Marine Products Corp. Files Q2 2024 10-Q

TL;DR

MPX 10-Q filed. Boat builder's latest financials are in.

AI Summary

Marine Products Corp. filed its 10-Q for the period ending June 30, 2024. The company, headquartered in Atlanta, GA, operates in the ship and boat building industry. This filing details their financial performance and operational status for the quarter.

Why It Matters

This filing provides investors and analysts with the latest financial data for Marine Products Corp., crucial for understanding the company's performance in the boat building sector.

Risk Assessment

Risk Level: low — This is a routine quarterly financial filing with no immediate red flags.

Key Players & Entities

• MARINE PRODUCTS CORP (company) — Filer
• 0001129155 (company) — Central Index Key
• 2801 BUFORD HIGHWAY NE, SUITE 300 (company) — Business Address
• ATLANTA (company) — City
• GA (company) — State
• 30329 (company) — ZIP Code
• 404-321-2140 (company) — Business Phone
• 20240630 (date) — Conformed Period of Report

FAQ

Key Financial Figures

• $0.10 M — ch registered: Common stock, par value $0.10 MPX New York Stock Exchange Indicate

Filing Documents

• mpx-20240630x10q.htm (10-Q) — 1020KB
• mpx-20240630xex31d1.htm (EX-31.1) — 13KB
• mpx-20240630xex31d2.htm (EX-31.2) — 13KB
• mpx-20240630xex32d1.htm (EX-32.1) — 8KB
• 0001558370-24-010165.txt ( ) — 4624KB
• mpx-20240630.xsd (EX-101.SCH) — 37KB
• mpx-20240630_cal.xml (EX-101.CAL) — 39KB
• mpx-20240630_def.xml (EX-101.DEF) — 112KB
• mpx-20240630_lab.xml (EX-101.LAB) — 262KB
• mpx-20240630_pre.xml (EX-101.PRE) — 221KB
• mpx-20240630x10q_htm.xml (XML) — 643KB

Financial Information

Part I. Financial Information Item 1.

Financial Statements (Unaudited)

Financial Statements (Unaudited) Consolidated Balance Sheets – As of June 30, 2024 and December 31, 2023 3 Consolidated Statements of Operations – for the three and six months ended June 30, 2024 and 2023 4 Consolidated Statements of Comprehensive Income – for the three and six months ended June 30, 2024 and 2023 5 Consolidated Statements of Stockholders' Equity – for the three and six months ended June 30, 2024 and 2023 6 Consolidated Statements of Cash Flows – for the six months ended June 30, 2024 and 2023 7

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 8 - 16 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 17 - 23 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 23 Item 4.

Controls and Procedures

Controls and Procedures 23

Other Information

Part II. Other Information Item 1.

Legal Proceedings

Legal Proceedings 25 Item 1A.

Risk Factors

Risk Factors 25 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 25 Item 3. Defaults upon Senior Securities 25 Item 4. Mine Safety Disclosures 25 Item 5. Other Information 25 Item 6. Exhibits 26

Signatures

Signatures 27 2 Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS MARINE PRODUCTS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2024 AND DECEMBER 31, 2023 (In thousands, except shares and par value data) June 30, December 31, 2024 2023 ASSETS (Unaudited) (Note 1) Cash and cash equivalents $ 55,131 $ 71,952 Accounts receivable, net of allowance for credit losses of $ 11 in 2024 and $ 11 in 2023 5,726 2,475 Inventories 53,080 61,611 Income taxes receivable 235 361 Prepaid expenses and other current assets 3,440 2,847 Total current assets 117,612 139,246 Property, plant and equipment, net of accumulated depreciation of $ 34,153 in 2024 and $ 32,789 in 2023 22,733 22,456 Goodwill 3,308 3,308 Other intangibles, net 465 465 Deferred income taxes 9,435 8,590 Retirement plan assets 17,365 15,379 Other assets 4,808 4,358 Total assets $ 175,726 $ 193,802 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities Accounts payable $ 7,955 $ 6,071 Accrued expenses and other liabilities 16,598 16,496 Total current liabilities 24,553 22,567 Retirement plan liabilities 20,238 17,998 Other long-term liabilities 1,679 1,649 Total liabilities 46,470 42,214 Commitments and contingencies (Note 15) Stockholders' Equity Preferred stock, $ 0.10 par value, 1,000,000 shares authorized, none issued — — Common stock, $ 0.10 par value, 74,000,000 shares authorized, issued and outstanding – 34,717,733 shares in 2024 and 34,466,726 shares in 2023 3,472 3,447 Capital in excess of par value — — Retained earnings 125,784 148,141 Total stockholders' equity 129,256 151,588 Total liabilities and stockholders' equity $ 175,726 $ 193,802 The accompanying notes are an integral part of these consolidated financial statements. 3 Table of Contents MARINE PRODUCTS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED J

