Marine Products Corporation Reports Second Quarter 2008 Financial Results

ATLANTA, July 23 /PRNewswire-FirstCall/ -- Marine Products Corporation
(NYSE: MPX) announced its unaudited results for the quarter ended June 30,
2008. Marine Products is a leading manufacturer of fiberglass boats under two
brand names: sterndrive and inboard pleasure boats by Chaparral, including SSi
Sportboats, SSX Sportdecks, Sunesta Wide Techs and Xtremes, Signature
Cruisers, and outboard sport fishing boats by Robalo.
For the quarter ended June 30, 2008, Marine Products generated net sales
of $55,734,000, a 17.9 percent decrease compared to $67,869,000 last year.
The decrease in net sales was due to a 24.8 percent decrease in the number of
boats sold, partially offset by a 6.8 percent increase in the average selling
price per boat. The increase in average selling price per boat was due to the
continued success of our new Sunesta Wide Techs and Xtremes, in which unit
volume increased significantly compared to last year at much higher average
selling prices than the previous Sunesta models. Gross profit for the quarter
was $11,027,000, or 19.8 percent of net sales, compared to $14,934,000, or
22.0 percent of net sales, in the prior year. Gross profit as a percentage of
net sales declined compared to the prior year due to cost inefficiencies
resulting from lower production volumes and the impact of our retail incentive
program.
Operating income for the quarter was $4,407,000, a 37.2 percent decrease
compared to the second quarter last year due to lower gross profit, partially
offset by lower selling, general and administrative expenses. Selling,
general and administrative expenses in the second quarter of 2008 decreased by
16.4 percent compared to the prior year due to the variable nature of many of
these expenses, including incentive compensation, which declined as a
percentage of net sales because this cost varies with sales and profitability.
Operating income was 7.9 percent of net sales for the quarter compared to 10.3
percent of net sales in the prior year.
Net income for the quarter ended June 30, 2008 was $3,896,000, a 26.1
percent decrease compared to $5,275,000 in the prior year. Net income
decreased due to lower income before income taxes, partially offset by a lower
effective tax rate. The effective tax rate decreased because tax-exempt
interest income was a higher percentage of total income before income taxes
than last year, and because of tax credits. Diluted earnings per share for
the quarter were $0.11, a 21.4 percent decrease compared to $0.14 diluted
earnings per share in the prior year.
Net sales for the six months ended June 30, 2008 were $121,276,000, an 8.7
percent decrease compared to the first six months of 2007. Net income for the
six-month period decreased 12.7 percent to $8,028,000 or $0.22 diluted
earnings per share compared to $9,192,000 or $0.24 diluted earnings per share
in the prior year. Average shares outstanding for the period decreased due to
open market repurchases made under Marine Products' open market repurchase
authorization.
Richard A. Hubbell, Marine Products' Chief Executive Officer stated, "Our
financial results for the second quarter of 2008 reflect the recent
acceleration of the decline in the recreational boating market which we have
experienced for almost three years. During the spring selling season, the
price of fuel increased dramatically, which we believe caused many consumers
to forego the purchase of a new boat. Also, the declines in the residential
housing market have continued, and are acute in important recreational boating
markets. These factors, along with slower economic growth, have made the 2008
retail selling season very weak. Our order backlog is lower than at this time
last year, and our dealer inventories are higher. Due to our lack of
confidence in a rebound in demand in the beginning of this model year,
continued high fuel prices, and other factors such as the general economy and
prolonged drought in several of our important markets, we have made further
cuts in unit production and direct costs as we begin 2009 model year
production.
Hubbell continued, "Although we are in the most protracted downturn in our
company's history as a public company, we continue to be pleased with the
market's reception to our new products, and we believe that our financial
strength and management expertise have positioned us to perform relatively
better than our peers. Although we are cutting costs to manage our
profitability at current production levels, we continue to develop new
products and increase brand awareness among our consumers which will benefit
our company in the long run. We find evidence of this in the available retail
unit sales data through May, which indicate that Chaparral's market share has
improved slightly, and that our unit sales have declined less than the general
market for our category of recreational boat.
Hubbell concluded, "As we announced in May, our Chaparral 284 Sunesta won
the Powerboat Magazine Boat of the Year Award for Product Excellence, the
tenth such award that Chaparral has won. Also, the National Marine
Manufacturers Association announced earlier this month that Chaparral and
Robalo are recipients of the Association's Customer Service Index awards,
which we earned for our company's high quality and customer satisfaction over
the past year. We appreciate both of these recent product awards and believe
that they, along with the market share data for the year validate our
management strength and long term approach to our business."
Marine Products Corporation (NYSE: MPX) designs, manufactures and
distributes premium-branded Chaparral sterndrive and inboard pleasure boats
and Robalo sport fishing boats, and continues to diversify its product line
through product innovation and is prepared to consider strategic acquisition
targets. With premium brands, a solid capital structure, and a strong
independent dealer network, Marine Products Corporation is prepared to
capitalize on opportunities to increase its market share and to generate
superior financial performance to build long-term shareholder value. For more
information on Marine Products Corporation visit our website at
www.marineproductscorp.com .
Certain statements and information included in this press release
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
include statements regarding our lack of confidence in a rebound in demand in
the upcoming model year; our belief that our financial strength and management
expertise have positioned us to perform relatively better than our peers; our
belief that continued development of new products and an increase in brand
awareness among our customers will benefit the Company in the long run; and
our belief that we are prepared to capitalize on opportunities to increase our
market share and generate superior financial performance to build long-term
shareholder value. These statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of Marine Products Corporation to be materially
different from any future results, performance or achievements expressed or
implied in such forward-looking statements. These risks include possible
decreases in the level of consumer confidence and available funds impacting
discretionary spending, increased interest rates and fuel prices, weather
conditions, changes in consumer preferences, deterioration in the quality of
Marine Products' network of independent boat dealers or availability of
financing of their inventory, and competition from other boat manufacturers
and dealers. Additional discussion of factors that could cause the actual
results to differ materially from management's projections, forecasts,
estimates and expectations is contained in Marine Products' Form 10-K, filed
with the Securities and Exchange Commission for the year ending December 31,
2007.
For information contact:

