Form 10-Q - Quarterly report [Sections 13 or 15(d)]

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2023

Commission File No. 1-16263

MARINE PRODUCTS CORPORATION

(exact name of registrant as specified in its charter)

Delaware	58-2572419
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

2801 Buford Highway, Suite 300, Atlanta, Georgia 30329

(Address of principal executive offices) (zip code)

Registrant’s telephone number, including area code -- (404) 321-7910

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:		Trading Symbol(s)		Name of each exchange on which registered:
Common stock, par value $0.10		MPX		New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	⌧
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ⌧

As of October 20, 2023, Marine Products Corporation had 34,466,726 shares of common stock outstanding.

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Marine Products Corporation

Table of Contents

		Page No.
Part I. Financial Information

Item 1.	Financial Statements (Unaudited)

	Consolidated Balance Sheets – As of September 30, 2023 and December 31, 2022	3

	Consolidated Statements of Operations – for the three and nine months ended September 30, 2023 and 2022	4

	Consolidated Statements of Comprehensive Income – for the three and nine months ended September 30, 2023 and 2022	5

	Consolidated Statements of Stockholders’ Equity – for the three and nine months ended September 30, 2023 and 2022	6

	Consolidated Statements of Cash Flows – for the nine months ended September 30, 2023 and 2022	8

	Notes to Consolidated Financial Statements	9 - 17

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18 - 25

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25

Item 4.	Controls and Procedures	26

Part II. Other Information

Item 1.	Legal Proceedings	27

Item 1A.	Risk Factors	27

Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities	27

Item 3.	Defaults upon Senior Securities	27

Item 4.	Mine Safety Disclosures	27

Item 5.	Other Information	27

Item 6.	Exhibits	28

Signatures		29

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MARINE PRODUCTS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2023 AND DECEMBER 31, 2022

(In thousands)


	September 30,		December 31,
	2023		2022
ASSETS		(Unaudited)	(Note 1)
Cash and cash equivalents	$	60,705	$	43,171
Accounts receivable, net of allowance for credit losses of $11 in 2023 and $12 in 2022		10,743		5,340
Inventories		69,784		73,015
Income taxes receivable		199		28
Pension plan assets		113		356
Prepaid expenses and other current assets		3,671		3,088
Total current assets		145,215		124,998
Property, plant and equipment, net of accumulated depreciation of $32,450 in 2023 and $33,055 in 2022		21,356		14,965
Goodwill		3,308		3,308
Other intangibles, net		465		465
Deferred income taxes		7,833		6,027
Other assets		18,556		13,952
Total assets	$	196,733	$	163,715

LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	$	12,066	$	8,250
Accrued expenses and other liabilities		16,218		15,340
Total current liabilities		28,284		23,590
Retirement plan liabilities		16,714		14,440
Other long-term liabilities		1,622		1,304
Total liabilities		46,620		39,334
Commitments and contingencies (Note 15)

Stockholders’ Equity
Preferred stock, $0.10 par value, 1,000,000 shares authorized, none issued		—		—
Common stock, $0.10 par value, 74,000,000 shares authorized, issued and outstanding – 34,466,726 shares in 2023 and 34,217,582 shares in 2022		3,447		3,422
Capital in excess of par value		—		—
Retained earnings		146,678		122,954
Accumulated other comprehensive loss		(12)		(1,995)
Total stockholders’ equity		150,113		124,381
Total liabilities and stockholders’ equity	$	196,733	$	163,715

The accompanying notes are an integral part of these consolidated financial statements.

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MARINE PRODUCTS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

(In thousands except per share data)

(Unaudited)


	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Net sales	$	77,786	$	100,061	$	312,858	$	272,486
Cost of goods sold		58,548		75,056		235,942		206,089
Gross profit		19,238		25,005		76,916		66,397
Selling, general and administrative expenses		8,789		10,326		35,495		29,449
Gain on disposition of assets, net		(1,962)		—		(1,962)		—
Operating income		12,411		14,679		43,383		36,948
Interest income, net		860		76		2,066		52
Income before income taxes		13,271		14,755		45,449		37,000
Income tax provision		2,868		3,283		9,176		8,510
Net income	$	10,403	$	11,472	$	36,273	$	28,490

Earnings per share
Basic	$	0.30	$	0.34	$	1.05	$	0.83
Diluted	$	0.30	$	0.34	$	1.05	$	0.83

Dividends paid per share	$	0.14	$	0.12	$	0.42	$	0.36

The accompanying notes are an integral part of these consolidated financial statements.

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MARINE PRODUCTS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

(In thousands)

(Unaudited)


	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Net income	$	10,403	$	11,472	$	36,273	$	28,490
Other comprehensive income, net of taxes:
Pension adjustment		—		23		1,983		67
Comprehensive income	$	10,403	$	11,495	$	38,256	$	28,557

The accompanying notes are an integral part of these consolidated financial statements.

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MARINE PRODUCTS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

(In thousands)

(Unaudited)


	Nine Months Ended September 30, 2023
								Accumulated
				Capital in				Other
	Common Stock			Excess of		Retained		Comprehensive
	Shares	Amount		Par Value		Earnings		Loss		Total
Balance, December 31, 2022	34,218	$	3,422	$	—	$	122,954	$	(1,995)	$	124,381
Stock issued for stock incentive plans, net	289		29		748		—		—		777
Stock purchased and retired	(69)		(7)		(748)		(155)		—		(910)
Net income	—		—		—		11,549		—		11,549
Pension adjustment, net of taxes	—		—		—		—		1,886		1,886
Dividends paid	—		—		—		(4,817)		—		(4,817)
Balance, March 31, 2023	34,438		3,444		—		129,531		(109)		132,866
Stock issued for stock incentive plans, net	29		3		1,230		—		—		1,233
Stock purchased and retired	—		—		(1,230)		1,230		—		—
Net income	—		—		—		14,321		—		14,321
Pension adjustment, net of taxes	—		—		—		—		97		97
Dividends paid	—		—		—		(4,820)		—		(4,820)
Balance, June 30, 2023	34,467		3,447		—		140,262		(12)		143,697
Stock issued for stock incentive plans, net	—		—		834		—		—		834
Stock purchased and retired	—		—		(834)		834		—		—
Net income	—		—		—		10,403		—		10,403
Dividends paid	—		—		—		(4,821)		—		(4,821)
Balance, September 30, 2023	34,467	$	3,447	$	—	$	146,678	$	(12)	$	150,113

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	Nine Months Ended September 30, 2022
								Accumulated
				Capital in				Other
	Common Stock			Excess of		Retained		Comprehensive
	Shares	Amount		Par Value		Earnings		Loss		Total
Balance, December 31, 2021	33,993	$	3,399	$	—	$	97,702	$	(2,576)	$	98,525
Stock issued for stock incentive plans, net	211		21		589		—		—		610
Stock purchased and retired	(60)		(6)		(589)		(107)		—		(702)
Net income	—		—		—		7,063		—		7,063
Pension adjustment, net of taxes	—		—		—		—		22		22
Dividends paid	—		—		—		(4,095)		—		(4,095)
Balance, March 31, 2022	34,144		3,414		—		100,563		(2,554)		101,423
Stock issued for stock incentive plans, net	94		10		810		—		—		820
Stock purchased and retired	—		—		(810)		810		—		—
Net income	—		—		—		9,955		—		9,955
Pension adjustment, net of taxes	—		—		—		—		22		22
Dividends paid	—		—		—		(4,096)		—		(4,096)
Balance, June 30, 2022	34,238		3,424		—		107,232		(2,532)		108,124
Stock issued for stock incentive plans, net	(20)		(2)		680		—		—		678
Stock purchased and retired	—		—		(680)		680		—		—
Net income	—		—		—		11,472		—		11,472
Pension adjustment, net of taxes	—		—		—		—		23		23
Dividends paid	—		—		—		(4,104)		—		(4,104)
Balance, September 30, 2022	34,218	$	3,422	$	—	$	115,280	$	(2,509)	$	116,193

The accompanying notes are an integral part of these consolidated financial statements.

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MARINE PRODUCTS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

(In thousands)

(Unaudited)


	Nine months ended September 30,
	2023		2022
OPERATING ACTIVITIES
Net income	$	36,273	$	28,490
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,750		1,416
Stock-based compensation expense		2,844		2,108
Gain on disposition of assets, net		(1,962)		—
Deferred income tax benefit		(2,366)		(1,146)
Pension settlement loss		2,277		—
(Increase) decrease in assets:
Accounts receivable		(5,403)		(8,230)
Income taxes receivable		(171)		(88)
Inventories		3,231		(9,551)
Current pension assets		509		—
Prepaid expenses and other current assets		514		(64)
Other non-current assets		(4,477)		3,039
Increase (decrease) in liabilities:
Accounts payable		3,816		7,870
Income taxes payable		755		573
Accrued expenses and other liabilities		97		4,202
Other long-term liabilities		2,491		(1,491)
Net cash provided by operating activities		40,178		27,128

INVESTING ACTIVITIES
Capital expenditures		(8,405)		(1,373)
Proceeds from sale of assets		1,129		—
Net cash used for investing activities		(7,276)		(1,373)

FINANCING ACTIVITIES
Payment of dividends		(14,458)		(12,295)
Cash paid for common stock purchased and retired		(910)		(702)
Net cash used for financing activities		(15,368)		(12,997)


Net increase in cash and cash equivalents		17,534		12,758
Cash and cash equivalents at beginning of period		43,171		14,102
Cash and cash equivalents at end of period	$	60,705	$	26,860

Supplemental information:
Income tax payments, net	$	10,736	$	8,782

The accompanying notes are an integral part of these consolidated financial statements.

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MARINE PRODUCTS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. GENERAL

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (all of which consisted of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

The Consolidated Balance Sheet at December 31, 2022 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

For further information, refer to the Consolidated Financial Statements and footnotes thereto included in the annual report of Marine Products Corporation (“Marine Products,” the “Company” or “MPC”) on Form 10-K for the year ended December 31, 2022.

A group that includes Gary W. Rollins, Pamela R. Rollins, Amy Rollins Kreisler and Timothy C. Rollins, each of whom is a director of the Company, controls in excess of fifty percent of the Company’s voting power.

2. RECENT ACCOUNTING STANDARDS

The FASB issued the following Accounting Standards Updates (ASUs):

Recently Adopted Accounting Standards:

ASU No. 2021-08 — Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The amendments in this ASU address diversity in practice related to the accounting for revenue contracts with customers acquired in a business combination, by adopting guidance requiring an acquirer to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. At the acquisition date, an acquirer would recognize and measure the acquired contract assets and contract liabilities in the same manner that they were recognized and measured in the acquiree's financial statements before the acquisition. The Company adopted these provisions in the first quarter of 2023 prospectively to future business combinations and the adoption did not have a material impact on its consolidated financial statements.

3. NET SALES

Accounting Policy:

MPC’s contract revenues are generated principally from selling: (1) fiberglass motorized boats and accessories and (2) parts to independent dealers. Revenue is recognized when obligations under the terms of a contract with our customer are satisfied. Satisfaction of contract terms occurs with the transfer of title of our boats and accessories and parts to our dealers. Net sales are measured as the amount of consideration we expect to receive in exchange for transferring the goods to the dealer. The amount of consideration we expect to receive consists of the sales price adjusted for dealer incentives. The expected costs associated with our base warranties continue to be recognized as expense when the products are sold as they are deemed to be assurance-type warranties (see Note 6). Incidental promotional items that are immaterial in the context of the contract are recognized as expense. Fees charged to customers for shipping and handling are included in Net sales in the accompanying Consolidated Statements of Operations and the related costs incurred by the Company are included in Cost of goods sold.

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MARINE PRODUCTS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Nature of goods:

MPC’s performance obligations within its contracts consist of: (1) boats and accessories and (2) parts. The Company transfers control and recognizes revenue on the satisfaction of its performance obligations (point in time) as follows:

●

Boats and accessories (domestic sales) – upon delivery and acceptance by the dealer

●

Boats and accessories (international sales) – upon delivery to shipping port

●

Parts – upon shipment/delivery to carrier

Payment terms:

For most domestic customers, MPC manufactures and delivers boats and accessories and parts ahead of payment - i.e., MPC has fulfilled its performance obligations prior to submitting an invoice to the dealer. MPC invoices the customer when the products are delivered and typically receives the payment within seven to ten business days after invoicing. For some domestic customers and all international customers, MPC requires payment prior to transferring control of the goods. These amounts are classified as deferred revenue and recognized when control has transferred, which generally occurs within three months of receiving the payment.

