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Marine Products Corp. Reports Operating Results (10-Q)

November 04, 2010 | About:
10qk

10qk

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Marine Products Corp. (MPX) filed Quarterly Report for the period ended 2010-09-30.

Marine Products Corp. has a market cap of $231.4 million; its shares were traded at around $6.26 with and P/S ratio of 4.7. MPX is in the portfolios of Mario Gabelli of GAMCO Investors.

Highlight of Business Operations:

Cost of goods sold for the three months ended September 30, 2010 was $20.0 million compared to $7.6 million for the comparable period in 2009, an increase of $12.4 million or 162.7 percent. Cost of goods sold, as a percentage of net sales, decreased primarily as the result of higher sales, lower retail incentive costs as a percentage of net sales, and increased efficiencies due to higher production levels during the first nine months of 2010 compared to the same periods in 2009. Production levels were significantly higher in response to improved retail demand for new models and lower dealer inventories of non-current models.

Selling, general and administrative expenses for the three months ended September 30, 2010 were $2.9 million compared to $2.8 million for the comparable period in 2009, an increase of $0.1 million or 5.2 percent. Selling, general and administrative expenses, as a percentage of net sales, decreased primarily due to leverage of fixed costs over higher net sales. Warranty expense was 1.8 percent of net sales for the three months ended September 30, 2010 compared to 7.2 percent in the prior year which was higher due primarily to significantly lower net sales volumes during the third quarter of 2009.

Cost of goods sold for the nine months ended September 30, 2010 was $66.1 million compared to $33.6 million for the comparable period in 2009, an increase of $32.5 million or 96.6 percent. Cost of goods sold, as a percentage of net sales, decreased primarily as the result of higher sales, lower retail incentive costs as a percentage of net sales, and increased efficiencies due to higher production levels during the first nine months of 2010 compared to the same periods in 2009. Production levels were increased during the first nine months of 2010 in response to higher retail demand for new models and lower dealer inventories of non-current models.

Selling, general and administrative expenses for the nine months ended September 30, 2010 were $10.8 million compared to $9.2 million for the comparable period in 2009, an increase of $1.6 million or 17.0 percent. Selling, general and administrative expenses, as a percentage of net sales, decreased primarily due to leverage of fixed costs over higher net sales. Warranty expense was 2.1 percent of net sales for the nine months ended September 30, 2010 compared to 4.7 percent in the prior year which was higher due primarily to significantly lower net sales volumes during the third quarter of 2009.

The Company s cash and cash equivalents at September 30, 2010 were $9.1 million. In addition, the aggregate of short-term and long-term marketable securities were $46.9 million at September 30, 2010 compared to $39.4 million at December 31, 2009. The following table sets forth the historical cash flows for the applicable periods:

During the third quarter of 2009, an amendment to the current agreement with one of the Company s floor plan lenders was executed with a contractual repurchase limit of $9.0 million effective January 1, 2009 which expired June 30, 2010. Effective July 1, 2010, this agreement was further amended to change the contractual repurchase limit to not exceed 15 percent of the amount of the average net receivables financed by the floor plan lender for dealers during the prior 12 month period. The Company has contractual repurchase agreements with additional lenders with an aggregate maximum repurchase obligation of approximately $4.5 million, with various expiration and cancellation terms of less than one year, for an aggregate remaining repurchase obligation with all financing institutions of approximately $9.0 million as of September 30, 2010.

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