MARINE PRODUCTS CORP Q1 FY2024 earnings call

• First quarter results showed signs of stability on the top line and some improvement in profitability compared to the fourth quarter of last year, though year-over-year comparisons were challenging. - Production levels reduced by around mid-30% range below peak production rates in H1 2023 to align with current demand, with focus on executing operational projects. - Comfortable with product levels in dealers, but high inventories remain an issue for many dealers in non-competing categories. - Positive reception at early 2024 boat shows, with larger priced boats (cash buyers) selling better than smaller, lower-priced ones (financed purchases). - Focus on cost and efficiencies, navigating the environment by executing projects to improve operations and support dealers.

For the first quarter of 2024 compared to the first quarter of 2023, sales were down 42% to $69.3 million. Gross profit decreased 52% to $14 million with a gross margin of 20.2%, down 420 basis points versus last year. SG&A expenses were $8.7 million in the quarter, down 40% or $5.8 million compared to last year's first quarter. Diluted EPS was $0.13 in the first quarter, down from $0.34 last year. EBITDA was $5.9 million, down from $15 million and EBITDA margin decreasing 410 basis points to 8.5%.

• Directionally, believe sequential sales will be relatively stable. - Cost reductions and normalized incentives should result in stable margins.

• Uncertainty regarding timing and magnitude of potential decline in interest rates. - Industry contending with dealer channel flushed with inventory and hesitant to order aggressively.

Q: Can you give color on production schedule for rest of the year and signs of retail sales inflections?

A: We've set current production level, looking forward to new model year. Wait and see based on order flow, expect next change in production to be up but need to wait for order flow. Encouraged by sales improvement heading into spring and summer.

Q: Idea of progress on field inventory since beginning of year and time to normalize?

A: Comfortable with current position schedule, encouraged by sales acceleration, looking forward to potential increase in production next quarter.

Q: Will promotions continue throughout selling season and when pricing may normalize?

A: Expect programs to stay in place throughout selling season, incentives are attractive but not outsized, will see how season plays out, expect some incentive programs in next couple of quarters.

Q: Health of dealer partners and their appetite for new model years?

A: Relationships with dealers are great, dealers are doing fine though struggling with field inventory, diversified geographically and in dealer network, no concerns with particular dealers, proud of dealer network and long-standing relationships.