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What changed in MARINE PRODUCTS CORP's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of MARINE PRODUCTS CORP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+199 added−271 removedSource: 10-K (2024-02-28) vs 10-K (2023-02-27)

Top changes in MARINE PRODUCTS CORP's 2023 10-K

199 paragraphs added · 271 removed · 163 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

78 edited+14 added−38 removed31 unchanged
Biggest changeThe contractual agreements that Marine Products or its subsidiaries have with these qualified lenders contain the Company’s assumption of specified percentages of the debt obligation on repossessed boats, up to certain contractually determined dollar limits negotiated with the lender. 7 ​ The Company currently has an agreement with one of the floor plan lenders whereby the contractual repurchase limit, subject to a minimum of $8.0 million, is based on a specified percentage of the amount of the average net receivables financed by the floor plan lender for our dealers less repurchases during the prior 12 month period, which was a repurchase limit of $8.0 million as of December 31, 2022.
Biggest changeThe 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.
Availability of Filings Marine Products makes available free of charge on its website, MarineProductsCorp.com, the annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports on the same day as they are filed with the Securities and Exchange Commission.
Availability of Filings Marine Products makes available free of charge on its website, MarineProductsCorp.com, the annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports on the same day as they are filed with the Securities and Exchange Commission. 13 ​
The most recent NMMA surveys indicate that many past boating participants do not currently participate in boating because of 9 ​ high costs and a lack of leisure time.
The most recent NMMA surveys indicate that many past boating participants do not currently participate in boating because of high costs and a lack of leisure time.
Design features handling of a runabout, style of a sportboat and open concept layout. Select models offer Ski & Fish options to meet specific needs.
Design features include handling of a runabout, style of a sportboat and open concept layout. Select models offer Ski & Fish options to meet specific needs.
Effective February 28, 2001, RPC accomplished the spin-off by contributing 100 percent of the issued and outstanding stock of Chaparral to Marine Products, a newly formed, wholly owned subsidiary of RPC, and then distributing the common stock of Marine Products to RPC stockholders. Marine Products designs, manufactures and sells recreational fiberglass powerboats in the sportboat and sport fishing boat markets.
Effective February 28, 2001, RPC accomplished the spin-off by contributing 100% of the issued and outstanding stock of Chaparral to Marine Products, a newly formed, wholly owned subsidiary of RPC, and then distributing the common stock of Marine Products to RPC stockholders. Marine Products designs, manufactures and sells recreational fiberglass powerboats in the sport boat and sport fishing boat markets.
There are currently approximately 12 million recreational boats owned in the United States, including outboard, inboard, sterndrive, jet drive, sailboats and personal watercraft. Marine Products competes in the sterndrive boating category with three lines of Chaparral boats and in the outboard category with its Robalo sport fishing boats, Chaparral OSX Sport Luxury, and selected Chaparral SSi models.
There are currently approximately 16 million recreational boats owned in the United States, including outboard, inboard, sterndrive, jet drive, sailboats and personal watercraft. Marine Products competes in the sterndrive boating category with three lines of Chaparral boats and in the outboard category with its Robalo sport fishing boats, Chaparral OSX Sport Luxury, and selected Chaparral SSi models.
The Occupational Safety and Health Administration (“OSHA”) standards limit the amount of emissions to which an employee may be exposed without the need for respiratory protection or upgraded plant ventilation. Marine Products’ manufacturing facilities are regularly inspected by OSHA and by state and local inspection agencies and departments.
The Occupational Safety and Health Administration (“OSHA”) standards limit the number of emissions to which an employee may be exposed without the need for respiratory protection or upgraded plant ventilation. Marine Products’ manufacturing facilities are regularly inspected by OSHA and by state and local inspection agencies and departments.
These programs help to stabilize Marine Products’ manufacturing between the peak and off-peak periods and promote sales of certain models. For the 2023 model year (which commenced July 1, 2022), Marine Products offered its dealers several sales incentive programs based on dollar volume and timing of dealer purchases.
These programs help to stabilize Marine Products’ manufacturing between the peak and off-peak periods and promote sales of certain models. For the 2024 model year (which commenced July 1, 2023), Marine Products offered its dealers several sales incentive programs based on dollar volume and timing of dealer purchases.
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 first subsequent owner, a five-year transferrable hull warranty and the remainder of the original one-year limited warranty on certain components are available.