When the Company enters into contracts with its customers, it generally expects there to be no significant timing difference between the date the goods have been delivered to the customer (satisfaction of the performance obligation) and the date cash consideration is received. Accordingly, there is no financing component to the Company’s arrangements with its customers.

Significant judgments:

Determining the transaction price

The transaction price for MPC’s boats and accessories is the invoice price adjusted for dealer incentives. Key inputs and assumptions in determining variable consideration related to dealer incentives include:

●

Inputs: Current model year boat sales, total potential program incentive percentage, prior model year results of dealer incentive activity (i.e., incentive earned as a percentage of total incentive potential).

●

Assumption: Current model year incentive activity will closely reflect prior model year actual results, adjusted as necessary for dealer purchasing trends or economic factors.

Other:

Our contracts with dealers do not provide them with a right of return. Accordingly, we do not have any obligations recorded for returns or refunds.

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MARINE PRODUCTS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Disaggregation of revenues:

The following table disaggregates our sales by major source:


	Three months ended				Nine months ended
(in thousands)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Boats and accessories	$	76,155	$	98,687	$	308,436	$	268,358
Parts		1,631		1,374		4,422		4,128
Net sales	$	77,786	$	100,061	$	312,858	$	272,486

The following table disaggregates our revenues between domestic and international:


	Three months ended				Nine months ended
(in thousands)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Domestic	$	73,227	$	94,894	$	292,298	$	255,435
International		4,559		5,167		20,560		17,051
Net sales	$	77,786	$	100,061	$	312,858	$	272,486

Contract balances:

Amounts received from international and certain domestic dealers toward the purchase of boats are classified as deferred revenue and are included in Accrued expenses and other liabilities in the accompanying Consolidated Balance Sheets.


	September 30,		December 31,
(in thousands)	2023		2022
Deferred revenue	$	1,212	$	1,989

Substantially all of the amounts of deferred revenue disclosed above were or will be recognized as sales during the immediately following quarters, respectively, when control is transferred.

4. EARNINGS PER SHARE

Basic and diluted earnings per share are computed by dividing net income by the weighted average number of shares outstanding during the respective periods. In addition, the Company has periodically issued share-based payment awards that contain non-forfeitable rights to dividends and are therefore considered participating securities. Restricted shares of common stock (participating securities) outstanding and a reconciliation of weighted average shares outstanding is as follows:


	Three months ended				Nine months ended
	September 30,				September 30,
(in thousands)	2023		2022		2023		2022
Net income available for stockholders:	$	10,403	$	11,472	$	36,273	$	28,490
Less: Adjustments for earnings attributable to participating securities		(249)		(254)		(866)		(602)
Net income used in calculating earnings per share	$	10,154	$	11,218	$	35,407	$	27,888

Weighted average shares outstanding (including participating securities)		34,467		34,225		34,435		34,172
Adjustment for participating securities		(839)		(768)		(833)		(737)
Shares used in calculating basic and diluted earnings per share		33,628		33,457		33,602		33,435

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MARINE PRODUCTS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

5. STOCK-BASED COMPENSATION

The Company reserved 3,000,000 shares of common stock under the 2014 Stock Incentive Plan with a term of ten years expiring in April 2024. This plan provides for the issuance of various forms of stock incentives, including among others, incentive and non-qualified stock options and restricted shares. As of September 30, 2023, there were approximately 777,199 shares available for grant.

In the first quarter of 2023, the Company issued time-lapse restricted shares to certain employees that will vest ratably over a period of four years. In addition, the Company granted performance share unit awards to its executive officers that vest based on the achievement of pre-established performance targets. The awards will be issued at different levels based on the performance achieved with a cliff vesting at the end of calendar year 2025. The Company evaluated the portions of the awards that are probable to vest and accordingly has accrued estimated compensation expense equal to 100 percent of the target awards.

Stock-based compensation was as follows:


	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2023		2022		2023		2022
Pre – tax cost	$	834	$	678	$	2,844	$	2,108
After tax cost		650		529		2,218		1,644

The following is a summary of the changes in non-vested restricted shares for the nine months ended September 30, 2023:


		Weighted
		Average
		Grant-Date
	Shares	Fair Value
Non-vested shares at December 31, 2022	764,170	$	14.15
Granted	318,348		13.25
Vested	(243,468)		14.16
Non-vested shares at September 30, 2023	839,050	$	13.81

The total fair value of shares vested was approximately $3,220,000 during the nine months ended September 30, 2023 and approximately $2,241,000 during the nine months ended September 30, 2022. The above table does not include any of the activity related to performance share unit awards since they are not currently issued or vested.

For the nine months ended September 30, 2023, approximately $30,000 of excess tax benefit for stock-based compensation awards was recorded as a discrete tax adjustment and classified within Net cash provided by operating activities in the accompanying Consolidated Statements of Cash Flows compared to approximately $44,000 for the nine months ended September 30, 2022.

6. WARRANTY COSTS

Warranty Costs:

For its Chaparral and Robalo products, Marine Products provides a lifetime limited structural hull warranty and a transferable one-year limited warranty to the original owner. Chaparral also includes a five-year limited structural deck warranty. Warranties for additional items are provided for periods of one to five years and are not transferrable. Additionally, as it relates to the second subsequent owner, a five-year transferrable hull warranty and the remainder of the original one-year limited warranty on certain

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MARINE PRODUCTS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

components are available. The five-year transferable hull warranty terminates five years after the date of the original retail purchase. Claim costs related to components are generally absorbed by the original component manufacturer.

The manufacturers of the engines, generators, and navigation electronics included on our boats provide and administer their own warranties for various lengths of time.

An analysis of the warranty accruals for the nine months ended September 30, 2023 and 2022 is as follows:


(in thousands)	2023		2022
Balance at January 1	$	5,699	$	4,641
Less: Payments made during the period		(3,316)		(3,600)
Add: Warranty provision for the period		4,704		3,950
Changes to warranty provision for prior periods		156		145
Balance at September 30	$	7,243	$	5,136

The warranty accruals are reflected in Accrued expenses and other liabilities in the accompanying Consolidated Balance Sheets.

7. BUSINESS SEGMENT INFORMATION

The Company has one reportable segment, its powerboat manufacturing business; therefore, the majority of segment-related disclosures are not relevant to the Company. In addition, the Company’s results of operations and its financial condition are not significantly reliant upon any single customer or product model.

8. INVENTORIES

Inventories consist of the following:


	September 30,		December 31,
	2023		2022
(in thousands)
Raw materials and supplies	$	44,983	$	37,210
Work in process		11,168		14,190
Finished goods		13,633		21,615
Total inventories	$	69,784	$	73,015

9. INCOME TAXES

The Company determines its periodic income tax provision based upon the current period income and the annual estimated tax rate for the Company adjusted for discrete items including tax credits and changes to prior year estimates. The estimated tax rate is adjusted, if necessary, as of the end of each successive interim period during the fiscal year to the Company’s current annual estimated tax rate.

Income tax provision for the third quarter of 2023 reflects an effective tax rate of 21.6 percent compared to 22.3 percent for the comparable period in the prior year. For the nine months ended September 30, 2023 the income tax provision reflects an effective tax rate of 20.2 percent compared to 23.0 percent for the comparable period in the prior year. The decrease in the effective tax rate is primarily due to favorable permanent adjustments coupled with beneficial discrete tax items.

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MARINE PRODUCTS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

10. PENSION AND RETIREMENT PLANS

The Company participates in a multiple employer Retirement Income Plan, a trusteed defined benefit pension plan, sponsored by RPC, Inc. (“RPC”). The following represents the net periodic cost and related components for the plan for the three and nine months ended September 30, 2023 and 2022.


	Three months ended				Nine months ended
(in thousands)	September 30,				September 30,
	2023		2022		2023		2022
Interest cost	$	—	$	34	$	4	$	100
Expected return on plan assets		—		—		—		—
Amortization of net losses		—		28		22		84
Settlement loss ⁽¹⁾		—		—		2,277		—
Net periodic cost	$	—	$	62	$	2,303	$	184

⁽¹⁾ Reported as part of Selling, general and administrative expenses in the accompanying Consolidated Statements of Operations.

The Company did not contribute to this Plan during the nine months ended September 30, 2023 and 2022. The Company does not expect to make any additional cash contributions.

The Company permits selected highly compensated employees to defer a portion of their compensation into a non-qualified Supplemental Executive Retirement Plan (“SERP”). The Company maintains certain securities primarily in mutual funds and company-owned life insurance (“COLI”) policies as a funding source to satisfy the obligation of the SERP that have been classified as trading and are stated at fair value totaling approximately $14,405,000 as of September 30, 2023 and $9,881,000 as of December 31, 2022. During the third quarter of 2023, the Company contributed $4.0 million to the SERP assets. Trading losses related to the SERP assets totaled approximately $238,000 during the three months ended September 30, 2023, compared to trading losses of approximately $499,000 during the three months ended September 30, 2022. Trading gains related to the SERP assets totaled approximately $524,000 during the nine months ended September 30, 2023, compared to trading losses of approximately $2,802,000 during the nine months ended September 30, 2022. The SERP assets are reported in Other assets in the accompanying Consolidated Balance Sheets and changes to the fair value of the assets are reported in Selling, general and administrative expenses in the accompanying Consolidated Statements of Operations.

The SERP liabilities include participant deferrals net of distributions and are stated at fair value of approximately $16,714,000 as of September 30, 2023 and $14,440,000 as of December 31, 2022. The SERP liabilities are reported in the accompanying Consolidated Balance Sheets in Retirement plan liabilities and any change in the fair value is recorded as compensation cost within Selling, general and administrative expenses in the accompanying Consolidated Statements of Operations. Changes in the fair value of the SERP liabilities represented unrealized losses of approximately $166,000 during the three months ended September 30, 2023, compared to unrealized losses of approximately $475,000 during the three months ended September 30, 2022. Changes in the fair value of the SERP liabilities represented unrealized gains of approximately $651,000 during the nine months ended September 30, 2023, compared to unrealized losses of approximately $2,799,000 during the nine months ended September 30, 2022.

11. FAIR VALUE MEASUREMENTS

The various inputs used to measure assets at fair value establish a hierarchy that distinguishes between assumptions based on market data (observable inputs) and the Company’s assumptions (unobservable inputs). The hierarchy consists of three broad levels as follows:

Level 1 – Quoted market prices in active markets for identical assets or liabilities.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs developed using the Company’s estimates and assumptions, which reflect those that market participants would use.

Trading securities are comprised of SERP assets, as described in Note 10, and are recorded primarily at their net cash surrender values calculated using their net asset values, which approximate fair value, as provided by the issuing insurance company or investment company. Significant observable inputs, in addition to quoted market prices, are used to value the trading securities. The Company’s policy is to recognize transfers between levels at the beginning of quarterly reporting periods.

The carrying amount of other financial instruments reported in the accompanying Consolidated Balance Sheets for current assets and current liabilities approximate their fair values because of the short-term maturity of these instruments. The Company currently does not use the fair value option to measure any of its existing financial instruments and has not determined whether or not it will elect this option for financial instruments it may acquire in the future.

12. ACCUMULATED OTHER COMPREHENSIVE LOSS

Accumulated other comprehensive loss consists of pension adjustments as follows:


	Nine months ended
	September 30,
(in thousands)	2023		2022
Balance at beginning of the period	$	(1,995)	$	(2,576)
Change during the period:
Before-tax amount		244		—
Tax provision		(54)		—
Pension settlement loss, net of taxes⁽¹⁾		1,776		—
Reclassification adjustment, net of taxes
Amortization of net loss ⁽¹⁾		17		67
Total activity for the period		1,983		67
Balance at end of the period	$	(12)	$	(2,509)

(1)

Reported as part of Selling, general and administrative expenses in the accompanying Consolidated Statements of Operations.

13. ACCRUED EXPENSES AND OTHER LIABILITIES

Accrued expenses and other liabilities consist of the following:


	September 30,		December 31,
(in thousands)	2023		2022
Accrued payroll and related expenses	$	3,657	$	3,753
Accrued sales incentives and discounts		1,599		2,485
Accrued warranty costs		7,243		5,699
Deferred revenue		1,212		1,989
Income taxes payable		1,097		342
Other		1,410		1,072
Total accrued expenses and other liabilities	$	16,218	$	15,340

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

14. NOTES PAYABLE TO BANKS

The Company has a revolving credit agreement with Truist Bank which provides a credit facility of $20.0 million. The facility includes: (i) a $5.0 million sublimit for swingline loans, (ii) a $2.5 million aggregate sublimit for all letters of credit, and (iii) a committed accordion which can increase the aggregate commitments by the greater of $35.0 million and consolidated EBITDA (as calculated under the Credit Agreement) over the most recently completed twelve-month period. The revolving credit facility includes a full and unconditional guarantee by the Company and its consolidated domestic subsidiaries. The facility is secured by a first priority security interest in and lien on substantially all personal property of the Company and the guarantors including, without limitation, certain assets owned by them. The facility will terminate on November 12, 2026.

