This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk00: Good morning, and thank you for joining us for Marine Products Corporation's first quarter 2021 Financial Earnings Conference Call. Today's call will be hosted by Rick Hubbell, President and CEO, and Ben Palmer, Chief Financial Officer. Also to present is Jim Landers, Vice President of Corporate Services. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for you to queue up for questions. I would like to advise everyone that this conference call is being recorded. Jim will get us started by reading the forward-looking disclaimer.
spk03: Thank you, Ashley, and good morning. Before we get started today, I'd like to remind everyone that some of the statements that we will make on this call may be forward-looking in nature and reflect a number of known and unknown risks. I'd like to refer you to our press release issue today, the 2020 10-K, and other SEC filings that outline those risks, all of which are available on our website at marineproductscorp.com. If you've not received our press release, please visit our website, again, at MarineProductsCorp.com for a copy. We will make a few comments about the quarter, and then we'll be available for your questions. Now, I will turn the call over to our President and CEO, Rick Hubbell. Jim, thanks.
spk01: We issued our earnings press release for the first quarter of 2021 this morning. Ben Palmer, our CFO, will discuss the financial results in more detail in a moment. Before we start, though, I'd like to thank our employees for their continued dedication as we continue to design and manufacture peer-leading products to satisfy extraordinary dealer and customer demand. We are very proud of what we have achieved over the past year, and we appreciate all that you are doing. Now a few highlights on the quarter. Marine Products Corporation's first quarter 2021 reflects the continued increased interest in recreational boating that we first observed at this time last year as consumers rediscovered boating as a safe, enjoyable recreation activity suitable for these extraordinary times. Unit sales during the first quarter were almost 18% higher than the first quarter of last year. We are entering the peak retail selling season with continued high-order backlogs. We are manufacturing new product at the highest production rate possible while still maintaining our quality standards. The recently reported market share statistics for the 12 months ended December 31, 2020, indicated that both our outboard and stern drive market shares increased compared to the previous reporting period. Reballo continues to hold the highest market share in the 16 to 36 outboard category, and the combination of Reballo and Chaparral's outboards holds 6.7% of that market. Our Chaparral stern drives hold 16.9% of the market in their size range, an increase from the previous reporting period. We announced this morning that our board of directors yesterday declared a quarterly cash dividend of 12 cents per share, representing a 20% increase compared to the prior quarter. With that overview, I'll now turn it over to our CFO, Ben Palmer.
spk02: Thank you, Rick. Net sales for the first quarter of 2021 were 78.4 million, a 32.6% increase compared to the first quarter of last year. Unit sales increased by 17.9% during the quarter as we generated higher sales across all our models. Average selling prices increased by 15.5% due to a model mix, which included more larger boats. Gross profit in the first quarter was $18.5 million, an increase of 52.5% compared to the first quarter of 2020. Gross margin during the quarter increased to 23.6% compared to 20.5% in the first quarter of last year. Gross margin as a percentage of net sales increased due to the efficiency benefits of higher production and a favorable model mix compared to the prior year. Selling general and administrative expenses were $8.4 million in the first quarter of 2021. an increase of $1.2 million compared to $7.3 million in the first quarter of last year. These expenses were higher due to expenses which vary with sales and profitability, such as sales commissions, incentive compensation, and warranty expense, partially offset by lower marketing costs in the first quarter as compared to the prior year. For the quarter ended March 31, 2021, we generated net income of $8.1 million, an increase of 92.4%, compared to net income of $4.2 million in the first quarter of 2020. Diluted earnings per share were $0.24, double the $0.12 diluted earnings per share that we recorded in the first quarter of last year. Our effective tax rate during the first quarter of this year was 19.3% compared to 14.4% in the first quarter of the prior year. The increase in the first quarter's effective tax rate was due to lower beneficial permanent differences coupled with higher pre-tax income this year and a similar positive discrete tax adjustment amount in both years. We project a full-year 2021 effective tax rate of approximately 20%. Our international sales accounted for 5.1% of total sales during the quarter, an increase of 18% compared to the first quarter of the prior year. Our international sales declined in Canada, but reflected strong increases on a percentage basis in many of our other international markets. Our cash balance at the end of the first quarter was $35 million, an increase of $14.9 million compared to $20.1 million at the end of the first quarter of 2020, reflecting strong cash flows of the business. As Rick mentioned, we're entering the peak of the retail selling season with continued high order backlog and strong dealer demand. With that, I'll turn it back over to Rick for a few closing remarks.
spk01: Thank you, Ben. 2021 is continuing the strong trends and demand that first emerged last year at this time, when the requirements of social distancing and the cancellation of so many organized activities revealed recreational boating as the perfect alternative activity during these times. I am pleased that we have transitioned our sales and marketing efforts to web-based platforms while still making the customer experience informative and personal. We are pleased with strong dealer and consumer interest in all of our models as evidenced by our growing market share. We are also encouraged by the growing number of first-time boat buyers who have purchased a boat during the previous year. The demographic profile of these buyers indicates that boating has a wide appeal across a variety of age groups. There are many reasons to believe that recreational boating is undergoing a positive secular change in demand. With so many manufacturing businesses, however, we have started to experience supply chain disruptions, which will impact our second quarter 2021 production and sales growth. We are working with our suppliers to understand these disruptions and continue the most efficient manufacturing processes possible while ensuring high product quality. Thank you for joining us this morning, and we'd be happy to take any questions you may have.
spk00: At this time, if you have a question, please press star, then the number 1 on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. And there are no questions at this time. I will hand the call back to Jim Lenders for closing remarks.
spk03: Thank you, Ashley, and thanks to everybody who called to listen in this morning. We hope everyone has a good day. We'll talk to you soon. Thanks.
spk00: As a reminder, this conference call will be replayed on MarineProductsCorp.com within two hours following the completion of the call. That concludes today's conference. Thank you for your participation. You may now disconnect.
Disclaimer