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 transferable. Additionally, as it relates to the first subsequent owner, a five-year transferable hull warranty and the remainder of the original one-year limited warranty on certain components are available.
We estimate that the boat manufacturing industry includes fewer than 20 sterndrive manufacturers and approximately 75 outboard boat manufacturers with significant unit production, with a large number representing small, privately held companies with varying degrees of professional management and manufacturing skill.
We estimate that the boat manufacturing industry includes fewer than 15 sterndrive manufacturers and approximately 75 outboard boat manufacturers with significant unit production, with a large number representing small, privately held companies with varying degrees of professional management and manufacturing skill.
Primary competitors for Chaparral in the sterndrive market during 2022 included Cobalt 4 , Sea Ray 5 , Regal, Crownline and Monterey. 1 Includes Bayliner, Boston Whaler and Sea Ray outboard units 2 Includes Robalo and Chaparral outboard units 3 Division or subsidiary of MasterCraft Boat Holdings, Inc. 4 Division or subsidiary of Malibu Boats, Inc. 5 Division or subsidiary of Brunswick Corporation Environmental and Regulatory Matters Certain materials used in boat manufacturing, including the resins used to make the decks and hulls, are toxic, flammable, corrosive, or reactive and are classified by the federal and state governments as “hazardous materials.” Control of these substances is regulated by the Environmental Protection Agency (“EPA”) and state pollution control agencies, which require reports and facility inspections to monitor compliance with their regulations.
Primary competitors for Chaparral in the sterndrive market during 2023 included Cobalt 3 , Sea Ray 4 , Regal, Crownline and Monterey. 1 Includes Bayliner, Boston Whaler and Sea Ray outboard units 2 Includes Robalo and Chaparral outboard units 3 Division or subsidiary of Malibu Boats, Inc. 4 Division or subsidiary of Brunswick Corporation Environmental and Regulatory Matters Certain materials used in boat manufacturing, including the resins used to make the decks and hulls, are toxic, flammable, corrosive, or reactive and are classified by the federal and state governments as “hazardous materials.” Control of these substances is regulated by the Environmental Protection Agency (“EPA”) and state pollution control agencies, which require reports and facility inspections to monitor compliance with their regulations.
This provided Chaparral an opportunity to obtain additional manufacturing space and access to a trained workforce. With over 57 years of 3 ​ boatbuilding experience, Chaparral continues to expand the range of its offerings through insightful, innovative product design and quality manufacturing processes in order to reach an increasingly discerning recreational boating market.
This provided Chaparral an opportunity to obtain additional manufacturing space and access to a trained workforce. With over 58 years of boatbuilding experience, Chaparral continues to expand the range of its offerings through insightful, innovative product design and quality manufacturing processes in order to reach an increasingly discerning recreational boating market.
Marine Products’ six independent field sales representatives call upon existing dealers and develop new dealer relationships. The field sales representatives are directed by a National Sales Coordinator, who is responsible for developing the dealer distribution network for the Company’s products. No single dealer accounted for 10 percent or more of net sales during 2022, 2021 or 2020.
Marine Products’ six independent field sales representatives call upon existing dealers and develop new dealer relationships. The field sales representatives are directed by a National Sales Coordinator, who is responsible for developing the dealer distribution network 6 ​ for the Company’s products. No single dealer accounted for 10% or more of net sales during 2023, 2022 or 2021.
The Company sells its products to a network of 210 domestic and 88 international independent authorized dealers. Marine Products’ mission is to enhance its customers’ boating experience by providing them with high quality, innovative powerboats. The Company intends to remain a leading manufacturer of recreational powerboats for sale to a broad range of consumers worldwide.
The Company sells its products to a network of 203 domestic and 87 international independent authorized dealers. Marine Products’ mission is to enhance its customers’ boating experience by providing them with high quality, innovative powerboats. The Company intends to remain a leading manufacturer of recreational powerboats for sale to a broad range of consumers worldwide.
Marketed to experienced fishermen seeking family-friendly amenities. Smaller models include a trailer, and all models are marketed with a national fixed retail price.
Marketed to experienced fishermen seeking family-friendly amenities. Smaller models include a trailer, and all models are marketed with national fixed retail prices.
The engines used in Marine Products’ Chaparral and Robalo product lines are subject to these regulations. These regulations are similar to regulations adopted by the California Air Resources Board in 2007 but apply to all U.S. states and territories. This regulation has increased the cost to manufacture the majority of the Company’s boat products.