Effective July 1, 2023, revolving borrowings under the facility accrue interest at a rate equal to Term Secured Overnight Financing Rate (SOFR) plus the applicable percentage, as defined. During the second quarter of 2023, the Company was notified by Truist Bank that SOFR replaced LIBOR for all borrowings under the facility. The new applicable percentage is between 150 and 250 basis points for all loans based on MPC’s net leverage ratio plus a SOFR adjustment of 11.45 basis points. In addition, the Company pays facility fees under the agreement ranging from 25 to 45 basis points, based on MPC’s net leverage ratio, on the unused revolving commitment.

The credit agreement contains certain financial covenants including: (i) a maximum consolidated leverage ratio of 2.50:1.00 and (ii) a minimum consolidated fixed charge coverage ratio of 1.25:1.00 both determined as of the end of each fiscal quarter. Additionally, the agreement contains customary covenants including affirmative and negative covenants and events of default (each with customary exceptions, thresholds and exclusions). As of September 30, 2023, the Company was in compliance with all covenants.

The Company has incurred total loan origination fees and other debt related costs associated with this revolving credit facility in the aggregate of $195,000. These costs are being amortized to interest expense over the remaining term of the loan, and the remaining net balance is classified as part of Other assets in the accompanying Consolidated Balance Sheets. MPC had no outstanding borrowings under the revolving credit facility as of September 30, 2023 and December 31, 2022.

Interest expense incurred, which includes facility fees on the unused portion of the revolving credit facility and the amortization of loan costs, on the credit facility was $23,000 for the three months ended September 30, 2023 and $22,000 for the three months ended September 30, 2022; and interest expense incurred was $67,000 for the nine months ended September 30, 2023 and $67,000 for the nine months ended September 30, 2022. Interest expense paid on the credit facility was $25,000 for the three months ended September 30, 2023 and no interest was paid for the three months ended September 30, 2022. Interest expense paid on the credit facility was $63,000 for the nine months ended September 30, 2023 and $32,000 for the nine months ended September 30, 2022.

15. COMMITMENTS AND CONTINGENCIES

Repurchase Obligations:

The Company is a party to various agreements with third party lenders that provide floor plan financing to qualifying dealers whereby the Company guarantees varying amounts of debt on boats in dealer inventory. The Company’s obligation under these guarantees becomes effective in the case of a default under the financing arrangement between the dealer and the third-party lender. The agreements provide for the return of repossessed boats to the Company in new and unused condition subject to normal wear and tear as defined, in exchange for the Company’s assumption of specified percentages of the debt obligation on those boats, up to certain contractually determined dollar limits by the lenders. The Company had no material financial impact associated with repurchases under these contractual agreements during the nine months ended September 30, 2023 and 2022.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Management continues to monitor the risk of defaults and resulting repurchase obligations based in part on information provided by third-party floor plan lenders and will adjust the guarantee liability at the end of each reporting period based on information reasonably available at that time.

The Company currently has an agreement with one of the floor plan lenders whereby the contractual repurchase limit is based on the highest of the following criteria: (i) a specified percentage of the amount of the average net receivables financed by the floor plan lender for our dealers, (ii) the total average net receivables financed by the floor plan lender for our two highest dealers during the prior three month period, or (iii) $8.0 million, less repurchases during the prior 12 month period. As defined by the agreement, the repurchase limit for this lender was $14.6 million as of September 30, 2023. The Company has contractual repurchase agreements with additional lenders with an aggregate maximum repurchase obligation of approximately $7.4 million with various expiration and cancellation terms of less than one year, for an aggregate repurchase obligation with all floor plan financing institutions of approximately $22.0 million as of September 30, 2023.

Short-term Cash Incentive Compensation:

In addition to recording Short-term Cash Incentive (STCI) compensation expense for executive officers, STCI expense has been recorded for four non-executive employees based on a percentage of Pre-Tax Profit (PTP incentive), defined as pretax income before goodwill adjustments and certain allocated corporate expenses. During 2022 and through the third quarter of 2023, this PTP incentive was 16 percent in the aggregate per year and was subject to either a contractual arrangement or a discretionary determination. The PTP incentive under a contractual agreement with one employee, in the amount of seven percent per year, was discontinued as of September 30, 2023. As a result, effective October 1, 2023, the PTP incentive, subject to a discretionary determination, will be nine percent in the aggregate per year for three employees.

Total STCI expense for the reported periods was as follows:


	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2023		2022		2023		2022
STCI expense	$	2,365	$	3,414	$	9,650	$	8,699

These amounts are included in Selling, general and administrative expenses in the accompanying Consolidated Statements of Operations.

16. NET INVESTMENT IN LEASE

During the second quarter of 2023, the Company entered into a lease agreement related to a warehouse as a lessor for a period of less than a year that provided the lessee with an option to purchase the asset at the end of the lease term. The consideration included required weekly payments with a purchase price of $2,000,000 less lease payments. The lessee was reasonably certain to exercise this purchase option and therefore, the Company concluded that the agreement qualified to be a sales type lease. However, at the commencement of the lease, the Company determined that collectibility was not probable based on an analysis of qualitative factors. Therefore, the amount received as of June 30, 2023 was recorded as a deposit liability.

In the third quarter of 2023, the Company determined the collectibility had become probable and recognized a net investment in lease of $1,096,950 consisting of a lease receivable of $1,100,000 less indirect costs. In addition, the Company recognized a gain of approximately $1,800,000 which is reported as part of Gain on disposition of assets, net on the Consolidated Statement of Operations. Net investment in lease is reported as part of Prepaid expenses and other current assets on the Consolidated Balance Sheet.

17. SUBSEQUENT EVENT

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Marine Products Corporation, through our wholly owned subsidiaries Chaparral and Robalo, is a leading manufacturer of recreational fiberglass powerboats. Our sales and profits are generated by selling the products that we manufacture to a network of independent dealers who in turn sell the products to retail customers. These dealers are located throughout the continental United States and in several international markets. Many of these dealers finance their inventory through third-party floorplan lenders, who pay Marine Products generally within seven to ten days after delivery of the products to the dealers.

The discussion on business and financial strategies of the Company set forth under the heading “Overview” in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2022 is incorporated herein by reference. There have been no significant changes in the strategies since year-end.

In executing these strategies and attempting to optimize our financial returns, management closely monitors dealer orders and inventories, the production mix of various models, and indications of near term demand such as consumer confidence, inflation concerns, interest rates, dealer orders placed at our annual dealer conferences, and retail attendance and orders at annual winter boat show exhibitions. We also consider trends related to certain key financial and other data, including our historical and forecasted financial results, market share, unit sales of our products, average selling price per boat, and gross profit margins, among others, as indicators of the success of our strategies. Our financial results are affected by consumer confidence — because pleasure boating is a discretionary expenditure, interest rates — because many retail customers finance the purchase of their boats, and other socioeconomic and environmental factors such as availability of leisure time, consumer preferences, demographics and the weather.

Our net sales of $77.8 million were 22.3 percent lower during the third quarter of 2023 compared to the third quarter of 2022 primarily due to a decrease in unit sales volumes, partially offset by an increase in the average selling price per boat. Unit sales volumes during the third quarter of 2023 decreased 24.3 percent in comparison to the same period of the prior year as production has been adjusted to align more with current demand, including seasonally lower dealer demand during the third quarter of each calendar year. In addition, unit sales during the third quarter of 2023 were impacted by severe weather-related production shutdowns. Average selling price per boat during the third quarter of 2023 increased by 4.6 percent compared to the third quarter of 2022 primarily due to a favorable model mix and, to a lesser extent, price increases to cover higher costs of materials and components.

Cost of goods sold as a percentage of net sales was 75.3 percent of net sales for the three months ended September 30, 2023 compared to 75.0 percent for the comparable period in the prior year.

Operating income decreased 15.5 percent to $12.4 million during the third quarter of 2023 from $14.7 million during the same period in the prior year primarily due to lower net sales. Selling, general and administrative expenses decreased 14.9 percent to $8.8 million during the third quarter of 2023 from $10.3 million during the same period of the prior year. This decrease was due primarily to costs that vary with sales and profitability such as incentive compensation, sales commissions and warranty expense. Selling, general and administrative expenses were 11.3 percent of net sales in the third quarter of 2023 compared to 10.3 percent in the third quarter of 2022. Net gain on disposition of assets was $2.0 million during the third quarter of 2023, which includes a $1.8 million gain related to a real estate transaction.

OUTLOOK

The discussion of the outlook for 2023 is incorporated herein by reference from the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2022.

We believe that the strong retail demand for new recreational boats which began with the onset of the COVID-19 pandemic has declined and will continue to moderate throughout 2023. In addition, consumers are returning to pre-pandemic routine lifestyles and rising interest rates are contributing to higher costs of boat ownership. Since some buyers of recreational boats finance their purchases, higher interest rates may discourage them from the purchase of a boat. In light of the normalization of demand and higher interest rates, we may have to reinstitute certain retail incentives and other allowances to attract more consumers. We believe that production will satisfy current retail demand.

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Despite strong consumer demand, industry retail sales declined in 2021 and 2022 because dealers’ inventories were depleted, and supply chain and labor problems hindered recreational boat manufacturers’ output capacity. The cost of boat ownership has increased over the last several years due to the increased cost of materials, key components and labor. In addition, higher interest rates have increased the financing costs of boat ownership. The higher cost of boat ownership may discourage consumers from purchasing recreational boats. For years, Marine Products and other boat manufacturers have been improving their customer service capabilities, marketing strategies and sales promotions to attract more consumers to recreational boating as well as improve consumers’ boating experiences. The Company provides financial incentives to its dealers for receiving favorable customer satisfaction surveys. In addition, the recreational boating industry conducts a promotional program which involves advertising and consumer targeting efforts, as well as other activities designed to increase the potential consumer market for pleasure boats. Many manufacturers, including Marine Products, participate in this program. Management believes that these efforts have incrementally benefited the industry and Marine Products. During the past three model years, Marine Products has produced a smaller number of boat designs than in previous years to increase production efficiency. In addition, the average size of the models the Company is producing has increased in response to evolving retail demand, which continued into the first, second and third quarters of 2023.

In a typical year, Marine Products and its dealers present our new models to retail customers during the winter boat show season, which takes place during the fourth and first calendar quarters. The industry conducted more boat shows in 2023 than in either of the previous two years due to the easing of COVID-19 – related restrictions.

Due to strong demand across the recreational sector, key materials and components have been in tight supply. Supply chain disruptions have delayed the receipt of both raw materials and key components used in our manufacturing process, thus delaying production and deliveries to our dealers. Although these disruptions began to moderate in late 2022, they still are currently impacting our ability to some extent to meet dealer and retail demand. Although supply chain constraints caused our working capital requirements to increase significantly in 2021, our inventory levels began to decline during the fourth quarter of 2022 and further into 2023 as these issues began to improve.

Our financial results during the remainder of 2023 will depend on a number of factors, including our ability to meet dealer and consumer demand in the face of ongoing supply chain challenges which have impacted our manufacturing operations. Additional factors that could impact our results include the availability and cost of credit to our dealers and consumers, declines in consumer confidence due to fears of a recession, increasing fuel costs, the continued acceptance of our new products in the recreational boating market, the near-term effectiveness of our marketing efforts, the availability and cost of labor and certain of our raw materials and key components used in manufacturing our products and the availability of qualified employee and contract drivers to deliver our finished products to dealers.

RESULTS OF OPERATIONS

Key operating and financial statistics for the three and nine months ended September 30, 2023 and 2022 are as follows:


	Three months ended September 30,						Nine months ended September 30,
	2023			2022			2023			2022
Total number of boats sold		827			1,093			3,348			3,130
Average gross selling price per boat (in thousands)	$	82.1		$	78.5		$	82.3		$	75.7
Net sales (in thousands)	$	77,786		$	100,061		$	312,858		$	272,486
Percentage of cost of goods sold to net sales		75.3	%		75.0	%		75.4	%		75.6	%
Gross profit margin percent		24.7	%		25.0	%		24.6	%		24.4	%
Percentage of selling, general and administrative expenses to net sales		11.3	%		10.3	%		11.3	%		10.8	%
Operating income (in thousands)	$	12,411		$	14,679		$	43,383		$	36,948
Warranty expense (in thousands)	$	1,209		$	1,664		$	4,860		$	4,095

THREE MONTHS ENDED SEPTEMBER 30, 2023 COMPARED TO THREE ENDED SEPTEMBER 30, 2022

Net sales for the three months ended September 30, 2023 decreased $22.3 million or 22.3 percent compared to the same period in 2022. The change in net sales during the quarter compared to the prior year was due primarily to a decrease in unit sales volumes,

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partially offset by an increase in the average selling price per boat. Unit sales volumes during the third quarter of 2023 decreased 24.3 percent in comparison to the same period of the prior year as production has been adjusted to align more with normal seasonal demand, including seasonally lower dealer demand during the third quarter of each calendar year. In addition, unit sales during the third quarter of 2023 were impacted by severe weather-related production shutdowns.