BEN M. PALMER
Chief Financial Officer
404.321.7910
irdept@marineproductscorp.com

JIM LANDERS
V.P. Corporate Finance
404.321.2162
jlanders@marineproductscorp.com

MARINE PRODUCTS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (In thousands except per share data)
Periods ended June 30,
(Unaudited) Second Quarter Six Months
BETTER BETTER
2008 2007 (WORSE) 2008 2007 (WORSE)

Net Sales $55,734 $67,869 (17.9)% $121,276 $132,845 (8.7)%
Cost of Goods Sold 44,707 52,935 15.5 96,785 103,947 6.9
Gross Profit 11,027 14,934 (26.2) 24,491 28,898 (15.3)
Selling, General and
Administrative
Expenses 6,620 7,920 16.4 14,879 16,363 9.1
Operating Income 4,407 7,014 (37.2) 9,612 12,535 (23.3)
Interest Income 629 637 (1.3) 1,192 1,363 (12.5)
Income Before
Income Taxes 5,036 7,651 (34.2) 10,804 13,898 (22.3)
Income Tax
Provision 1,140 2,376 52.0 2,776 4,706 41.0
NET INCOME $3,896 $5,275 (26.1)% $8,028 $9,192 (12.7)%

EARNINGS PER SHARE
Basic $0.11 $0.14 (21.4)% $0.22 $0.25 (12.0)%
Diluted $0.11 $0.14 (21.4)% $0.22 $0.24 (8.3)%

AVERAGE SHARES
OUTSTANDING
Basic 35,813 37,324 35,748 37,412
Diluted 36,464 38,448 36,460 38,622

MARINE PRODUCTS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
At June 30, (Unaudited) (in thousands)
2008 2007
ASSETS
Cash and cash equivalents $ 8,975 $ 15,925
Marketable securities 13,791 4,525
Accounts receivable, net 3,209 5,320
Inventories 26,443 34,080
Income taxes receivable 1,178 258
Deferred income taxes 1,691 2,999
Prepaid expenses and other current assets 2,060 1,955
Total current assets 57,347 65,062
Property, plant and equipment, net 15,307 16,385
Goodwill 3,308 3,308
Other intangibles, net 465 465
Marketable securities 37,904 37,324
Deferred income taxes 2,615 1,185
Other assets 6,739 5,785
Total assets $123,685 $129,514

LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 5,931 $ 7,706
Accrued expenses and other liabilities 15,112 14,027
Total current liabilities 21,043 21,733
Pension liabilities 5,597 5,255
Other long-term liabilities 495 733
Total liabilities 27,135 27,721
Common stock 3,643 3,767
Capital in excess of par value - 9,233
Retained earnings 92,989 89,515
Accumulated other comprehensive loss (82) (722)
Total stockholders' equity 96,550 101,793
Total liabilities and stockholders'
equity $123,685 $129,514

SOURCE Marine Products Corporation

Ben M. Palmer, Chief Financial Officer, +1-404-321-7910,
irdept@marineproductscorp.com, Jim Landers, V.P. Corporate Finance,
+1-404-321-2162, jlanders@marineproductscorp.com, both of Marine Products
Corporation