The engines used in Marine Products’ Chaparral and Robalo product lines are subject to these regulations. These regulations are similar to regulations adopted by the California Air Resources Board in 2007 but apply to all U.S. states and territories. These regulations have increased the cost to manufacture the majority of the Company’s boat products.
Marketed as high value, luxury runabouts for family groups. ​ ​ ​ ​ ​ ​ ​ ​ ​ Chaparral – Surf Series 5 21′-30′ ​ $75,000 - $312,000 This model line features a forward-facing sterndrive engine. Fiberglass multipurpose bowriders, the Surf Series models are marketed to both experienced and value-conscious buyers.
Marketed as high value, luxury runabouts for family groups. ​ ​ ​ ​ ​ ​ ​ ​ ​ Chaparral – Surf Series 5 21′-30′ ​ $76,000 - $338,000 This model line features a forward-facing sterndrive engine. Fiberglass multipurpose bowriders, the Surf Series models are marketed to both experienced and value-conscious buyers.
Human Capital The table below shows the number of employees at December 31, 2022 and 2021: ​ ​ ​ ​ ​ At December 31, 2022 2021 Employees 935 880 ​ The recreational boating industry is cyclical and therefore headcount is subject to change based on production levels which are a function of dealer and consumer demand.
Human Capital The table below shows the number of employees at December 31, 2023 and 2022: ​ ​ ​ ​ ​ At December 31, 2023 2022 Employees 690 935 ​ The recreational boating industry is cyclical and therefore headcount is subject to change based on production levels which are a function of dealer and consumer demand.
The most recent available industry statistics [source: Statistical Surveys, Inc. report dated September 30, 2022] indicate that Robalo is the third largest manufacturer of outboard boats in lengths from 18 to 36 feet in the United States with a market share of 4.2 percent.
The most recent available industry statistics [source: Statistical Surveys, Inc. report dated September 30, 2023] indicate that Robalo is the third largest manufacturer of outboard boats in lengths from 18 to 36 feet in the United States with a market share of 4.5%.
The Explorer series features extra seating options. ​ ​ ​ ​ ​ ​ ​ Robalo – Cayman Bay Boats 6 20′-26′ ​ $53,000 - $198,000 Fiberglass outboard sport fishing boats for large freshwater lakes or coastal saltwater use. Marketed to experienced fishermen wanting inshore and offshore capabilities.
The Explorer series features extra seating options. ​ ​ ​ ​ ​ ​ ​ Robalo – Cayman Bay Boats 6 20′-26′ ​ $55,000 - $227,000 Fiberglass outboard powered sport fishing boats for large freshwater lakes or coastal saltwater use. Marketed to experienced fishermen wanting inshore and offshore capabilities.
These boats are designed to enhance the wake of the boat to accommodate the popular sport of wake surfing. ​ ​ ​ ​ ​ ​ ​ Chaparral – OSX Sport Boats 4 25′-30′ ​ $136,000 - $433,000 Fiberglass, multipurpose sport boats with outboard power featuring plentiful seating and entertaining areas, cabin and bathroom accommodations, excellent performance, and luxury finishes. ​ ​ ​ ​ ​ ​ ​ ​ ​ Robalo – Center Consoles 11 18′-36′ ​ $47,000 - $627,000 Fiberglass outboard sport fishing boats for large freshwater lakes or saltwater use.
These boats are designed to enhance the wake of the boat to accommodate the popular sport of wake surfing. ​ ​ ​ ​ ​ ​ ​ Chaparral – OSX Sport Boats 4 25′-30′ ​ $140,000 - $483,000 Fiberglass, multipurpose sport boats with outboard power featuring plentiful seating and entertaining areas, cabin and bathroom accommodations, excellent performance, and luxury finishes. ​ ​ ​ ​ ​ ​ ​ ​ ​ Robalo – Center Consoles 11 18′-36′ ​ $46,000 - $654,000 Fiberglass outboard sport fishing boats for large freshwater lakes or saltwater use.
During 2021 and 2022, however, extraordinarily high dealer and consumer demand combined with the Company’s production delays caused by supply chain disruptions have caused dealer inventories to fall to historic lows.
During 2021 and 2022, however, extraordinarily high dealer and consumer demand combined with the Company’s production delays resulting from supply chain disruptions caused dealer inventories to fall to historic lows.