Average selling price per boat during the third quarter of 2023 increased by 4.6 percent compared to the third quarter of 2022 due to a favorable model mix and, to a lesser extent, price increases to cover higher costs of materials and components. Domestic net sales decreased 22.8 percent to $73.2 million and international net sales decreased 11.8 percent to $4.6 million compared to the third quarter of the prior year. In the third quarter of 2023, net sales outside of the United States accounted for 5.9 percent of net sales compared to 5.2 percent of net sales in the same period of the prior year.

Cost of goods sold for the three months ended September 30, 2023 was $58.5 million compared to $75.1 million for the comparable period in 2022, a decrease of $16.5 million or 22.0 percent. Cost of goods sold as a percentage of net sales was 75.3 percent of net sales for the three months ended September 30, 2023 compared to 75.0 percent for the same period in the prior year.

Selling, general and administrative expenses for the three months ended September 30, 2023 were $8.8 million compared to $10.3 million for the comparable period in 2022, a decrease of $1.5 million or 14.9 percent. This decrease was primarily due to costs that vary with sales and profitability, such as incentive compensation, sales commissions and warranty expense. Selling, general and administrative expenses were 11.3 percent of net sales in the third quarter of 2023 compared to 10.3 percent in the third quarter of 2022. Management expects the reduction in anticipated incentive compensation to be paid to certain non-executive employees described at Note 15, Commitments and Contingencies, to favorably impact selling, general and administrative expenses for future periods.

Gain on disposition of assets, net for the three months ended September 30, 2023 was $2.0 million due primarily to a $1.8 million gain related to a real estate transaction. See Note 16, Net investment in leases for additional information.

Operating income for the three months ended September 30, 2023 was $12.4 million compared to $14.7 million in the same period in 2022.

Interest income (expense), net for the three months ended September 30, 2023 increased to interest income, net of $860 thousand from interest income, net of $76 thousand in the same period of the prior year due to a higher average cash balance and higher interest yields. Marine Products generates interest income primarily from investments of excess cash in money market funds. Additionally, interest expense is recorded for the revolving credit facility, including fees on the unused portion of the facility and the amortization of loan costs.

Income tax provision for the third quarter of 2023 reflects an effective tax rate of 21.6 percent compared to 22.3 percent for the comparable period in the prior year. The decrease in the 2023 effective tax rate is primarily due to favorable permanent adjustments coupled with beneficial discrete tax items.

NINE MONTHS ENDED SEPTEMBER 30, 2023 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2022

Net sales for the nine months ended September 30, 2023 increased $40.4 million or 14.8 percent compared to the same period in 2022. The change in net sales during the nine months ended September 30, 2023 compared to the prior year was due primarily to increases in the average gross selling price per boat and unit sales volumes, as well as an increase in parts and accessories sales. Unit sales volumes during the nine months ended September 30, 2023 increased 7.0 percent in comparison to the same period of the prior year as production has been adjusted to align more with current demand, including seasonally lower dealer demand during the third quarter of each calendar year.

Average selling price per boat during the nine months ended September 30, 2023 increased by 8.7 percent compared to the nine months ended September 30, 2022 due to a favorable model mix and price increases to cover higher costs for materials and components, partially offset by an increase in discounts to our dealers. Domestic net sales increased 14.4 percent to $292.3 million and international net sales increased 20.6 percent to $20.6 million compared to the same period of the prior year. In the nine months ended

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September 30, 2023, net sales outside of the United States accounted for 6.6 percent of net sales compared to 6.3 percent of net sales in the same period of the prior year.

Cost of goods sold for the nine months ended September 30, 2023 was $235.9 million compared to $206.1 million for the comparable period in 2022, an increase of $29.9 million or 14.5 percent. Cost of goods sold as a percentage of net sales were 75.4 percent of net sales for the nine months ended September 30, 2023 and 75.6 percent for the same period of the prior year.

Selling, general and administrative expenses for the nine months ended September 30, 2023 were $35.5 million compared to $29.4 million for the comparable period in 2022, an increase of $6.0 million or 20.5 percent. In the nine months ended September 30, 2023, selling, general and administrative expenses included a non-cash settlement loss of $2.3 million related to the termination of the defined benefit pension plan. The remainder of the increase was due to costs that vary with sales and profitability, such as incentive compensation, sales commissions and warranty expense. Selling, general and administrative expenses as a percentage of net sales were 11.3 percent in the nine months ended September 30, 2023 compared to 10.8 percent in the same period of 2022. Management expects the reduction in anticipated incentive compensation to be paid to certain non-executive employees described at Note 15, Commitments and Contingencies, to favorably impact selling, general and administrative expenses for future periods.

Gain on disposition of assets, net for the nine months ended September 30, 2023 was $2.0 million due primarily to a $1.8 million gain related to a real estate transaction during the third quarter of 2023. See Note 16, Net investment in leases for additional information.

Operating income for the nine months ended September 30, 2023 was $43.4 million compared to $36.9 million in the same period in 2022.

Interest income (expense), net for the nine months ended September 30, 2023 increased to interest income, net of $2.1 million from interest income, net of $52 thousand in the same period of the prior year due to a higher average cash balance and higher interest yields. Marine Products generates interest income primarily from investments of excess cash in money market funds. Additionally, interest expense is recorded for the revolving credit facility, including fees on the unused portion of the facility and the amortization of loan costs.

Income tax provision for the nine months ended September 30, 2023 reflects an effective tax rate of 20.2 percent compared to 23.0 percent for the comparable period in the prior year. The decrease in the 2023 effective tax rate is primarily due to favorable permanent adjustments coupled with beneficial discrete tax items.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

The Company’s cash and cash equivalents at September 30, 2023 were $60.7 million compared to $43.2 million at December 31, 2022. The following table sets forth the cash flows for the applicable periods:


	Nine months ended September 30,
(in thousands)	2023		2022
Net cash provided by operating activities	$	40,178	$	27,128
Net cash used for investing activities		(7,276)		(1,373)
Net cash used for financing activities		(15,368)		(12,997)

Cash provided by operating activities for the nine months ended September 30, 2023 increased $13.1 million compared to the nine months ended September 30, 2022. The net cash provided by operating activities for the nine months ended September 30, 2023 includes net income of $36.3 million, an adjustment for a non-cash pension settlement loss of $2.3 million, coupled with a net favorable change in inventory of $3.2 million. These favorable changes are partially offset by a net unfavorable change in other components of our working capital (including accounts receivable less accounts payable) totaling $1.6 million, as well as an unfavorable change in other non-current assets. The net favorable change in inventory during the current period is primarily due to clearing inventory of partially completed boats as supply chain disruptions of critical components have improved during the nine months ended September 30, 2023 in comparison to prior periods. The net unfavorable change in other components of our working capital is primarily a result of an increase in accounts receivable of $5.4 million consistent with an increase in shipments during the

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current period, partially offset by a decrease in accounts payable due to the timing of payments. The net unfavorable change in other non-current assets is due to an employer contribution of $4.0 million during the current period to the supplemental retirement plan assets.

Cash used for investing activities for the nine months ended September 30, 2023 increased $5.9 million in comparison to the same period in 2022 due to higher capital expenditures during the third quarter of 2023 for transportation equipment and warehouse space partially offset by proceeds from sale of assets.

Cash used for financing activities for the nine months ended September 30, 2023 increased $2.4 million compared to the nine months ended September 30, 2022 primarily due to increased dividends paid to common shareholders, coupled with an increased cost of stock repurchases related to the vesting of restricted shares.

Financial Condition and Liquidity

The Company believes that the liquidity provided by existing cash, cash equivalents and marketable securities, its overall strong capitalization, cash generated by operations and the Company’s revolving credit facility will provide sufficient capital to meet the Company’s requirements for at least the next twelve months. The Company’s decisions about the amount of cash to be used for investing and financing purposes are influenced by its capital position and the expected amount of cash to be provided by operations.

Cash Requirements

The Company currently expects that capital expenditures in 2023 will be approximately $9.0 million, of which $8.4 million has been spent through September 30, 2023.

The Company participates in a multiple employer Retirement Income Plan (Plan), sponsored by RPC, Inc. (“RPC”). The Company did not contribute to this Plan during the nine months ended September 30, 2023 and currently does not expect to make any additional contributions.

The Company has repurchased an aggregate total of 6,679,572 shares in the open market under the Company stock repurchase program, which began in 2002. As of September 30, 2023, there were 1,570,428 shares that remained available for repurchase under the current authorization. There were no shares repurchased under this program during the nine months ended September 30, 2023 and September 30, 2022.

For the nine months ended September 30, 2023, short-term cash incentive compensation expense recorded by the Company included an amount equal to 16 percent of pre-tax profit (defined as pretax income before goodwill adjustments and certain allocated corporate expenses), which was adjusted to nine percent, effective October 1, 2023. Management expects this reduction to favorably impact operating cash flow in future periods.

On October 24, 2023, the Board of Directors declared a regular quarterly cash dividend of $0.14 per share payable December 11, 2023 to common stockholders of record at the close of business November 10, 2023. The Company expects to continue to pay cash dividends to common stockholders, subject to industry conditions and Marine Products’ earnings, financial condition, and other relevant factors.

OFF BALANCE SHEET ARRANGEMENTS

To assist dealers in obtaining financing for the purchase of its boats for inventory, the Company has entered into agreements with various third-party floor plan lenders whereby the Company guarantees varying amounts of debt for qualifying dealers on boats in inventory. The Company’s obligation under these guarantees becomes effective in the case of a default under the financing arrangement between the dealer and the third-party lender. The agreements provide for the return of all repossessed boats to the Company in a new and unused condition as defined, in exchange for the Company’s assumption of specified percentages of the debt obligation on those boats, up to certain contractually determined dollar limits which vary by lender. The Company had no material financial impact associated with repurchases under these contractual agreements during the nine months ended September 30, 2023 and 2022.

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MARINE PRODUCTS CORPORATION AND SUBSIDIARIES

Management continues to monitor the risk of defaults and resulting repurchase obligations based in part on information provided by the third-party floor plan lenders and will adjust the guarantee liability at the end of each reporting period based on information reasonably available at that time.

The Company currently has an agreement with one of the floor plan lenders whereby the contractual repurchase limit is based on the highest of the following criteria: ( i) a specified percentage of the amount of the average net receivables financed by the floor plan lender for our dealers, (ii) the total average net receivables financed by the floor plan lender for our two highest dealers during the prior three month period, or (iii) $8.0 million, less repurchases during the prior 12 month period. As defined by the agreement, the repurchase limit for this lender was $14.6 million as of September 30, 2023. The Company has contractual repurchase agreements with additional lenders with an aggregate maximum repurchase obligation of approximately $7.4 million with various expiration and cancellation terms of less than one year, for an aggregate repurchase obligation with all floor plan financing institutions of approximately $22.0 million as of September 30, 2023.

CERTAIN RELATED PARTY TRANSACTIONS

In conjunction with its spin-off from RPC, Inc. in 2001, the Company and RPC entered into various agreements that define their relationship after the spin-off. RPC charged the Company for its allocable share of administrative costs incurred for services rendered on behalf of Marine Products totaling $786 thousand for the nine months ended September 30, 2023 and $682 thousand for the nine months ended September 30, 2022.

Marine Products and RPC own 50 percent each of a limited liability company called 255 RC, LLC that was created for the joint purchase and ownership of a corporate aircraft. Marine Products recorded certain net operating costs comprised of rent and an allocable share of fixed costs of $120 thousand for the nine months ended September 30, 2023 and $120 thousand for the nine months ended September 30, 2022.

As part of the termination of the Retirement Income Plan, the Company received $482 thousand during the nine months ended September 30, 2023 from RPC, which represented funds paid from the Company’s assets in the Plan to settle a portion of RPC’s participant liabilities.

