Marine Products Corporation

Good morning and thank you for joining us for Marine Products Corporation fourth quarter and year end 2024 financial earnings conference call. Today's call will be hosted by Penn Palmer, President and CEO, and Mike Smith, Chief Financial Officer. At this time, all participants are in 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. I will now turn the call over to Mr. Schmidt.

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 10K 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 and our website contain reconciliations of these non-GAAP measures, the most directly comparable GAAP measures. I'll now turn the call over to our President and CEO, Ben Palmer.

Thank you, Mike, and thank you all for joining our call. Apologize for the issues we've had there. Fourth quarter results were negative compared to prior year. However, we are seeing early signs of stabilization and a path to turning the corner toward growth later this year. The marine industry continues to push through a lackluster period. Sentiment remains cautious, but perhaps best characterized is shifting from cautious and concerned to cautiously optimistic. During this past year, we've been laser focused on managing costs and production levels as tightly as possible. without disrupting our business and jeopardizing our ability to support our dealers when industry demand picks back up. Channel inventory has been the most acute challenge facing us and our peers in 2024. We are pleased to share that our field inventory ended the year about 15% lower than prior year. We feel we have been true partners to our dealers by conservatively managing our field inventory. While dealer inventories did increase sequentially from the end of the third quarter, it's our normal seasonal pattern as dealers position themselves for the winter boat shows and the spring selling season. The 15% field inventory decline versus last year reflects some sell-through of older models. Bottom line, this has not been an easy journey, navigating channel inventory excesses over the last 18 months. But we are pleased where we've landed and with our current position, especially relative to some of our competitors and categories where we don't compete. With respect to interest rates and dealer and consumer sentiment following the election and transition to a new presidential administration, we are encouraged by the general optimism for improved business conditions. After some interest rate reductions, there are mixed signals on the near-term direction of rates, but we believe they will likely be neutral to favorable going forward. Though purely anecdotal, our dealers are expressing a hopeful sentiment for consumer demand. With the election behind us and some closure to the general political uncertainty from the second half of 2024, we hope consumers will steadily come back into the market. Feedback from winner vote shows thus far is that they are well attended by credible buyers expressing renewed interest. So few buyers conveyed a sense of urgency. We also heard some buyers who had purchased their first boat during the pandemic were already considering upgrades to a newer and or larger model. Cash buyers will likely be the first area of strength we see, but we also heard some feedback that entry-level buyers showed interest as well, an encouraging sign for consumers looking to finance their boat purchases. Again, these are anecdotal and directional comments, but we hope they are the precursor for improved demand as the year progresses. 2024 also marked some investments in our business we expect to help improve operations and results this coming year. With higher than normal downtime, we worked on our efficiencies and streamlined some of our shop floor operations so that they run more profitably, especially when production volumes increase. In addition, we completed the installation of solar panels at our National Georgia Manufacturing Facility. We received some attractive tax incentives and expect to generate strong electricity cost savings going forward from this investment. We are also proud of the environmental benefits this project will deliver.