The costs of these commodities fluctuate in response to changes in global economic conditions. 6 ​ Sales and Distribution Domestic sales are generated through our independent dealer network of approximately 73 Chaparral dealers, 47 Robalo dealers and 90 dealers that sell both brands located in markets throughout the United States. Marine Products also has 88 international dealers.
The costs of these commodities fluctuate in response to changes in global economic conditions. Sales and Distribution Domestic sales are generated through our independent dealer network of approximately 64 Chaparral dealers, 49 Robalo dealers and 90 dealers that sell both brands located in markets throughout the United States. Marine Products also has 87 international dealers.
All models marketed with a trailer at a national fixed retail price. ​ ​ ​ ​ ​ ​ ​ Robalo – Dual Consoles 2 20′-31′ ​ $59,000 - $343,000 Multi-purpose fiberglass outboard-powered sport fishing boats for large freshwater lakes or saltwater use.
All models marketed with a trailer at national fixed retail prices. ​ ​ ​ ​ ​ ​ ​ Robalo – Dual Consoles 2 20′-31′ ​ $61,000 - $363,000 Multi-purpose fiberglass outboard powered sport fishing boats for large freshwater lakes or saltwater use.
According to Statistical Surveys, Inc., the companies set forth below represent approximately 47 percent of all United States retail outboard boat registrations with hull lengths of 18 to 36 feet for the 12-month period ended September 30, 2022 (latest data available to us). 1. Brunswick Corporation 1 2. Sea Hunt Boats 3. Marine Products Corporation 2 4. Key West 5.
According to Statistical Surveys, Inc., the companies set forth below represent approximately 55% of all United States retail outboard boat sales with hull lengths of 18 to 36 feet for the 12-month period ended September 30, 2023 (latest data available to us). 1. Brunswick Corporation 1 2. Sea Hunt Boats 3. Marine Products Corporation 2 4. Malibu Boats, Inc. 5.
Marine Products’ dealer sales incentive programs are generally designed to promote early replenishment of the stock in dealer inventories depleted throughout the prime spring and summer selling seasons, and to promote the sales of older models in dealer inventory and particular models during specified periods.
Marine Products offers both dealer and retail sales incentive programs generally designed to promote early replenishment of the stock in dealer inventories depleted throughout the prime spring and summer selling seasons, and to promote the sales of older 7 ​ models in dealer inventory and particular models during specified periods.
Retail sales of new outboard boats had an estimated total retail value of $3.7 billion, with an average retail price per unit of approximately $79,000. Approximately 58 percent of the Company’s unit sales to dealers in 2022 were outboard boats compared to 62 percent in 2021.
Retail sales of new outboard boats had an estimated total retail value of $3.7 billion, with an average retail price per unit of approximately $89,000. Approximately 63% of the Company’s unit sales to dealers in 2023 were outboard boats compared to 58% in 2022.
Retail sales of new sterndrive boats in the United States during 2022 totaled 6,552 units and accounted for approximately 10 percent of the total new fiberglass powerboats sold in the 21 to 34 feet hull length.
Retail sales of new sterndrive boats in the United States during 2023 totaled 5,830 units and accounted for approximately 10% of the total new fiberglass powerboats sold in the 21 to 34 feet hull length.
Under these established arrangements with qualified lending institutions, a dealer establishes a line of credit with one or more of these lenders for the purchase of boat inventory for sales to retail customers in their showroom or during boat show exhibitions.
The remaining dealers finance their boat inventory with smaller regional financial institutions in local markets or self-finance. Under these established arrangements with qualified lending institutions, a dealer establishes a line of credit with one or more of these lenders for the purchase of boat inventory for sales to retail customers in their showroom or during boat show exhibitions.
We provide employment in a small community which we have supported as the largest employer since 1976 under the same management. Our company is strong in its values, relationships and consistency in management.
Our dedicated team of employees work toward a common purpose. We provide employment in a small community which we have supported as the largest employer since 1976 under the same management. Our company is strong in its values, relationships and consistency in management.
Industry retail sales of new outboard boats in the United States during 2022 totaled 47,099 units and accounted for approximately 71 percent of the total new fiberglass powerboats sold between 18 and 36 feet in hull length.
Industry retail sales of new outboard boats in the United States during 2023 totaled 41,357 units and accounted for approximately 72% of the total new fiberglass powerboats sold between 18 and 36 feet in hull length.