CRITICAL ACCOUNTING POLICIES

The discussion of Critical Accounting Policies is incorporated herein by reference from the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2022. There have been no significant changes in the critical accounting policies since year-end.

IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS

See Note 2 Recent Accounting Standards in the accompanying Consolidated Financial Statements for a description of recent accounting pronouncements, including the expected dates of adoption and expected effects on results of operations and financial condition, if known.

SEASONALITY

Marine Products’ quarterly operating results are affected by weather and general economic conditions. Quarterly operating results for the second quarter have historically recorded the highest sales volume for the year because this corresponds with the highest retail sales volume period. The results for any quarter are not necessarily indicative of results to be expected in any future period.

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MARINE PRODUCTS CORPORATION AND SUBSIDIARIES

INFLATION

During 2021 and 2022, inflation in the general economy had increased to its highest level in more than 40 years due to economic growth following the COVID-19 pandemic, labor shortages and U.S. fiscal policy. As a result, the market prices of the raw materials used by the Company’s manufacturing processes increased during these periods. In addition, the Company purchases components of which there are a limited number of suppliers, most of whom are experiencing significant customer orders impacting their ability to provide needed supply quantities. The costs of most of these components increased as demand from recreational boat manufacturers has increased and supply chains have remained constrained. These cost increases were exacerbated by higher transportation costs, which are included in the total cost of these components. In response to historically high consumer demand as well as higher raw materials and components costs, the Company increased the prices for its products periodically beginning in the third quarter of 2021 and continuing through the 2023 model year. During the third and fourth quarters of 2022 and the first nine months of 2023, the prices of many raw materials used in the Company’s manufacturing processes began to decline, and transportation became more available and less expensive, thus easing the Company’s cost pressures. Price increases of raw materials and component costs in recent periods have had no discernible negative impact on the Company’s sales due to high consumer demand and strong order backlogs which have allowed Marine Products to maintain its profit margins. However, the Company believes the cost of boat ownership has risen enough to impact retail demand. Therefore, it will be more difficult to raise prices in the future to compensate for increased costs of raw materials and components, which could impact the Company’s sales and profit margins.

New boat buyers typically finance their purchases. The Company believes that the recent increase in interest rates has reduced retail demand for smaller boats, since purchasers of smaller boats are typically more sensitive to increases in the cost of boat ownership.

FORWARD-LOOKING STATEMENTS

Certain statements made in this report that are not historical facts are “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. The words “may,” “should,” “will,” “expect,” “believe,” “anticipate,” “intend,” “plan,” “seek,” “project,” “estimate,” and similar expressions used in this document that do not relate to historical facts are intended to identify forward-looking statements. Such forward-looking statements may include, without limitation: our attempts to optimize financial returns by closely monitoring dealer orders and inventories, the production mix of various models, and indications of near term demand such as consumer confidence, inflation concerns, interest rates, dealer orders placed at our annual dealer conferences, and retail attendance and orders at annual winter boat show exhibitions; our plans to consider trends related to certain key financial and other data, including our historical and forecasted financial results, market share, unit sales of our products, average selling price per boat, and gross profit margins, among others, as indicators of the success of our strategies; our belief that our financial results are affected by consumer confidence; our belief that the strong retail demand for new recreational boats has declined and will continue to moderate throughout 2023 as retail demand normalizes and consumers return to more pre-pandemic routine lifestyles coupled with factors such as rising interest rates and higher cost of boat ownership; our belief that production will satisfy current retail demand; statements that since many recreational boat purchasers finance their purchases, higher interest may discourage them from the purchase of a boat; our belief that the higher cost of boat ownership may discourage consumers from purchasing recreational boats; our belief that our financial results are affected by consumer confidence — because pleasure boating is a discretionary expenditure, interest rates — because many retail customers finance the purchase of their boats, and other socioeconomic and environmental factors such as availability of leisure time, consumer preferences, demographics and the weather; our belief that the strong retail demand for new recreational boats which began with the onset of the COVID-19 pandemic has declined and will continue to moderate throughout 2023, and that consumers are returning to pre-pandemic routine lifestyles, and rising interest rates are contributing to higher costs of boat ownership; our belief that, for years, we have been improving our customer service capabilities, marketing strategies and sales promotions to attract more consumers to recreational boating as well as improve consumers’ boating experiences; our belief that the recreational boating industry’s promotional program has incrementally benefited the industry and Marine Products; our belief that our financial results during the remainder of 2023 will depend on a number of factors, including our ability to meet dealer and consumer demand in the face of ongoing supply chain challenges which have impacted our manufacturing operations, the availability and cost of credit to our dealers and consumers, declines in consumer confidence due to fears of a recession, increasing fuel costs, the continued acceptance of our new products in the recreational boating market, the near-term effectiveness of our marketing efforts, the availability and cost of labor and certain of our raw materials and key components used in manufacturing our products and the availability of qualified employee and contract drivers to deliver our finished products to dealers; our belief that, in light of the normalization of demand and higher interest rates, we may have to reinstitute certain retail incentives and other allowances to attract more consumers; our belief that the liquidity provided by existing cash, cash equivalents and marketable securities, our overall strong capitalization and cash expected to be generated from operations and the Company’s revolving credit facility will

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MARINE PRODUCTS CORPORATION AND SUBSIDIARIES

provide sufficient capital to meet our requirements for at least the next twelve months; our belief that our decisions about the amount of cash to be used for investing and financing purposes will be influenced by our capital position and the expected amount of cash to be provided by operations; our expectations that capital expenditures in 2023 will be approximately $9.0 million; our expectation to continue to pay cash dividends to common stockholders, subject to industry conditions and Marine Products’ earnings, financial condition, and other relevant factors; our plans to continue to monitor the risk of defaults and resulting repurchase obligations based in part on information provided by third-party floor plan lenders and our plans to adjust the guarantee liability at the end of each reporting period based on information reasonably available at that time; our belief that the cost of boat ownership has risen enough to impact retail demand, and as a result, it will be more difficult to raise prices in the future to compensate for increased costs of raw materials and components, which could impact the Company’s sales and profit margins; our belief that the recent increase in interest rates has reduced retail demand for smaller boats, since purchasers of smaller boats are typically more sensitive to increases in the cost of boat ownership; statements that we do not expect any material changes in market risk exposures or how those risks are managed; our current expectations that we don’t expect to make additional contributions to the multiple employer Retirement Income Plan and our belief that the outcome of any litigation, arising from time to time in the ordinary course of our business, will not have a material effect on the financial position, results of operations or liquidity of Marine Products.

Such forward-looking statements are based on certain assumptions and analyses made by our management in light of its experience and its perception of historical trends, current conditions, expected future developments and other factors it believes to be appropriate. We caution you that such statements are only predictions and not guarantees of future performance and that actual results, developments and business decisions may differ from those envisioned by the forward-looking statements. Risk factors that could cause such future events not to occur as expected include the following: our manufacturing operations are conducted in a single location, and to support our operations, several of our suppliers have also established facilities close to our manufacturing facility to provide timely delivery of fabricated components to us; as a result, catastrophic weather, civil unrest or other unanticipated events beyond our control may disrupt both our and our suppliers’ ability to conduct manufacturing operations or transport our finished boats to our dealer network, and we do not own or have access to alternate manufacturing locations; economic conditions, unavailability of credit and possible decreases in the level of consumer confidence impacting discretionary spending; business interruptions due to adverse weather conditions, increased interest rates, increased fuel costs, unanticipated changes in consumer demand and preferences, deterioration in the quality of Marine Products’ network of independent boat dealers or availability of financing of their inventory; our ability to insulate financial results against increasing commodity prices; competition from other boat manufacturers and dealers; potential liabilities for personal injury or property damage claims relating to the use of our products; our ability to successfully identify suitable acquisition candidates or strategic partners, obtain financing on satisfactory terms, complete acquisitions or strategic alliances, integrate acquired operations into our existing operations, or expand into new markets; changes in various government laws and regulations, including environmental regulations; the possibility of retaliatory tariffs imposed on the export of our products to countries on which the U.S. has imposed tariffs; the higher prices of materials, would increase the costs of manufacturing our products, and could negatively affect our profit margins; higher inflation, which typically results in higher interest rates that could translate into an increased cost of boat ownership which could cause prospective buyers to choose to forego or delay boat purchases; the existence of certain anti-takeover provisions in our governance documents, which could make a tender offer, change in control or takeover attempt that is opposed by Marine Products’ Board of Directors more difficult or expensive; and our cash and cash equivalents are held primarily at a single financial institution. Additional discussion of factors that could cause actual results to differ 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 ended December 31, 2022 and in this Form 10-Q.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is subject to interest rate risk exposure through borrowings on its credit facility. As of September 30, 2023, there were no outstanding interest-bearing advances on our credit facility, which bear interest at a floating rate.

Marine Products holds no derivative financial instruments which could expose the Company to significant market risk. Marine Products maintains investments primarily in money market funds which are not subject to interest rate risk exposure. Marine Products does not expect any material changes in market risk exposures or how those risks are managed.

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MARINE PRODUCTS CORPORATION AND SUBSIDIARIES

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures – The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms, and that such information is accumulated and communicated to its management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As of the end of the period covered by this report, September 30, 2023 (the “Evaluation Date”), the Company carried out an evaluation, under the supervision and with the participation of its management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of its disclosure controls and procedures. Based upon this evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective at a reasonable assurance level as of the Evaluation Date.

Changes in internal control over financial reporting – There were no changes in the Company’s internal control over financial reporting during the third quarter of 2023 which were not identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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MARINE PRODUCTS CORPORATION AND SUBSIDIARIES

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Marine Products is involved in litigation from time to time in the ordinary course of its business. Marine Products does not believe that the outcome of such litigation will have a material effect on the financial position, results of operations or liquidity of Marine Products.

Item 1A. RISK FACTORS

There have been no material changes from the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 and in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASERS OF EQUITY SECURITIES

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

ITEM 5. OTHER INFORMATION

During the three months ended September 30, 2023, no director or officer, as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934, as amended, of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

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MARINE PRODUCTS CORPORATION AND SUBSIDIARIES

ITEM 6. Exhibits


Exhibit Number		Description

3.1(a)		Marine Products Corporation Articles of Incorporation (incorporated herein by reference to Exhibit 3.1 to the Registrant’s Registration Statement on Form 10 filed on February 13, 2001).

3.1(b)		Certificate of Amendment of Certificate of Incorporation of Marine Products Corporation executed on June 8, 2005 (incorporated herein by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed June 9, 2005).

3.2		Amended and Restated By-laws of Marine Products Corporation dated October 26, 2021 (incorporated herein by reference to Exhibit 3.2 to the Form 10-Q filed October 29, 2021).

4		Restated Form of Stock Certificate of Marine Products Corporation (incorporated herein by reference to Exhibit 4.1 to the Registrant’s Registration Statement to the Form 10 filed on February 13, 2001).

31.1		Section 302 certification for Chief Executive Officer.

31.2		Section 302 certification for Chief Financial Officer.

32.1		Section 906 certifications for Chief Executive Officer and Chief Financial Officer.

101.INS		Inline XBRL Instance Document

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

104		Cover Page Interactive Data File (formatted as Inline XBRL)

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MARINE PRODUCTS CORPORATION AND SUBSIDIARIES

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		MARINE PRODUCTS CORPORATION



Date: October 26, 2023		/s/ Ben M. Palmer
		Ben M. Palmer
		President and Chief Executive Officer
		(Principal Executive Officer)


Date: October 26, 2023		/s/ Michael L. Schmit
		Michael L. Schmit
		Vice President, Chief Financial Officer and Corporate Secretary
		(Principal Financial and Accounting Officer)

EXHIBIT 31.1

CERTIFICATIONS

I, Ben M. Palmer, certify that:

I have reviewed this quarterly report on Form 10-Q of Marine Products Corporation;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Date: October 26, 2023	/s/ Ben M. Palmer
	Ben M. Palmer
	President and Chief Executive Officer
	(Principal Executive Officer)

EXHIBIT 31.2

CERTIFICATIONS

I, Michael L. Schmit, certify that:

I have reviewed this quarterly report on Form 10-Q of Marine Products Corporation;

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Date: October 26, 2023	/s/ Michael L. Schmit
	Michael L. Schmit
	Vice President, Chief Financial Officer, and Corporate Secretary
	(Principal Financial and Accounting Officer)

EXHIBIT 32.1

CERTIFICATION OF PERIODIC FINANCIAL REPORTS PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

To the best of their knowledge the undersigned hereby certify that the Quarterly Report on Form 10-Q of Marine Products Corporation for the period ended September 30, 2023, fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. Sec. 78m) and that the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of Marine Products Corporation.


