over plan had you about you your talked comment the where inventory in high. was first, talk last guess, like it for year. I compared maybe right inventories next little might about little able felt now, that overall and the a areas be Would industry in are you field,

Ben Palmer

during current Good adjusted we kind production and of fourth terms level, Probably the morning, in of quarters. our Brandon. third

better go here So we fourth kind talk quarter. to it's easier to about where or relative probably the of from

to have been last results boat slightly indicated the shows we that maybe here early So of the positive to year. consistent

production adjusted is we'll think quarters so it's how recent that forth. next we hard -- we with appropriate shows that kind adjust the in first where -- an sort some to activity pleased watch results had year. or of We've so then dealers, demand, from forward. appropriate had weather, But to production the could, we've some the coming are a indicated fourth again, down shows slightly as and be But of -- negative quarter had demand on the the think early in we read recent of some we'll of and indications comments I in generally increasing assess of boat where indicated levels We we move through. accordingly and we're quarter my some that that get we rate read during an of with

little some to hopeful expect had make programs will will maybe respect we're and documented inventory, it's room benefited this program forward. And out, the a took -- we industry segments a market. for So and of strong it with for have year retail manufacturers to incentive of that than retail us products. our and production clear moves demand from field increase the slowed our other the It our us I dealer other we with as think that segment really with little bit further inventory of down sooner that but been the -- our of

-- But so think inventory some say primary than I I the would products, that's to of the So I'd more aluminum some experienced they have. area. have want think,

Brandon Rollé

Okay. Or of shows encouraging forward? you or space you performance both mentioned as being more these had the on you positive in Great. slightly specifically boat was attendance moving view What gave retail seeing terms sales? were show And positive a least. boat or a that the guys it combination of at at

Ben Palmer

of feel the placed the that better the tangible the positive. I year at think sales is in still measure a we You for were it's a both or, I than getting And are of show. said, year and some relatively and a sense those And ago, slightly had right? just things like number seeing course, orders a the attendance ago. cases, excitement people things, get of similar

to but sign, of move So firm we good our take a we're production dealers. going up from have certainly indications until that orders not we as

assessing So constantly that. we're

Michael Schmit

the Yes. the that especially, in here was Northeast due there comment that add negative weather. was Northwest, South lot of because a referring And -- boat the I'll of I really lot in that's think shows impact to just a to

is heard of better. mentioned, bit things last their if Ben discounting because that. and attendance were didn't of was year really instance. the going Northwest, what considering slightly we're for we're at that we that we Boat our show than in great the attended last if not on that crowds the mean that are weather really dealers, as the better fact not Atlanta from same, about not -- what's But a indicative I the And was something definitely So sort little year. the Show, same, this in have the as Northeast, they I the market.

So in -- a place year. and great last were we

by that. were encouraged we very So

Brandon Rollé

on combination are or Okay. Great. incentive a as a dig -- going And to like your Or helping wholesale new retail retail program, in you are out of both? deeper incentives could with they dealers well just are on little then they these incentives? incentives the

Ben Palmer

discussed in and and quarter, be had that think the we the of dealers showrooms. the from in today program and quarter the already what we fourth announced to with the accounting able impact shows and started It's talked an late were and in required, work offer at to so we -- What program of those on program. effect, the the impact of of And still a as been about -- course, retail incentive consumers cost a record the retail on the the that purpose that estimate retail an sales it's course, recorded. fourth program to we

that So that's significantly the in gross much to our all pay to still impacted would had talked that we record retail we this thought or boats inventory. about estimate we incentives was an sold we've this we dealer of point out where the fact up are because quarter margin how in

do significant, and types always it buyers encourage to through filter think will that those we we orders will inventory. as to dealer restock with But estimate an and programs. it's to additional order it's their of retail So

idea. the that's So

So It's not It's it's more more normal. a little just outsized. not It's normalized. huge. really

If you go kind days. of pre-COVID back

Michael Schmit

just our through ship to those more of you of of There's both. dealers Robalo other answer read it. the but it's on incentive about I'll float Chaparral kind lot a on and incentives to websites. that it combination There's and and websites Yes. retail, to some question, called is it a can flow about information both add [ ] boat your

Brandon Rollé

feel retail like and And place how demand, to to Great. to really given production needs normalized destocking the in you are where industry much take Okay. do just current get levels? back guess at I inventories the

Ben Palmer

our work it with is it That's just answer I'll dealers. do, a process to is difficult our mean, I question. by saying, What we quantify difficult. we

levels We out number our that points wants so their retail on we appropriate have the time inventory miss looking periodic us, with decide that that be have they sale. an and dealers, go of their Nobody and inventory to meet together order during they're over a need to to right? what's at sufficient delivered boats demand, to year

it be execute. to So door hand that to the walk you are [ other to meet ] need inventory buyers to have have able -- that to in on helps that ready

weeks. indication in movement So We're pleased shows. watching getting we're point dealers. says up some We're they're have coming We'll boat next another the working with early order obviously the the that few inventory. with in their

in aligning you production in disciplined that. need terms seeing about right of sales to we're very and demand inventory. and to actual we're if that regard So but making what some in with we're the you're dealer projection it that have sure now, helps Certainly, going future, of make accelerate a

to spring -- be that this to would to able later again quarter positive. to production as be sales expect So summer and some even be support further. hope should We and able even inventory to increase bring well down

Brandon Rollé

and then... great Okay

Operator

from comes question next line Your Kennison Craig the with of Baird.