According to estimates provided by Statistical Surveys, Inc., during the latest reported period ended September 30, 2022, the top five outboard model manufacturers, which include Marine Products Corporation’s Robalo brands, have a combined market share of approximately 24 percent, compared to 28 percent during the same period in the prior year.
According to estimates provided by Statistical Surveys, Inc. during the latest reported period ended September 30, 2023, the top five outboard model manufacturers, which includes Marine Products Corporation’s brands, have a combined market share of approximately 36%, consistent with the same period in the prior year.
All marketed with National Advertised Prices. ​ ​ ​ ​ ​ ​ ​ Chaparral – SSX Sport Boats ​ 5 ​ 24′-34′ ​ $126,000 - $546,000 ​ Fiberglass sterndrive and outboard powered bowriders that combine features of sportboats and bowriders.
All marketed with national fixed retail prices. ​ ​ ​ ​ ​ ​ ​ Chaparral – SSX Sport Boats ​ 5 ​ 24′-34′ ​ $128,000 - $564,000 ​ Fiberglass sterndrive and outboard powered models that combine features of sportboats and bowriders.
The sales order backlog as of December 31, 2022 was 1,544 boats with estimated net sales of approximately $115.0 million. This represents an approximate 16.6 week backlog based on recent production levels. The sales order backlog as of December 31, 2021 was 2,457 boats with estimated net sales of approximately $166.0 million.
The sales order backlog as of December 31, 2022 was 1,544 boats with estimated net sales of approximately $115.0 million. This represented an approximate 16.6 week backlog based on production levels at that time.
In a typical ordering, production and delivery cycle, the Company monitors dealer inventory levels in order to inform its production scheduling and to ensure that dealers do not hold excess inventory.
Historically, dealers have in most cases taken delivery of all their orders. In a typical ordering, production and delivery cycle, the Company monitors dealer inventory levels in order to inform its production scheduling and to ensure that dealers do not hold excess inventory.
Retail sales of new sterndrive boats had an estimated total retail value of $880 million, with an average retail price per unit of approximately $134,000. Approximately 42 percent of the Company’s unit sales to dealers in 2022 were sterndrive boats compared to 38 percent in 2021.
Retail sales of new sterndrive boats had an estimated total retail value of $900 million, 8 ​ with an average retail price per unit of approximately $154,000. Approximately 37% of the Company’s unit sales to dealers in 2023 were sterndrive boats compared to 42% in 2022.
The table below reflects the estimated annual sales within the recreational marine market segment by category for 2022 and 2021 (source: Info-Link Technologies, Inc.): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 ​ 2021 ​ Boats Sales ($ B) Boats Sales ($ B) Sterndrive Boats 6,552 ​ $ 0.9 7,165 ​ $ 0.8 Outboard Boats 47,099 ​ 3.7 53,471 ​ 3.8 Inboard Boats 12,465 ​ 2.0 12,871 ​ 1.8 TOTAL 66,116 ​ $ 6.6 73,507 ​ $ 6.4 ​ Chaparral’s products are categorized as sterndrive boats and outboard boats, and Robalo’s products are categorized as outboard boats.
The table below reflects the estimated annual sales within the recreational marine market segment by category for 2023 and 2022 (source: Info-Link Technologies, Inc.): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ 2022 ​ Boats Sales ($ B) Boats Sales ($ B) Sterndrive Boats 5,830 ​ $ 0.9 6,552 ​ $ 0.9 Outboard Boats 41,357 ​ 3.7 47,099 ​ 3.7 Inboard Boats 10,093 ​ 1.7 12,465 ​ 2.0 TOTAL 57,280 ​ $ 6.3 66,116 ​ $ 6.6 ​ Chaparral’s products are categorized as sterndrive boats and outboard boats, and Robalo’s products are categorized as outboard boats.
The Company manufactures Chaparral sterndrive pleasure boats including SSi and SSX models, and the Chaparral Surf Series. The Company also manufactures Chaparral outboard pleasure boats which include OSX Luxury Sportboats and SSi outboard models. In addition to the outboard models manufactured by Chaparral, the Company also manufactures Robalo outboard sport fishing boats.
The Company manufactures Chaparral sterndrive pleasure boats including SSi and SSX models, and the Chaparral Surf Series. The Company also manufactures Chaparral outboard pleasure boats which include OSX Luxury Sportboats and SSi outboard models.