Date: October 26, 2023	/s/ Ben M. Palmer
	Ben M. Palmer
	President and Chief Executive Officer
	(Principal Executive Officer)


Date: October 26, 2023	/s/ Michael L. Schmit
	Michael L. Schmit
	Vice President, Chief Financial Officer and Corporate Secretary
	(Principal Financial and Accounting Officer)

Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2023	Oct. 20, 2023
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2023
Document Transition Report	false
Entity File Number	1-16263
Entity Registrant Name	MARINE PRODUCTS CORPORATION
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	58-2572419
Entity Address, Address Line One	2801 Buford Highway
Entity Address, Address Line Two	Suite 300
Entity Address, City or Town	Atlanta
Entity Address, State or Province	GA
Entity Address, Postal Zip Code	30329
City Area Code	404
Local Phone Number	321-7910
Title of 12(b) Security	Common stock
Trading Symbol	MPX
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		34,466,726
Entity Central Index Key	0001129155
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Amendment Flag	false

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
ASSETS
Cash and cash equivalents	$ 60,705	$ 43,171
Accounts receivable, net of allowance for credit losses of $11 in 2023 and $12 in 2022	10,743	5,340
Inventories	69,784	73,015
Income taxes receivable	199	28
Pension plan assets	113	356
Prepaid expenses and other current assets	3,671	3,088
Total current assets	145,215	124,998
Property, plant and equipment, net of accumulated depreciation of $32,450 in 2023 and $33,055 in 2022	21,356	14,965
Goodwill	3,308	3,308
Other intangibles, net	465	465
Deferred income taxes	7,833	6,027
Other assets	18,556	13,952
Total assets	196,733	163,715
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	12,066	8,250
Accrued expenses and other liabilities	16,218	15,340
Total current liabilities	28,284	23,590
Retirement plan liabilities	16,714	14,440
Other long-term liabilities	1,622	1,304
Total liabilities	46,620	39,334
Commitments and contingencies (Note 15)
Stockholders' Equity
Preferred stock, $0.10 par value, 1,000,000 shares authorized, none issued
Common stock, $0.10 par value, 74,000,000 shares authorized, issued and outstanding - 34,466,726 shares in 2023 and 34,217,582 shares in 2022	3,447	3,422
Retained earnings	146,678	122,954
Accumulated other comprehensive loss	(12)	(1,995)
Total stockholders' equity	150,113	124,381
Total liabilities and stockholders' equity	$ 196,733	$ 163,715

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
CONSOLIDATED BALANCE SHEETS
Allowance for credit losses	$ 11	$ 12
Accumulated depreciation, property plant and equipment	$ 32,450	$ 33,055
Preferred stock, par value (in dollar per share)	$ 0.10	$ 0.10
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	0	0
Common stock, par value (in dollar per share)	$ 0.10	$ 0.10
Common stock, shares authorized	74,000,000	74,000,000
Common stock, shares issued	34,466,726	34,217,582
Common stock, shares outstanding	34,466,726	34,217,582

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
CONSOLIDATED STATEMENTS OF OPERATIONS
Net sales	$ 77,786	$ 100,061	$ 312,858	$ 272,486
Cost of goods sold	58,548	75,056	235,942	206,089
Gross profit	19,238	25,005	76,916	66,397
Selling, general and administrative expenses	8,789	10,326	35,495	29,449
Gain on disposition of assets, net	(1,962)		(1,962)
Operating income	12,411	14,679	43,383	36,948
Interest income, net	860	76	2,066	52
Income before income taxes	13,271	14,755	45,449	37,000
Income tax provision	2,868	3,283	9,176	8,510
Net income	$ 10,403	$ 11,472	$ 36,273	$ 28,490
Earnings per share
Basic (in dollars per share)	$ 0.30	$ 0.34	$ 1.05	$ 0.83
Diluted (in dollars per share)	0.30	0.34	1.05	0.83
Dividends paid per share (in dollars per share)	$ 0.14	$ 0.12	$ 0.42	$ 0.36

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income	$ 10,403	$ 11,472	$ 36,273	$ 28,490
Other comprehensive income, net of taxes:
Pension adjustment		23	1,983	67
Comprehensive income	$ 10,403	$ 11,495	$ 38,256	$ 28,557

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands	Common stock	Capital in Excess of Par Value	Retained Earnings	Accumulated Other Comprehensive Loss	Total
Balance at Dec. 31, 2021	$ 3,399		$ 97,702	$ (2,576)	$ 98,525
Balance (in shares) at Dec. 31, 2021	33,993
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock issued for stock incentive plans, net	$ 21	$ 589			610
Stock issued for stock incentive plans, net (in shares)	211
Stock purchased and retired	$ (6)	(589)	(107)		(702)
Stock purchased and retired (in shares)	(60)
Net income			7,063		7,063
Pension adjustment, net of taxes				22	22
Dividends paid			(4,095)		(4,095)
Balance at Mar. 31, 2022	$ 3,414		100,563	(2,554)	101,423
Balance (in shares) at Mar. 31, 2022	34,144
Balance at Dec. 31, 2021	$ 3,399		97,702	(2,576)	98,525
Balance (in shares) at Dec. 31, 2021	33,993
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income					28,490
Pension adjustment, net of taxes					67
Balance at Sep. 30, 2022	$ 3,422		115,280	(2,509)	116,193
Balance (in shares) at Sep. 30, 2022	34,218
Balance at Mar. 31, 2022	$ 3,414		100,563	(2,554)	101,423
Balance (in shares) at Mar. 31, 2022	34,144
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock issued for stock incentive plans, net	$ 10	810			820
Stock issued for stock incentive plans, net (in shares)	94
Stock purchased and retired		(810)	810
Net income			9,955		9,955
Pension adjustment, net of taxes				22	22
Dividends paid			(4,096)		(4,096)
Balance at Jun. 30, 2022	$ 3,424		107,232	(2,532)	108,124
Balance (in shares) at Jun. 30, 2022	34,238
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock issued for stock incentive plans, net	$ (2)	680			678
Stock issued for stock incentive plans, net (in shares)	(20)
Stock purchased and retired		(680)	680
Net income			11,472		11,472
Pension adjustment, net of taxes				23	23
Dividends paid			(4,104)		(4,104)
Balance at Sep. 30, 2022	$ 3,422		115,280	(2,509)	116,193
Balance (in shares) at Sep. 30, 2022	34,218
Balance at Dec. 31, 2022	$ 3,422		122,954	(1,995)	124,381
Balance (in shares) at Dec. 31, 2022	34,218
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock issued for stock incentive plans, net	$ 29	748			777
Stock issued for stock incentive plans, net (in shares)	289
Stock purchased and retired	$ (7)	(748)	(155)		(910)
Stock purchased and retired (in shares)	(69)
Net income			11,549		11,549
Pension adjustment, net of taxes				1,886	1,886
Dividends paid			(4,817)		(4,817)
Balance at Mar. 31, 2023	$ 3,444		129,531	(109)	132,866
Balance (in shares) at Mar. 31, 2023	34,438
Balance at Dec. 31, 2022	$ 3,422		122,954	(1,995)	124,381
Balance (in shares) at Dec. 31, 2022	34,218
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income					36,273
Pension adjustment, net of taxes					1,983
Balance at Sep. 30, 2023	$ 3,447		146,678	(12)	150,113
Balance (in shares) at Sep. 30, 2023	34,467
Balance at Mar. 31, 2023	$ 3,444		129,531	(109)	132,866
Balance (in shares) at Mar. 31, 2023	34,438
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock issued for stock incentive plans, net	$ 3	1,230			1,233
Stock issued for stock incentive plans, net (in shares)	29
Stock purchased and retired		(1,230)	1,230
Net income			14,321		14,321
Pension adjustment, net of taxes				97	97
Dividends paid			(4,820)		(4,820)
Balance at Jun. 30, 2023	$ 3,447		140,262	(12)	143,697
Balance (in shares) at Jun. 30, 2023	34,467
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock issued for stock incentive plans, net		834			834
Stock purchased and retired		$ (834)	834
Net income			10,403		10,403
Dividends paid			(4,821)		(4,821)
Balance at Sep. 30, 2023	$ 3,447		$ 146,678	$ (12)	$ 150,113
Balance (in shares) at Sep. 30, 2023	34,467

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
OPERATING ACTIVITIES
Net income	$ 36,273	$ 28,490
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,750	1,416
Stock-based compensation expense	2,844	2,108
Gain on disposition of assets, net	(1,962)
Deferred income tax benefit	(2,366)	(1,146)
Pension settlement loss	2,277
(Increase) decrease in assets:
Accounts receivable	(5,403)	(8,230)
Income taxes receivable	(171)	(88)
Inventories	3,231	(9,551)
Current pension assets	509
Prepaid expenses and other current assets	514	(64)
Other non-current assets	(4,477)	3,039
Increase (decrease) in liabilities:
Accounts payable	3,816	7,870
Income taxes payable	755	573
Accrued expenses and other liabilities	97	4,202
Other long-term liabilities	2,491	(1,491)
Net cash provided by operating activities	40,178	27,128
INVESTING ACTIVITIES
Capital expenditures	(8,405)	(1,373)
Proceeds from sale of assets	1,129
Net cash used for investing activities	(7,276)	(1,373)
FINANCING ACTIVITIES
Payment of dividends	(14,458)	(12,295)
Cash paid for common stock purchased and retired	(910)	(702)
Net cash used for financing activities	(15,368)	(12,997)
Net increase in cash and cash equivalents	17,534	12,758
Cash and cash equivalents at beginning of period	43,171	14,102
Cash and cash equivalents at end of period	60,705	26,860
Supplemental information:
Income tax payments, net	$ 10,736	$ 8,782

GENERAL

9 Months Ended

Sep. 30, 2023

GENERAL

GENERAL

1. GENERAL

RECENT ACCOUNTING STANDARDS

9 Months Ended

Sep. 30, 2023

RECENT ACCOUNTING STANDARDS

RECENT ACCOUNTING STANDARDS

2. RECENT ACCOUNTING STANDARDS

The FASB issued the following Accounting Standards Updates (ASUs):

Recently Adopted Accounting Standards:

NET SALES

9 Months Ended

Sep. 30, 2023

NET SALES

NET SALES

3. NET SALES

Accounting Policy:

Nature of goods:

●

Boats and accessories (domestic sales) – upon delivery and acceptance by the dealer

●

Boats and accessories (international sales) – upon delivery to shipping port

●

Parts – upon shipment/delivery to carrier

Payment terms:

Significant judgments:

Determining the transaction price

●

Assumption: Current model year incentive activity will closely reflect prior model year actual results, adjusted as necessary for dealer purchasing trends or economic factors.

Other:

Our contracts with dealers do not provide them with a right of return. Accordingly, we do not have any obligations recorded for returns or refunds.

Disaggregation of revenues:

The following table disaggregates our sales by major source:


	Three months ended				Nine months ended
(in thousands)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Boats and accessories	$	76,155	$	98,687	$	308,436	$	268,358
Parts		1,631		1,374		4,422		4,128
Net sales	$	77,786	$	100,061	$	312,858	$	272,486

The following table disaggregates our revenues between domestic and international:


	Three months ended				Nine months ended
(in thousands)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Domestic	$	73,227	$	94,894	$	292,298	$	255,435
International		4,559		5,167		20,560		17,051
Net sales	$	77,786	$	100,061	$	312,858	$	272,486

Contract balances:


	September 30,		December 31,
(in thousands)	2023		2022
Deferred revenue	$	1,212	$	1,989

Substantially all of the amounts of deferred revenue disclosed above were or will be recognized as sales during the immediately following quarters, respectively, when control is transferred.

EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2023

EARNINGS PER SHARE

EARNINGS PER SHARE

4. EARNINGS PER SHARE


	Three months ended				Nine months ended
	September 30,				September 30,
(in thousands)	2023		2022		2023		2022
Net income available for stockholders:	$	10,403	$	11,472	$	36,273	$	28,490
Less: Adjustments for earnings attributable to participating securities		(249)		(254)		(866)		(602)
Net income used in calculating earnings per share	$	10,154	$	11,218	$	35,407	$	27,888

Weighted average shares outstanding (including participating securities)		34,467		34,225		34,435		34,172
Adjustment for participating securities		(839)		(768)		(833)		(737)
Shares used in calculating basic and diluted earnings per share		33,628		33,457		33,602		33,435

STOCK-BASED COMPENSATION

9 Months Ended

Sep. 30, 2023

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

5. STOCK-BASED COMPENSATION

Stock-based compensation was as follows:


	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2023		2022		2023		2022
Pre – tax cost	$	834	$	678	$	2,844	$	2,108
After tax cost		650		529		2,218		1,644

The following is a summary of the changes in non-vested restricted shares for the nine months ended September 30, 2023:


		Weighted
		Average
		Grant-Date
	Shares	Fair Value
Non-vested shares at December 31, 2022	764,170	$	14.15
Granted	318,348		13.25
Vested	(243,468)		14.16
Non-vested shares at September 30, 2023	839,050	$	13.81

WARRANTY COSTS

9 Months Ended

Sep. 30, 2023

WARRANTY COSTS

WARRANTY COSTS

6. WARRANTY COSTS

Warranty Costs:

The manufacturers of the engines, generators, and navigation electronics included on our boats provide and administer their own warranties for various lengths of time.

