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spk00: and 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. I will now turn the call over to Mr. Smith.
spk03: Thank you and good morning. Before we begin, I want to remind you that some of the statements that will be made on this call could be forward looking in nature. and reflect a number of known and unknown risks. Please refer to our press release issued today, along with our 2023 10-K and other public filings that outline those risks, all of which can be found at www.marineproductscorp.com. In today's earnings release and conference call, we'll be referring to several non-GAAP measures of operating performance and liquidity. We believe these non-GAAP measures allow us to compare performance consistently over various periods. Our press release issued today and our website contain reconciliations of these non-GAAP measures, the most directly comparable GAAP measures. I will now turn the call over to our President and CEO, Ben Palmer.
spk02: Thanks, Mike, and thank you all for joining our call. a few weeks ago after a long and courageous battle with cancer. I worked closely with Jim here at Marine Products for more than 20 years. He was a tremendous contributor to the company in so many ways. I'm sure those of you listening today who were lucky enough to work with him over the years know he was also a great friend and colleague. He will truly be missed by all of us. Shifting to our results, First quarter results showed signs of stability on the top line and some improvement in profitability sequentially compared to the fourth quarter of last year. However, year-over-year comparisons were very challenging, consistent with the near-term expectations we signaled on our last call. Both the quarter played out generally as we anticipated, and our discussion today might feel quite similar to our last call, as the key themes remain very much the same. uncertain demand, and higher floor plan carrying costs. We are being proactive in managing costs and production schedules during this soft period. As we said last quarter, we have reduced our production levels to be more in line with current demand as our dealers' work-throughs show remuneratories. This production scaleback was in order of magnitude of around mid-30% range Although we would certainly want our plant to be busier with more production to fill orders, we are taking advantage of this slowdown to execute operational projects we were unable to undertake during our periods of surging demand from the pandemic through mid-2023. Examples include projects to maintain and repair our tooling, improve consistency of lamination and other assembly processes, and evaluate alternative production schedules. With regard to dealer inventory, I'll echo my comments from last quarter, that we remain pretty comfortable with the level of our products in the field. But we continue to hear that high inventories are still an issue for many dealers, often in categories where we do not compete. We would note that our field inventory units is solidly below pre-pandemic levels. However, we may not return to those levels regardless of demand, given the new normal of higher carrying costs. We continue to have attractive retail incentives in the marketplace and are encouraged to see monthly sales trends for our dealers reflecting the typical ramp up throughout the first quarter. There was positive reception at most of the early 2024 boat shows with customers excited about our product lineup. Consistent with recent trends since the rise in interest rates, our larger priced boats, which are often purchased by cash buyers, sold better than smaller, lower priced boats Speaking of borrowing costs, it is worth noting that there remains a great deal of uncertainty regarding the timing and magnitude of a potential decline in interest rates. Though there had been broad consensus for multiple rate cuts by the Fed during 2024, expectations have clearly moderated with mixed economic data clouding the interest rate output. While this is a macro factor out of our hands, we will focus on things within our control. to support our dealers and maximize our partnerships. Now, Mike will provide an overview of the financial results.
spk03: Thanks, Ben. For the first quarter of 2024, compared to the first quarter of 2023, sales were down 42% to $69.3 million, driven by a 40% decrease in the number of boats sold. Price and net netted to a negative 2%. Of note, last year's first quarter sales of $119 million were the highest in company's history, as we were still experiencing unprecedented post-pandemic demand at that time last year. Gross profit decreased 52% to $14 million, with gross margin of 20.2% down 420 basis points versus last year, although recall we had an outside impact on gross margin in the fourth quarter from the reinitiation of our traditional retail incentive program. So we were encouraged to see the sequential increase in gross margin from 19% in the fourth quarter of 23 back to over the 20% mark in the first quarter of 24. SG&A expenses were $8.7 million in the quarter, down 40% for $5.8 million compared to last year's first quarter. These expenses decreased due to costs that vary with sales and profitability, such as incentive compensation, sales commissions, and warranty expenses. In addition, last year's first quarter results included a non-cash pension settlement charge of 2.1 billion dollars. The limited ETF was 13 cents in the first quarter, down from 34 cents last year. EBITDA was 5.9 million dollars, down from 15 million dollars. and even a margin of decreasing 410 basis points to 8.5%. Year-over-year comparisons were obviously difficult for the first quarter and may remain soft in the near term. It should become less pronounced later this year. While we don't give explicit financial guidance, directionally we believe sequential sales will be relatively stable and that our cost reductions and normalized incentives should result in stable margins as well. I'll now turn it back over to Ben for a few closing remarks on capital allocation, including the special dividends we announced this morning. Thanks, Mike.