Industry Overview The recreational marine market in the United States is a mature market, with 2021 retail expenditures of approximately $57 billion spent on new and used boats, motors and engines, trailers, accessories and other associated costs as estimated by the National Marine Manufacturers Association (“NMMA”). Pleasure boats compete with all other leisure activities for consumers’ limited free time.
Industry Overview The recreational marine market in the United States is a mature market, with 2022 retail expenditures of approximately $59.3 billion spent on new and used boats, motors and engines, trailers, accessories and other associated costs as estimated by the National Marine Manufacturers Association (“NMMA”).
Industry-wide sterndrive boat unit sales have declined steadily during the last three years. The recreational boat manufacturing market remains highly fragmented, although several large public companies own, or have started to acquire, a diversified group of recreational boat manufacturers.
Industry-wide sterndrive boat unit sales have declined steadily during the last three years. The recreational boat manufacturing market remains highly fragmented, although some publicly traded companies own a diversified group of recreational boat brands.
Proprietary Matters Marine Products owns several trademarks, trade names and patents that it believes are important to its business. Except for the Chaparral and Robalo trademarks, however, Marine Products is not dependent upon any single trademark or trade name or group of trademarks or trade names. The Chaparral and Robalo trademarks are currently registered in the United States.
Except for the Chaparral and Robalo trademarks, Marine Products is not dependent upon any single trademark or trade name or group of trademarks or trade names. The Chaparral and Robalo trademarks are currently registered in the United States.
Hurricane 6. Tahoe 7. Sportsman Boats 8. Nautic Star 3 9. Grady-White 10. Carolina Skiff The sterndrive engine powered market encompasses a wide variety of boats, accounting for approximately 10 percent of traditional powerboat retail unit sales during 2022.
Key West 6. White River Marine Group 7. Sportsman Boats 8. Carolina Skiff 9. Grady-White 10. Tidewater The sterndrive engine powered market encompasses a wide variety of boats, accounting for approximately 10% of traditional powerboat retail unit sales during 2023.
The final plug is used to create the necessary number of production molds. Molds are used to produce the fiberglass hulls and decks. Fiberglass components are made by applying the outside finish or gel coat to the mold, then numerous layers of fiberglass and resin are applied during the lamination process over the gel coat.
Fiberglass components are made by applying the outside finish or gel coat to the mold, then numerous layers of fiberglass and resin are applied during the lamination process over the gel coat.
This variable dead rise hull design provides a smooth ride in rough water conditions. It increases the maximum speed obtainable by a given engine horsepower and weight of the boat.
This variable dead rise hull design provides a smooth ride in rough water conditions. It increases the maximum speed obtainable by a given engine horsepower and weight of the boat. Robalo’s current models utilize the Hydro Lift TM design and we plan to continue to provide this design on Robalo models.
Suppliers Marine Products’ three most significant cost components used in manufacturing its boats are engines, resins and fiberglass. For each of these, there is currently an adequate supply available in the market.
Suppliers Marine Products’ three most significant cost components used in manufacturing its boats are engines, resins and fiberglass. For each of these, there is currently an adequate supply available in the market. While supply chains were constrained following the COVID-19 pandemic, by late 2022, many shortages and delays began to ease.
Marketed with national fixed retail prices to experienced fishermen and families looking for both fishing and cruising features. ​ ​ ​ ​ ​ ​ ​ ​ 5 ​ Manufacturing Marine Products’ manufacturing facilities are in Nashville, Georgia.
Marketed with national fixed retail prices to experienced fishermen and families looking for both fishing and cruising features. ​ ​ ​ ​ ​ ​ ​ ​ 5 ​ Manufacturing Marine Products’ manufacturing facilities located in Nashville, Georgia are utilized to manufacture interiors, design new models, create fiberglass hulls and decks, and assemble various end products.
The Company typically does not manufacture a significant number of boats for its own inventory. The Company occasionally manufactures boats for its own inventory because the number of boats required for immediate shipment is not always the most efficient number of boats to produce in a given production schedule.
The Company occasionally manufactures boats for its own inventory because the number of boats required for immediate shipment is not always the most efficient number of boats to produce in a given production schedule. Research and Development Marine Products has been a leading innovator in the recreational boating industry.
Also according to Statistical Surveys, Inc., the top five sterndrive model manufacturers, –– which includes Chaparral, have a combined market share of approximately 74 percent, the same as during the same period in the prior year.