An analysis of the warranty accruals for the nine months ended September 30, 2023 and 2022 is as follows:


(in thousands)	2023		2022
Balance at January 1	$	5,699	$	4,641
Less: Payments made during the period		(3,316)		(3,600)
Add: Warranty provision for the period		4,704		3,950
Changes to warranty provision for prior periods		156		145
Balance at September 30	$	7,243	$	5,136

The warranty accruals are reflected in Accrued expenses and other liabilities in the accompanying Consolidated Balance Sheets.

BUSINESS SEGMENT INFORMATION

9 Months Ended

Sep. 30, 2023

BUSINESS SEGMENT INFORMATION

BUSINESS SEGMENT INFORMATION

7. BUSINESS SEGMENT INFORMATION

INVENTORIES

9 Months Ended

Sep. 30, 2023

INVENTORIES

INVENTORIES

8. INVENTORIES

Inventories consist of the following:


	September 30,		December 31,
	2023		2022
(in thousands)
Raw materials and supplies	$	44,983	$	37,210
Work in process		11,168		14,190
Finished goods		13,633		21,615
Total inventories	$	69,784	$	73,015

INCOME TAXES

9 Months Ended

Sep. 30, 2023

INCOME TAXES

INCOME TAXES

9. INCOME TAXES

PENSION AND RETIREMENT PLANS

9 Months Ended

Sep. 30, 2023

PENSION AND RETIREMENT PLANS

PENSION AND RETIREMENT PLANS

10. PENSION AND RETIREMENT PLANS


	Three months ended				Nine months ended
(in thousands)	September 30,				September 30,
	2023		2022		2023		2022
Interest cost	$	—	$	34	$	4	$	100
Expected return on plan assets		—		—		—		—
Amortization of net losses		—		28		22		84
Settlement loss ⁽¹⁾		—		—		2,277		—
Net periodic cost	$	—	$	62	$	2,303	$	184

⁽¹⁾ Reported as part of Selling, general and administrative expenses in the accompanying Consolidated Statements of Operations.

The Company did not contribute to this Plan during the nine months ended September 30, 2023 and 2022. The Company does not expect to make any additional cash contributions.

FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2023

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

11. FAIR VALUE MEASUREMENTS

Level 1 – Quoted market prices in active markets for identical assets or liabilities.

Level 3 – Unobservable inputs developed using the Company’s estimates and assumptions, which reflect those that market participants would use.

ACCUMULATED OTHER COMPREHENSIVE LOSS

9 Months Ended

Sep. 30, 2023

ACCUMULATED OTHER COMPREHENSIVE LOSS

ACCUMULATED OTHER COMPREHENSIVE LOSS

12. ACCUMULATED OTHER COMPREHENSIVE LOSS

Accumulated other comprehensive loss consists of pension adjustments as follows:


	Nine months ended
	September 30,
(in thousands)	2023		2022
Balance at beginning of the period	$	(1,995)	$	(2,576)
Change during the period:
Before-tax amount		244		—
Tax provision		(54)		—
Pension settlement loss, net of taxes⁽¹⁾		1,776		—
Reclassification adjustment, net of taxes
Amortization of net loss ⁽¹⁾		17		67
Total activity for the period		1,983		67
Balance at end of the period	$	(12)	$	(2,509)

(1)

Reported as part of Selling, general and administrative expenses in the accompanying Consolidated Statements of Operations.

ACCRUED EXPENSES AND OTHER LIABILITIES

9 Months Ended

Sep. 30, 2023

ACCRUED EXPENSES AND OTHER LIABILITIES

ACCRUED EXPENSES AND OTHER LIABILITIES

13. ACCRUED EXPENSES AND OTHER LIABILITIES

Accrued expenses and other liabilities consist of the following:


	September 30,		December 31,
(in thousands)	2023		2022
Accrued payroll and related expenses	$	3,657	$	3,753
Accrued sales incentives and discounts		1,599		2,485
Accrued warranty costs		7,243		5,699
Deferred revenue		1,212		1,989
Income taxes payable		1,097		342
Other		1,410		1,072
Total accrued expenses and other liabilities	$	16,218	$	15,340

NOTES PAYABLE TO BANKS

9 Months Ended

Sep. 30, 2023

NOTES PAYABLE TO BANKS

NOTES PAYABLE TO BANKS

14. NOTES PAYABLE TO BANKS

COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2023

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

15. COMMITMENTS AND CONTINGENCIES

Repurchase Obligations:

Short-term Cash Incentive Compensation:

Total STCI expense for the reported periods was as follows:


	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2023		2022		2023		2022
STCI expense	$	2,365	$	3,414	$	9,650	$	8,699

These amounts are included in Selling, general and administrative expenses in the accompanying Consolidated Statements of Operations.

NET INVESTMENT IN LEASE

9 Months Ended

Sep. 30, 2023

NET INVESTMENT IN LEASE

NET INVESTMENT IN LEASE

16. NET INVESTMENT IN LEASE

SUBSEQUENT EVENT

9 Months Ended

Sep. 30, 2023

SUBSEQUENT EVENT

SUBSEQUENT EVENT

17. SUBSEQUENT EVENT

RECENT ACCOUNTING STANDARDS (Policies)	9 Months Ended
RECENT ACCOUNTING STANDARDS (Policies)	Sep. 30, 2023
RECENT ACCOUNTING STANDARDS
RECENT ACCOUNTING STANDARDS	The FASB issued the following Accounting Standards Updates (ASUs): Recently Adopted Accounting Standards: ASU No. 2021-08 — Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The amendments in this ASU address diversity in practice related to the accounting for revenue contracts with customers acquired in a business combination, by adopting guidance requiring an acquirer to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. At the acquisition date, an acquirer would recognize and measure the acquired contract assets and contract liabilities in the same manner that they were recognized and measured in the acquiree's financial statements before the acquisition. The Company adopted these provisions in the first quarter of 2023 prospectively to future business combinations and the adoption did not have a material impact on its consolidated financial statements.
NET SALES	MPC’s contract revenues are generated principally from selling: (1) fiberglass motorized boats and accessories and (2) parts to independent dealers. Revenue is recognized when obligations under the terms of a contract with our customer are satisfied. Satisfaction of contract terms occurs with the transfer of title of our boats and accessories and parts to our dealers. Net sales are measured as the amount of consideration we expect to receive in exchange for transferring the goods to the dealer. The amount of consideration we expect to receive consists of the sales price adjusted for dealer incentives. The expected costs associated with our base warranties continue to be recognized as expense when the products are sold as they are deemed to be assurance-type warranties (see Note 6). Incidental promotional items that are immaterial in the context of the contract are recognized as expense. Fees charged to customers for shipping and handling are included in Net sales in the accompanying Consolidated Statements of Operations and the related costs incurred by the Company are included in Cost of goods sold.

NET SALES (Tables)

9 Months Ended

Sep. 30, 2023

NET SALES

Schedule of disaggregation of sales by major source


	Three months ended				Nine months ended
(in thousands)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Boats and accessories	$	76,155	$	98,687	$	308,436	$	268,358
Parts		1,631		1,374		4,422		4,128
Net sales	$	77,786	$	100,061	$	312,858	$	272,486

Schedule of revenue by geographic region


	Three months ended				Nine months ended
(in thousands)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Domestic	$	73,227	$	94,894	$	292,298	$	255,435
International		4,559		5,167		20,560		17,051
Net sales	$	77,786	$	100,061	$	312,858	$	272,486

Schedule of contract balances


	September 30,		December 31,
(in thousands)	2023		2022
Deferred revenue	$	1,212	$	1,989

EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2023

EARNINGS PER SHARE

Schedule of reconciliation of weighted average shares outstanding


	Three months ended				Nine months ended
	September 30,				September 30,
(in thousands)	2023		2022		2023		2022
Net income available for stockholders:	$	10,403	$	11,472	$	36,273	$	28,490
Less: Adjustments for earnings attributable to participating securities		(249)		(254)		(866)		(602)
Net income used in calculating earnings per share	$	10,154	$	11,218	$	35,407	$	27,888

Weighted average shares outstanding (including participating securities)		34,467		34,225		34,435		34,172
Adjustment for participating securities		(839)		(768)		(833)		(737)
Shares used in calculating basic and diluted earnings per share		33,628		33,457		33,602		33,435

STOCK-BASED COMPENSATION (Tables)

9 Months Ended

Sep. 30, 2023

STOCK-BASED COMPENSATION

Schedule of stock-based compensation


	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2023		2022		2023		2022
Pre – tax cost	$	834	$	678	$	2,844	$	2,108
After tax cost		650		529		2,218		1,644

Schedule of summary of the changes in non-vested restricted shares


		Weighted
		Average
		Grant-Date
	Shares	Fair Value
Non-vested shares at December 31, 2022	764,170	$	14.15
Granted	318,348		13.25
Vested	(243,468)		14.16
Non-vested shares at September 30, 2023	839,050	$	13.81

WARRANTY COSTS (Tables)

9 Months Ended

Sep. 30, 2023

WARRANTY COSTS

Schedule of analysis of warranty accruals


(in thousands)	2023		2022
Balance at January 1	$	5,699	$	4,641
Less: Payments made during the period		(3,316)		(3,600)
Add: Warranty provision for the period		4,704		3,950
Changes to warranty provision for prior periods		156		145
Balance at September 30	$	7,243	$	5,136

INVENTORIES (Tables)

9 Months Ended

Sep. 30, 2023

INVENTORIES

Schedule of inventories


	September 30,		December 31,
	2023		2022
(in thousands)
Raw materials and supplies	$	44,983	$	37,210
Work in process		11,168		14,190
Finished goods		13,633		21,615
Total inventories	$	69,784	$	73,015

PENSION AND RETIREMENT PLANS (Tables)

9 Months Ended

Sep. 30, 2023

PENSION AND RETIREMENT PLANS

Schedule of net periodic cost (benefit)


	Three months ended				Nine months ended
(in thousands)	September 30,				September 30,
	2023		2022		2023		2022
Interest cost	$	—	$	34	$	4	$	100
Expected return on plan assets		—		—		—		—
Amortization of net losses		—		28		22		84
Settlement loss ⁽¹⁾		—		—		2,277		—
Net periodic cost	$	—	$	62	$	2,303	$	184

⁽¹⁾ Reported as part of Selling, general and administrative expenses in the accompanying Consolidated Statements of Operations.

ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables)

9 Months Ended

Sep. 30, 2023

ACCUMULATED OTHER COMPREHENSIVE LOSS

Schedule of accumulated other comprehensive loss


	Nine months ended
	September 30,
(in thousands)	2023		2022
Balance at beginning of the period	$	(1,995)	$	(2,576)
Change during the period:
Before-tax amount		244		—
Tax provision		(54)		—
Pension settlement loss, net of taxes⁽¹⁾		1,776		—
Reclassification adjustment, net of taxes
Amortization of net loss ⁽¹⁾		17		67
Total activity for the period		1,983		67
Balance at end of the period	$	(12)	$	(2,509)

(1)

Reported as part of Selling, general and administrative expenses in the accompanying Consolidated Statements of Operations.