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. GENERAL The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (all of which consisted of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. The Consolidated Balance Sheet at December 31, 2023 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. For further information, refer to the Consolidated Financial Statements and footnotes thereto included in the annual report of Marine Products Corporation ("Marine Products," the "Company" or "MPC") on Form 10-K for the year ended December 31, 2023. A group that includes Gary W. Rollins, Pamela R. Rollins, Amy Rollins Kreisler and Timothy C. Rollins, each of whom is a director of the Company, and certain companies under their control, controls in excess of fifty percent of the Company's voting power. 2. RECENT ACCOUNTING STANDARDS The FASB issued the following Accounting Standards Updates (ASUs): Recently Issued Accounting Standards Not Yet Adopted: ASU No. 2023-07 — Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in this ASU require an entity to disclos

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 3. NET SALES Accounting Policy: MPC's contract revenues are generated principally from selling: (1) fiberglass motorized boats and accessories and (2) parts to independent dealers. Revenue is recognized when obligations under the terms of a contract with our customer are satisfied. Satisfaction of contract terms occurs with the transfer of title of our boats and accessories and parts to our dealers. Net sales are measured as the amount of consideration we expect to receive in exchange for transferring the goods to the dealer. The amount of consideration we expect to receive consists of the sales price adjusted for dealer incentives. The expected costs associated with our base warranties continue to be recognized as expense when the products are sold as they are deemed to be assurance-type warranties (See Note titled Warranty Costs). Incidental promotional items that are immaterial in the context of the contract are recognized as expense. Fees charged to customers for shipping and handling are included in Net sales in the accompanying Consolidated Statements of Operations and the related costs incurred by the Company are included in Cost of goods sold. Nature of goods: MPC's performance obligations within its contracts consist of: (1) boats and accessories and (2) parts. The Company transfers control and recognizes revenue on the satisfaction of its performance obligations (point in time) as follows: Boats and accessories (domestic sales) – upon delivery and acceptance by the dealer Boats and accessories (international sales) – upon delivery to shipping port Parts – upon shipment/delivery to carrier Payment terms: For most domestic customers, MPC manufactures and delivers boats and accessories and parts ahead of payment - i.e., MPC has fulfilled its performance obligations prior to submitting an invoice to the dealer. MPC invoices the customer when the products are delivered and typically receives

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Assumption: Current model year incentive activity will closely reflect prior model year actual results, adjusted as necessary for dealer purchasing trends or economic factors. Other: Our contracts with dealers do not provide them with a right of return. Accordingly, we do not have any obligations recorded for returns or refunds. Disaggregation of revenues: The following table disaggregates our sales by major source: Three months ended Six months ended (in thousands) June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023 Boats and accessories $ 68,166 $ 114,562 $ 136,629 $ 232,281 Parts 1,381 1,596 2,258 2,791 Net sales $ 69,547 $ 116,158 $ 138,887 $ 235,072 The following table disaggregates our revenues between domestic and international: Three months ended Six months ended (in thousands) June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023 Domestic $ 65,281 $ 108,076 $ 129,683 $ 219,071 International 4,266 8,082 9,204 16,001 Net sales $ 69,547 $ 116,158 $ 138,887 $ 235,072 Contract balances: Amounts received from international and certain domestic dealers toward the purchase of boats are classified as deferred revenue and are included in Accrued expenses and other liabilities in the accompanying Consolidated Balance Sheets. June 30, December 31, (in thousands) 2024 2023 Deferred revenue $ 479 $ 654 Substantially all of the amounts of deferred revenue disclosed above were or will be recognized as sales during the immediately following quarters, respectively, when control is transferred. 10 Table of Contents MARINE PRODUCTS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 4. EARNINGS PER SHARE Basic and diluted earnings per share are computed by dividing net income by the weighted average number of shares outstanding during the respective periods. In addition, the Company has periodically issued share-based payment awards that contain non-forfeitable rights to dividends and are therefore considered participating securities. Restricted shares of common stock (participating securities) outstanding and a reconciliation of weighted average shares outstanding is as follows: Three months ended Six months ended June 30, June 30, (in thousands) 2024 2023 2024 2023 Net income available for stockholders: $ 5,585 $ 14,321 $ 10,182 $ 25,870 Less: Adjustments for earnings attributable to participating securities ( 719 ) ( 343 ) ( 839 ) ( 616 ) Net income used in calculating earnings per share $ 4,866 $ 13,978 $ 9,343 $ 25,254 Weighted average shares outstanding (including participating securities) 34,708 34,458 34,670 34,419 Adjustment for participating securities ( 886 ) ( 839 ) ( 883 ) ( 830 ) Shares used in calculating basic and diluted earnings per share 33,822 33,619 33,787 33,589 5. STOCK-BASED COMPENSATION The Company has issued various forms of stock incentives, including, incentive and non-qualified stock options, time-lapse restricted shares and performance stock unit awards under its Stock Incentive Plans to officers, selected employees and non-employee directors. The Company's 2014 Stock Incentive Plan expired in April 2024. At the April 23, 2024, annual meeting of stockholders, the 2024 Stock Incentive Plan, reserving 3,000,000 shares for the issuance of share-based payment awards described above , was approved. In accordance with the terms of their Director Compensation Program, equity grants in the form of fully vested Company shares totaling approximately $ 400 thousand were awarded to all