Also, according to Statistical Surveys, Inc., the top five sterndrive model manufacturers, which includes Marine Products’ Chaparral brand, have a combined market share of approximately 85%, compared to 82% during the same period in the prior year. Chaparral’s market share in sterndrive units during this period was approximately 26.9%, compared to 25.2% in the same period in the prior year.
Unlike Marine Products’ obligation to repurchase boats repossessed by qualified lenders, Marine Products is under no obligation to repurchase boats directly from dealers. Marine Products does not sponsor financing programs to the retail consumer; any consumer financing promotions for a prospective boat purchaser would be the responsibility of the dealer.
Marine Products does not sponsor financing programs to the retail consumer; any consumer financing promotions for a prospective boat purchaser would be the responsibility of the dealer.
Marine Products Corporation’ Chaparral brand was the second largest manufacturer of sterndrive boats in lengths from 21 to 34 feet during the 12-month period ended September 30, 2022 and its share of the market during this period was approximately 19.8 percent.
Marine Products’ Chaparral brand was the second largest manufacturer of sterndrive boats in lengths from 21 to 34 feet during the 12-month period ended September 30, 2023 and its share of the market during this period was approximately 26.9%. In addition to the outboard models manufactured by Chaparral, the Company also manufactures Robalo outboard sport fishing boats.
Business Strategies Recreational boating is a mature industry. According to Info-Link Technologies, Inc., retail sales of new powerboats of all types decreased at a compounded annual rate of approximately 2.3 percent between 2018 and 2022. During this period, Marine Products experienced a compounded annual decline rate of approximately 5.1 percent in the number of boats sold.
Business Strategies Recreational boating is a mature industry. According to Info-Link Technologies, Inc., retail sales of new powerboats of all types decreased at a compounded annual rate of approximately 6.3% between 2019 and 2023.
The Company has contractual repurchase agreements with additional lenders with an aggregate maximum repurchase obligation of $4.3 million, with various expiration and cancellation terms of less than one year. Accordingly, the aggregate repurchase obligation with all financing institutions was approximately $12.3 million as of December 31, 2022.
As defined by the agreement, the repurchase limit for this lender was $18.9 million as of December 31, 2023. The Company has contractual repurchase agreements with additional lenders with an aggregate maximum repurchase obligation of $7.7 million, with various expiration and cancellation terms of less than one year.
Safety - Marine Products monitors several safety measures and reports them to senior operational management on a regular basis. Management reviews safety incidents, and the Company works to remediate operational issues that may be potential causes of any frequent incidents. In addition, the Company awards safety bonuses to the drivers of its company-owned vehicles based on their driving records.
We believe that this program improves employee well-being by facilitating their access to health care. Safety - Marine Products monitors several safety measures and reports them to senior operational management on a regular basis. Management reviews safety incidents, and the Company works to remediate operational issues that may be potential causes of any frequent incidents.
We periodically review potential acquisition targets. Competition The recreational boat industry is highly fragmented, resulting in intense competition for customers, dealers and boat show exhibition space. There is significant competition both within markets we currently serve and in new markets that we may enter.
Competition The recreational boat industry is highly fragmented, resulting in intense competition for customers, dealers and boat show exhibition space. There is significant competition both within markets we currently serve and in new markets that we may enter. Marine Products’ brands compete with several large national or regional manufacturers that have substantial financial, marketing and other resources.
In addition, Marine Products has developed virtual marketing programs which include online product demonstrations and virtual reality software and hardware which promote the features of its products.
In addition, Marine Products has developed virtual marketing programs which include online product demonstrations and virtual reality software and hardware which promote the features of its products. Marine Products continues to seek new dealers in many areas throughout the U.S., Canada, Europe, South America, Asia, and the Middle East.
During the third and fourth quarters of 2022, 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.
In response to historically high consumer demand as well as higher raw materials and components costs, the Company increased the prices for its products. During 2023 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.
In the event that a dealer defaults on a credit line, the qualified lender may then invoke the manufacturer’s repurchase obligation with respect to that dealer. In that event, all repurchase agreements of all manufacturers supplying a defaulting dealer are generally invoked regardless of the boat or boats with respect to which the dealer has defaulted.