ACCRUED EXPENSES AND OTHER LIABILITIES (Tables)

9 Months Ended

Sep. 30, 2023

ACCRUED EXPENSES AND OTHER LIABILITIES

Schedule of accrued expenses and other liabilities


	September 30,		December 31,
(in thousands)	2023		2022
Accrued payroll and related expenses	$	3,657	$	3,753
Accrued sales incentives and discounts		1,599		2,485
Accrued warranty costs		7,243		5,699
Deferred revenue		1,212		1,989
Income taxes payable		1,097		342
Other		1,410		1,072
Total accrued expenses and other liabilities	$	16,218	$	15,340

COMMITMENTS AND CONTINGENCIES (Tables)

9 Months Ended

Sep. 30, 2023

COMMITMENTS AND CONTINGENCIES

Schedule of STCI expense


	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2023		2022		2023		2022
STCI expense	$	2,365	$	3,414	$	9,650	$	8,699

GENERAL (Details)	9 Months Ended
GENERAL (Details)	Sep. 30, 2023
Affiliated Entity \| RPC
Ownership control
Voting power (in percent)	50.00%

NET SALES - Payment Terms (Details)	9 Months Ended
NET SALES - Payment Terms (Details)	Sep. 30, 2023
Minimum
Net sales:
Revenue satisfaction period	7 days
Maximum
Net sales:
Revenue satisfaction period	10 days

NET SALES - Disaggregate sales by major source (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Disaggregation of revenue:
Net sales	$ 77,786	$ 100,061	$ 312,858	$ 272,486
Boats and accessories
Disaggregation of revenue:
Net sales	76,155	98,687	308,436	268,358
Parts
Disaggregation of revenue:
Net sales	$ 1,631	$ 1,374	$ 4,422	$ 4,128

NET SALES - Disaggregate revenue by location (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Disaggregation of revenue:
Net sales	$ 77,786	$ 100,061	$ 312,858	$ 272,486
Domestic
Disaggregation of revenue:
Net sales	73,227	94,894	292,298	255,435
International
Disaggregation of revenue:
Net sales	$ 4,559	$ 5,167	$ 20,560	$ 17,051

NET SALES - Deferred revenue (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Accrued expenses and other liabilities.
Disaggregation of revenue:
Deferred revenue	$ 1,212	$ 1,989

EARNINGS PER SHARE (Details) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2023	Sep. 30, 2022
EARNINGS PER SHARE
Net Income (Loss)	$ 10,403	$ 14,321	$ 11,549	$ 11,472	$ 9,955	$ 7,063	$ 36,273	$ 28,490
Less: Adjustments for earnings attributable to participating securities	(249)			(254)			(866)	(602)
Net income used in calculating earnings per share	$ 10,154			$ 11,218			$ 35,407	$ 27,888
Weighted average shares outstanding (including participating securities)	34,467			34,225			34,435	34,172
Adjustment for participating securities	(839)			(768)			(833)	(737)
Shares used in calculating basic earnings per share	33,628			33,457			33,602	33,435
Shares used in calculating diluted earnings per share	33,628			33,457			33,602	33,435

STOCK-BASED COMPENSATION (Details)	9 Months Ended
STOCK-BASED COMPENSATION (Details)	Sep. 30, 2023 shares
Stock-based compensation
Stock based compensation award, vesting period	4 years
Stock based compensation award, vesting percentage	100.00%
Stock Incentive Plans Member
Stock-based compensation
Stock authorized (in shares)	3,000,000
Term (in years)	P10Y
Available for grant (in shares)	777,199

STOCK-BASED COMPENSATION - Compensation expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
STOCK-BASED COMPENSATION
Pre - tax cost	$ 834	$ 678	$ 2,844	$ 2,108
After tax cost	$ 650	$ 529	$ 2,218	$ 1,644

STOCK-BASED COMPENSATION - Non vested RSU's (Details) - Restricted shares of common stock	9 Months Ended
	Sep. 30, 2023 $ / shares shares
Shares
Non-vested shares at beginning \| shares	764,170
Granted \| shares	318,348
Vested \| shares	(243,468)
Non-vested shares at ending \| shares	839,050
Weighted Average Grant-Date Fair Value
Non-vested shares at beginning \| $ / shares	$ 14.15
Granted \| $ / shares	13.25
Vested \| $ / shares	14.16
Non-vested shares at ending \| $ / shares	$ 13.81

STOCK-BASED COMPENSATION - Fair value (Details) - USD ($)	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Restricted shares of common stock
Stock-based compensation
Fair value, shares vested	$ 3,220,000	$ 2,241,000

STOCK-BASED COMPENSATION - Other Information (Details) - USD ($)	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Restricted shares of common stock
Stock-based compensation
Tax benefits for compensation expense for restricted stock	$ 30,000	$ 44,000

WARRANTY COSTS - Warranty Costs (Details)	9 Months Ended
WARRANTY COSTS - Warranty Costs (Details)	Sep. 30, 2023
Warranty Costs:
Period of transferable limited warranty to original owner	1 year
Period of transferable hull warranty available to second subsequent owner	5 years
Length of period after original retail purchase the 5-year transferable hull warranty terminates	5 years
Minimum
Warranty Costs:
Period of non-transferable warranty on additional items	1 year
Maximum
Warranty Costs:
Period of non-transferable warranty on additional items	5 years
Chaparral
Warranty Costs:
Period of limited warranty on structural deck	5 years

WARRANTY COSTS - Analysis of warranty accruals (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Warranty accruals:
Balance at beginning of year	$ 5,699	$ 4,641
Less: Payments made during the period	(3,316)	(3,600)
Add: Warranty provision for the period	4,704	3,950
Changes to warranty provision for prior periods	156	145
Balance at end of year	$ 7,243	$ 5,136

BUSINESS SEGMENT INFORMATION (Details)	9 Months Ended
BUSINESS SEGMENT INFORMATION (Details)	Sep. 30, 2023 segment
BUSINESS SEGMENT INFORMATION
Number of reportable segments	1

INVENTORIES (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
INVENTORIES
Raw materials and supplies	$ 44,983	$ 37,210
Work in process	11,168	14,190
Finished goods	13,633	21,615
Total inventories	$ 69,784	$ 73,015

INCOME TAXES (Details)	3 Months Ended		9 Months Ended
INCOME TAXES (Details)	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
INCOME TAXES
Effective tax rate (as a percent)	21.60%	22.30%	20.20%	23.00%

PENSION AND RETIREMENT PLANS - Components of net periodic cost (benefit) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
EMPLOYEE BENEFIT PLANS
Settlement loss			$ 2,277
Retirement Income Plan
EMPLOYEE BENEFIT PLANS
Defined Benefit Plan, Net Periodic Benefit (Cost) Credit, Amortization of Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration]	Selling, General and Administrative Expense	Selling, General and Administrative Expense	Selling, General and Administrative Expense	Selling, General and Administrative Expense
Defined Benefit Plan, Net Periodic Benefit Cost (Credit), Interest Cost, Statement of Income or Comprehensive Income [Extensible Enumeration]	Selling, General and Administrative Expense	Selling, General and Administrative Expense	Selling, General and Administrative Expense	Selling, General and Administrative Expense
Defined Benefit Plan, Net Periodic Benefit (Cost) Credit, Settlement Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration]	Selling, General and Administrative Expense	Selling, General and Administrative Expense	Selling, General and Administrative Expense	Selling, General and Administrative Expense
Defined Benefit Plan, Net Periodic Benefit (Cost) Credit, Expected Return (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration]	Selling, General and Administrative Expense	Selling, General and Administrative Expense	Selling, General and Administrative Expense	Selling, General and Administrative Expense
Retirement Income Plan \| RPC \| Affiliated Entity
EMPLOYEE BENEFIT PLANS
Interest cost		$ 34	$ 4	$ 100
Amortization of net losses		28	22	84
Settlement loss			2,277
Net periodic cost		$ 62	$ 2,303	$ 184

PENSION AND RETIREMENT PLANS (Details) - SERP - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
PENSION AND RETIREMENT PLANS (Details) - SERP - USD ($)	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	$ 14,405,000		$ 14,405,000		$ 9,881,000
Trading (losses) gains related to the SERP assets	238,000	$ (499,000)	524,000	$ (2,802,000)
Participant deferrals net of distributions stated at fair value			16,714,000		$ 14,440,000
Change in fair value of liability unrealized gains	(166,000)	$ (475,000)
Change in fair value of liability unrealized gains (losses)			$ 651,000	$ (2,799,000)
Company contribution to SERP assets	$ 4,000,000.0

ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
AOCI Roll Forward
Balance at beginning of the period	$ (1,995)
Reclassification adjustment, net of taxes
Balance at end of the period	(12)
Pension Adjustment
AOCI Roll Forward
Balance at beginning of the period	(1,995)	$ (2,576)
Change during the period:
Before-tax amount	244	0
Tax provision	(54)	0
Pension settlement loss, net of taxes	1,776	0
Reclassification adjustment, net of taxes
Amortization of net loss (1)	17	67
Total activity for the period	1,983	67
Balance at end of the period	$ (12)	$ (2,509)

ACCRUED EXPENSES AND OTHER LIABILITIES (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
ACCRUED EXPENSES AND OTHER LIABILITIES
Accrued payroll and related expenses	$ 3,657	$ 3,753
Accrued sales incentives and discounts	1,599	2,485
Accrued warranty costs	7,243	5,699
Deferred revenue	1,212	1,989
Income taxes payable	1,097	342
Other	1,410	1,072
Total accrued expenses and other liabilities	$ 16,218	$ 15,340

NOTES PAYABLE TO BANKS (Details)		3 Months Ended		9 Months Ended
NOTES PAYABLE TO BANKS (Details)	Jul. 01, 2023	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)
Line of Credit Facility [Line Items]
Maximum debt consolidated leverage ratio				2.50
Minimum debt consolidated fixed charge coverage ratio				1.25
Origination and other debt related costs		$ 195,000		$ 195,000
Revolving Credit Facility
Line of Credit Facility [Line Items]
Maximum borrowing capacity		20,000,000.0		20,000,000.0
Increase in the aggregate commitments from committed accordion				35,000,000.0
Additional interest	0.1145%
Outstanding borrowings		0		0		$ 0
Interest incurred		23,000	$ 22,000	67,000	$ 67,000
Interest expense paid		25,000	$ 0	63,000	$ 32,000
Revolving Credit Facility \| Minimum
Line of Credit Facility [Line Items]
Interest rate	1.50%
Facility fee	0.25%
Revolving Credit Facility \| Maximum
Line of Credit Facility [Line Items]
Interest rate	2.50%
Facility fee	0.45%
Swingline loans
Line of Credit Facility [Line Items]
Maximum borrowing capacity		5,000,000.0		5,000,000.0
Letter of Credit
Line of Credit Facility [Line Items]
Maximum borrowing capacity		$ 2,500,000		$ 2,500,000

COMMITMENTS AND CONTINGENCIES - Repurchase Obligations (Details) $ in Millions	Sep. 30, 2023 USD ($)
Repurchase obligations
Total purchase obligation	$ 22.0
Floor plan lender one
Repurchase obligations
Total purchase obligation	14.6
Floor plan lender one \| Minimum
Repurchase obligations
Total purchase obligation	8.0
Additional floor plan lenders
Repurchase obligations
Total purchase obligation	$ 7.4

COMMITMENTS AND CONTINGENCIES - Short-term Cash Incentive Compensation (Details) $ in Thousands		3 Months Ended		9 Months Ended		21 Months Ended
	Oct. 01, 2023 employee	Sep. 30, 2023 USD ($) employee	Sep. 30, 2022 USD ($)	Sep. 30, 2023 USD ($) employee	Sep. 30, 2022 USD ($)	Sep. 30, 2023 employee
COMMITMENTS AND CONTINGENCIES
Number of non-executive employee		4		4		4
Pre-tax profit incentive percentage						16.00%
Number of non-executive employee subject to contractual agreement		1		1		1
Pre-tax profit incentive percentage subject to contractual agreement				7.00%
Pre-tax profit incentive percentage subject to discretionary determination	9.00%
Number of non-executive employee, subject to discretionary determination	3
STCI expense \| $		$ 2,365	$ 3,414	$ 9,650	$ 8,699

NET INVESTMENT IN LEASE (Details) - USD ($)	3 Months Ended
NET INVESTMENT IN LEASE (Details) - USD ($)	Sep. 30, 2023	Jun. 30, 2023
NET INVESTMENT IN LEASE
Payments with a purchase price of sales-type lease		$ 2,000,000
Net investment in lease	$ 1,096,950
Lease receivable	1,100,000
Gain on disposition of assets, net	$ 1,800,000

SUBSEQUENT EVENT (Details) - Subsequent Event.	Oct. 24, 2023 $ / shares
Subsequent Event
Regular cash dividend Payable, Amount Per Share	$ 0.14
Dividend payable, date to be payable	Dec. 11, 2023
Dividends payable, date declared	Nov. 10, 2023

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended						9 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2023	Sep. 30, 2022
Pay vs Performance Disclosure
Net Income (Loss)	$ 10,403	$ 14,321	$ 11,549	$ 11,472	$ 9,955	$ 7,063	$ 36,273	$ 28,490

Insider Trading Arrangements	9 Months Ended
Insider Trading Arrangements	Sep. 30, 2023
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

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