spk02: As headlined in our release this morning, our Board of Directors approved a $0.14 per share regular quarterly dividend and a $0.70 return of capital to our shareholders. While we have limited our stock repurchases in recent years due to our relatively small float, we're extremely proud of our track record for distributing cash back to our investors. For the five-year period from 2019 to 2023, we paid $85 million to our investors in dividends. balance sheet that allows all cash flow to benefit our equity holders. We ended the first quarter with over $80 million in cash and believe that even following this special dividend payment, we will have ample liquidity to pursue organic investments in the business, as well as maintain the flexibility to pursue strategic acquisitions to continue actively assessing the marketplace for the right opportunity, the right valuation. Of course, over time, if capital to our investors. Special dividends are naturally less consistent, but we have a track record for periodically returning excess cash to our investors. These boost the total potential return of our stock, which already has an attractive dividend yield of around 5%. So before we turn the call over for questions, I'd like to thank our employees for their contributions every day, our dealers who continue to partner with us We're excited about entering the prime selling season and look forward to sharing results with you next quarter. With that, operator, please open up the line for questions.
spk00: We will now begin the question and answer session. If you would like to ask a question, simply press star followed by the number one on your telephone keypad. To withdraw your question, press star one again. Our first question will come from the line of Griffin Bryan with D.A. Davidson. Please go ahead.
spk01: Yeah, thanks. So I guess first off, can you just give us some color on, you know, how you're thinking about your production schedule for the rest of the year? And, you know, are there any signs of retail sales inflections you're specifically looking for to kind of turn that spigot back on?
spk02: This is Ben. You know, appropriate question. You know, as we indicated, we worked. Looking forward to the new model year, which will start soon, and some of our new products that will be out there we're really excited about. We're just going to have to wait and see. What we always do is set our production levels where we believe it's appropriate. We don't try to anticipate demand. We plan based on firm orders we have in hand, so we're going to have to work with our dealers You know, they're monitoring their field inventory. We're watching that as well. We're hopeful that, you know, once we get through this selling season and hopefully dealer inventories begin to settle out, we hope at that point we'll be able to increase production. But at this point in time, we expect that the next change in production will be up, but we'll just have to wait and see. Again, an appropriate question, but we're monitoring production monitoring that and we'll adjust as appropriate.
spk01: Yeah, fair enough. And then you mentioned, you know, field inventory overall right now is still too high. So can you just give us an idea of, you know, maybe any progress that's been made since the beginning of the year and, you know, how long it may take to get back to a more normalized level, you know, if that even is still a thing just kind of at the current retail run rate that we're seeing?
spk02: Well, what I would comment on is, again, when we look at our production rate and ship rate relative to retail sales and relative to our field inventory, we're comfortable where we are. Again, indication of being or that, again, ties back to the fact that we think the next move in our production schedule will be up, but we'll have to wait and see. We'll wait for the order flow. But we are encouraged. improvement in sales as normally happens this time of the quarter heading into the spring and summer. I wouldn't say it's extraordinary, but it's more normal. And so, again, we are comfortable with our current production schedule and are looking forward to the opportunity to increase production hopefully sometime in the next quarter
spk01: Got it. And then, you know, with the promotions needed to incentivize the consumers, do you see these promotions continuing throughout the selling season? And, you know, do you think that you'll be able to get this pricing back sometime maybe this year, maybe that's next year? Just any color on that would be great.
spk02: You know, we very meticulously evaluate and design and manage our retail programs. That's not abnormal. I would say the level of our incentives and size of the incentives at this point in time, but we always have the opportunity to make adjustments to those as needed.
spk03: But I do expect there will be some incentive programs in place for the next couple of quarters.
spk01: Got it. And then lastly, just with some recent news surrounding problems that kind of larger dealers Can you speak to the current health of your dealer partners and maybe what their appetite is to take on new model years once those start rolling out?
spk02: Well, there has been a lot in the news about some dealers. We're glad to report that our relationships with our dealers are great. Our dealers are doing great. fine but they everybody's struggling with the level of field inventory but we're very comfortable we're very diversified both geographically and across our dealer network we don't have currently not aware of any concerns with any particular dealer but we are partnering with them with these retail programs and with our dealer incentive programs uh and and we're Quite proud of them and very happy about our dealer network and the long-standing relationships we have with them. Certainly, we recognize that they are key to our success. They're doing a great job managing their businesses in this environment, and we're happy and pleased and proud to be associated with each and every one of them.
spk01: Appreciate it. Best of luck in the next quarter. Thank you.
spk00: Thank you very much. There are no further questions at this time. I will hand the call back over to Mr. Ben Palmer for closing remarks.
spk02: Well, thank you, everybody, for listening in this morning. We appreciate it and look forward to catching up with you later. Have a good day.
spk00: Today's call will be available for replay on our website at marineproductscorp.com within two hours following the completion of the call. this does conclude today's conference call thank you all for joining you may now disconnect
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