Marine Products' Q3 2025: Contradictions Emerge on Sales Trends, SG&A Expenses, and Product Launches

Date of Call: October 30, 2025

Financials Results

• Revenue: Sales up 7% YOY (no dollar amount disclosed); driven by a 7% net increase in price & mix, partially offset by a slight decrease in boats sold
• EPS: Diluted EPS $0.07, down from $0.10 YOY
• Gross Margin: $10.2M gross profit, 19.2% gross margin, gross profit up 11% and margin up 80 basis points YOY

Guidance:

• Full-year capital expenditures expected to track toward approximately $1.0M to $1.5M (CapEx likely to pick up in remainder of year).
• Plan to liquidate terminated supplemental executive retirement plan in Q4 with an expected net cash distribution of ~ $3M and a discrete tax adjustment increasing the effective tax rate.
• Expect the tax rate to be higher than the 19.9% recorded in Q3 for the remainder of the year.
• No formal revenue or EPS guidance provided; company expects potential tailwind from future interest rate cuts.

Business Commentary:

* Sales Growth and Inventory Management: - Marine Products reported a 7% increase in third quarter sales, marking the first quarter of year-over-year growth in over two years. - This growth is attributed to the completion of channel inventory destocking and stabilization of production levels.

• Gross Profit Improvement:
• Gross profit increased by 11% to $10.2 million, with a gross profit percentage of 19.2%, up 80 basis points from the prior year.

• The improvement is due to better margins on larger boats and improved manufacturing cost absorption as production schedules stabilize with demand.

• Investment in Product Development and R&D:

• SG&A expenses rose by 31% to $7.4 million, with SG&A as a percentage of sales increasing to 13.9%, up 260 basis points from the prior year.

• The increase is primarily due to the timing of new product R&D investments, compensation-related accruals, and warranty cost adjustments.

• Financial Stability and Cash Flow:

• The company generated operating cash flow of $11.7 million and free cash flow of $10.8 million year-to-date.
• Despite the challenging macro and geopolitical risks, Marine Products maintains a strong balance sheet with $47.4 million in cash and no debt.

Sentiment Analysis:

Overall Tone: Positive

• Management noted "This is the first quarter of year-over-year growth in over 2 years," reported sales up 7% and field inventory down 6% YOY, and stated "We're optimistic for the year ahead" driven by new product introductions and stabilizing production.

Contradiction Point 1

Sales and Market Conditions

It reflects differing perspectives on the state of sales and market conditions, impacting expectations for company performance.

Not applicable - Not applicable

2025Q3: Sales were up 7%, driven by a positive 7% net increase in price and mix and offset by a slight decrease in the number of boats sold during the quarter. - Michael Schmit(CFO)

（No question provided in the input; output is empty as per the instruction to only output the simplified question.） - Not applicable

2025Q2: We note sales have been stabilizing over the past few quarters as evidenced by the 7% sales increase. - Michael Schmit(CFO)

Contradiction Point 2

SG&A Expenses and Investment

It involves differing explanations for the change in SG&A expenses, which impacts the understanding of the company's investment strategy and financial health.

None - Not applicable

2025Q3: SG&A expenses were $7.4 million in the quarter, up 31% compared to last year's third quarter. SG&A as a percentage of sales was 13.9%, up 260 basis points compared to the prior year, primarily due to the timing of new product R&D investments and compensation-related accruals as well as warranty cost adjustments. - Michael Schmit(CFO)

Not applicable - Not applicable

2025Q2: SG&A expenses were $6.5 million for the quarter, up 1% year-over-year. As a percentage of sales, SG&A was 12.8% for the quarter, which was an improvement of 40 basis points year-over-year. - Michael Schmit(CFO)

Contradiction Point 3

Product Launch and Dealer Feedback

It involves the reception and impact of recent product launches, which are crucial for assessing market interest and company momentum.

`````` - Not applicable

2025Q3: Our annual dealer meeting was well attended with positive feedback from new and upgraded Chaparral and Robalo models. - Ben Palmer(CEO)

Can you share details on the new models and product innovations? - Matthew Ruby (Roth Capital Partners)

2025Q1: The 2024 product lines are in full launch, and we're receiving great feedback from our dealer network. - Ben Palmer(CEO)

Contradiction Point 4

Sales and Performance Trends

It reflects differing perspectives on the company's sales performance and trends, which are critical for investor expectations and strategic planning.

No input provided. Please supply a question to be simplified. - Not applicable

2025Q3: Sales were up 7%, driven by a positive 7% net increase in price and mix and offset by a slight decrease in the number of boats sold during the quarter. - Michael Schmit(CFO)

Is there any relevant information to report? - Not applicable

2025Q1: We had a solid Q4, again just down slightly. Now up 2% in the fourth quarter. - Ben Palmer(CEO)

Contradiction Point 5

Sales Growth Trends and Optimism

It highlights differing levels of optimism and perceived sales growth trends, which could impact investor expectations and strategic planning.

No question provided. - Not applicable

2025Q3: Third quarter sales were up 7% compared to the prior year as the largest part of our destocking of channel inventory appears to be behind us and production is off the lows we experienced in the second quarter of 2024. This is the first quarter of year-over-year growth in over 2 years. - Ben Palmer(CEO)

Can you discuss your relative strength compared to peers and share your expectations for the upcoming Miami Show? - Griffin Bryan (D.A. Davidson)

2024Q4: We have some good momentum going forward. We are getting our incentives right. We still need some fill-in with the retailers to try to derisk some of the older inventory on their floor. And as we talk to dealers, they’re confident in the demand being there, but they are – they want to see some of the demand on their lot. They want to see the floor traffic. So, they are cautious, but they are optimistic. - Ben Palmer(CEO)