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) An analysis of the warranty accruals for the six months ended June 30, 2024 and 2023 is as follows: (in thousands) 2024 2023 Balance at January 1 $ 7,078 $ 5,699 Less: Payments made during the period ( 2,453 ) ( 2,091 ) Add: Warranty provision for the period 2,162 3,495 Changes to warranty provision for prior periods 41 156 Balance at June 30 $ 6,828 $ 7,259 The warranty accruals are reflected in Accrued expenses and other liabilities in the accompanying Consolidated Balance Sheets. 7. BUSINESS SEGMENT INFORMATION The Company has one reportable segment, its powerboat manufacturing business; therefore, the majority of segment-related disclosures are not relevant to the Company. In addition, the Company's results of operations and its financial condition are not significantly reliant upon any single customer or product model. 8. INVENTORIES Inventories consist of the following: June 30, December 31, 2024 2023 (in thousands) Raw materials and supplies $ 35,652 $ 40,340 Work in process 11,281 10,601 Finished goods 6,147 10,670 Total inventories $ 53,080 $ 61,611 9. INCOME TAXES The Company determines its periodic income tax provision based upon the current period income and the annual estimated tax rate for the Company adjusted for discrete items including tax credits and changes to prior year estimates. The estimated tax rate is revised, if necessary, at the end of each successive interim period to the Company's current annual estimated tax rate. For the three months ended June 30, 2024, the effective rate reflects a provision of 15.7 percent compared to a provision of 16.8 percent for the comparable period in the prior year. For the six months ended June 30, 2024, the effective rate reflects a provision of 20.0 percent compared to a provision of 19.6 percent for the comparable period in the prior year. The decrease in the effecti

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 10. PENSION AND RETIREMENT PLANS The multiemployer Retirement Income Plan ("Plan"), a trusteed defined benefit pension plan, sponsored by RPC, Inc. ("RPC"), that the Company participated in was fully terminated in 2023. Amounts related to prior year are disclosed below: Three months ended Six months ended June 30, June 30, (in thousands) 2023 2023 Interest cost $ — $ 4 Expected return on plan assets — — Amortization of net losses — 22 Settlement loss 188 2,277 Net periodic cost (1) $ 188 $ 2,303 (1) Reported as part of Selling, general and administrative expenses in the accompanying Consolidated Statements of Operations. The Company permits selected highly compensated employees to defer a portion of their compensation into a non-qualified Supplemental Executive Retirement Plan ("SERP"). The Company maintains certain securities primarily in mutual funds and company-owned life insurance ("COLI") policies as a funding source to satisfy the obligation of the SERP that have been classified as trading and are stated at fair value totaling $ 17.4 million as of June 30, 2024 and $ 15.4 million as of December 31, 2023. Trading gains related to the SERP assets totaled $ 0.6 million during the three months ended June 30, 2024, compared to trading gains of $ 425 thousand during the three months ended June 30, 2023. Trading gains related to the SERP assets totaled $ 2.0 million during the six months ended June 30, 2024, compared to trading gains of $ 762 thousand during the three months ended June 30, 2023. The SERP assets are reported in Retirement plan assets in the accompanying Consolidated Balance Sheets and changes to the fair value of the assets are reported in Selling, general and administrative expenses in the accompanying Consolidated Statements of Operations. The SERP liabilities include participant deferrals net of distributions and are stated at fair value of $

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