Ben Palmer

in? there. have off check Brandon Can may been you Operator, cut

Operator

to take Kennison want question with Baird. of apologies. Craig a line Sorry. We My from the

Craig Kennison

different in on wanted I touch, affordability guess, to way. a I Yes,

got. -- of you've some you or affordable to to important foresee promotions that? if itself mentioned the change prices? product is how in I'm just But You any changes target And order the the in wondering mix product any more change that

Ben Palmer

responsive on. the balance the have I kind best challenge of 'XX, economic point the to we we're definitive go a to was series, and and with is shifts time HXO work At demand if any in trying period past with harkening to benefits always which cost in cycle. out that were lower able with boat great that 'XX in 'XX, came a changes in we're the the and quality we frame, consumer a and some an we of create the to something were vendors, back the do we point appealed not sign those and best the and out the at always of unit But you and a to between working been to of -- able this Well, cost and to back taking through features question. kind come measures, the go product time time, think in consumer our it's the that

the have now, closely, point, certainly we But on in as watching At we we demand we'll adjustments this have, today, sufficient and we're still right products we're make the feel that that necessary. but not anything doing that particular.

a boats way, course, high benefits. And expensive Of our most obviously do have carry fairly to the we not the that sort don't a point, we we're options at results. we our need a lower of volume more believe which some have seen boats, this and a we wide we adjust smaller sizes the lot At do point, But price do lower configuration the question carry seeing boat of another the the price. range the are to that occur. point. to good of sell and we've answer a our weight We try product But sell to it's question. that not to our with thing respect may or of need -- -- or features and still

Michael Schmit

just quick, I'll Yes. add really too.

haven't input in any really our a of seen We decline costs.

kind so the they to going up erosion. contrary, slightly, you've seen little fact, bit still In margin of are a of

really supply cost of are too now work that because we with will stabilizing things thing the that's So the chain down boats and chains the a hope supply increased. tough has input

boats industry. price So reflected that the higher whole the really have of in

Craig Kennison

Are portfolio? where balance guess, and expand acquisition available. your you then curious interest? have expand you in portfolio I desire where sheet become to boat or the particular to categories had And I'm I opportunities there your your holes if think mentioned opportunities strong see Great. you portfolio the

Ben Palmer

dealer good we Obviously, be to decision, that good would many somebody manufacturer, into want We and that attractive We manufacturer. go factors product. overlap us to that certainly to company, significantly do dealer a a That's leverage we we network. complementary. want could attractive want Yes. network to network. a we quality don't and that's something appeal strong about something that certainly, dealer When don't our that an to so that I aluminum our would think really have think

again, advantage fashion. would take do but cash That benefits and to of that in a on lot some think, we to go allow side, X a we I sizes, so the know again, in not leverage offshore prudently. us both that utilize of choice terms the form to that larger, could of the market, that dealer in we probably that do cash, our we We and shareholders some boats. be want our some larger the opportunity or don't the we're would we fiberglass fact certainly, would create significantly network, brand. something, we have to leverage able and able And primary some are positioned have generate and that indicated, nicely ones first be think we're the larger perhaps to find return if to to cash we'll offshore I as of then invest

Michael Schmit

the of last on specifically recent pontoons, there's aluminum in kind be the recent the for slowed, higher industry. -- increasing demand rate a more would progress but And years, just we rest XX of lot be months, historically pontoons is over that demand a to than seems the one X, of at that see --

interesting. very that's So

Craig Kennison

take you lot sheet, Just cash to a willing still profile? while no comfortable debt much at on you're balance looking with How of your are cash, flow your debt.

Ben Palmer

the months today "not and afraid equity secondary the debt" have $XXX we have we But We sales and XX other million. Obviously, approaching could forth. raise last options. so through over are would we of

$XXX -- easily a flow cash to an that's of the but a acquisition I I million -- balance I would we million would funded number. initially size that all So cash capability or not we it our adding and if company mean problem. a could at on $XXX $XXX with the they $XXX itself, be not pick be were a could not just think, problem acquisition, with million to be need be would to cash or depending fund think or and right, problem sheet million, doing, we generating a quality generating our

Operator

[Operator like at this Instructions] further the I would over Ben turn back There to are call Palmer. to CEO, time. our questions no

Ben Palmer

being you care. the very on and everyone, to with catching for Thank forward call you Take look up much, later.

Operator

gentlemen, joining. Thank concludes today's and for that call. all you Ladies

disconnect. now may You

Marine Products (MPX) 25 Jan 242023 Q4 Earnings call transcript