In that event, all repurchase agreements of all manufacturers supplying a defaulting dealer are generally invoked regardless of the boat or boats with respect to which the dealer has defaulted. Unlike Marine Products’ obligation to repurchase boats repossessed by qualified lenders, Marine Products is under no obligation to repurchase boats directly from dealers.
Approximately 58 percent of Marine Products’ domestic shipments are made pursuant to “floor plan financing” programs in which Marine Products’ subsidiaries participate on behalf of their dealers with major third-party financing institutions. The remaining dealers finance their boat inventory with smaller regional financial institutions in local markets or self-finance.
The Company continues to assess demand and dealer inventories to manage production levels. Approximately 71% of Marine Products’ domestic shipments are made pursuant to “floor plan financing” programs in which Marine Products’ subsidiaries participate on behalf of their dealers with major third-party financing institutions.
According to Statistical Surveys, Inc., the following is a list of the top ten (largest to smallest) outboard boat manufacturers in the United States based on retail unit sales in 2022.
Additionally, Marine Products faces general competition from all other recreational businesses seeking to attract consumers’ leisure time and discretionary spending dollars. According to Statistical Surveys, Inc., the following is a list of the top ten (largest to smallest) outboard boat manufacturers in the United States based on retail unit sales in 2023.
International net sales as a percentage of total net sales were 6.7 percent in 2022, 5.3 percent in 2021, and 4.9 percent in 2020. Marine Products’ sales orders are indicators of strong interest from its dealers. Historically, dealers have in most cases taken delivery of all their orders.
During 2023, the Company’s international net sales decreased 12.2% compared to 2022 due primarily to a decline in unit sales. International net sales as a percentage of total net sales were 5.9% in 2023, 6.7% in 2022, and 5.3% in 2021. Marine Products’ sales orders are indicators of strong interest from its dealers.
The Company provides a health insurance option that includes a local primary physician who provides immediate care or medical consultation to its employees at reduced or no cost, as well as certain maintenance medications at reduced or no cost.
The Company provides a health insurance option that includes a local primary care physician who provides immediate care or medical consultation to its employees at a reduced or no cost, as well as certain maintenance medications at a reduced or no cost. 12 ​ Under this program, an employee with a health concern visits the physician’s office, which is close to our manufacturing facilities, and either receives care or is referred to another facility for testing or additional care.
Additionally, the combination of Robalo and Chaparral outboards holds the second highest position in the outboard market of this size range, with a market share of 5.4 percent. ​ Products Marine Products distinguishes itself by offering a wide range of products to the family recreational markets through its Chaparral brands and to the sport fishing market through its Robalo brands. ​ 4 ​ The following table provides a brief description of our product lines and their particular market focus: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number ​ ​ ​ Approximate ​ ​ ​ of ​ Overall ​ Retail ​ Product Line Models Length Price Range Description Chaparral – SSi Sport Boats ​ 6 ​ 21′-23′ ​ $55,000 - $91,000 ​ Fiberglass sterndrive and outboard-powered, larger sport boats marketed as high value runabout for larger groups.
The following table provides a brief description of our product lines and their particular market focus: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number ​ ​ ​ Approximate ​ ​ ​ of ​ Overall ​ Retail ​ Product Line Models Length Price Range Description Chaparral – SSi Sport Boats ​ 7 ​ 19′-23′ ​ $48,000 - $107,000 ​ Fiberglass sterndrive and outboard powered sport boats marketed as high value runabout for smaller to larger groups.
Marine Products continues to seek new dealers in many areas throughout the U.S., Canada, Europe, South America, Asia, and the Middle East. In general, Marine Products requires full payment in U.S. dollars prior to shipping a boat overseas. Consequently, there is no credit risk associated with these international sales or risk related to foreign currency fluctuation.
In general, Marine Products requires full payment in U.S. dollars prior to shipping a boat overseas. Consequently, there is no credit risk associated with these international sales or risk related to foreign currency fluctuation. The Company’s international sales are affected by trends in consumer discretionary spending and the value of the U.S. dollar on global currency markets, among other things.
See “Risk Factors” below. Marine Products uses other raw materials in its manufacturing processes. Among these are resins, made from hydrocarbon feedstocks, as well as copper and steel.
In the event of a sudden and extended interruption in the supply of engines from any of these suppliers, our sales and profitability could be negatively impacted. See Item 1A Risk Factors below. Marine Products uses other raw materials in its manufacturing processes. Among these are resins, made from hydrocarbon feedstocks, as well as copper and steel.
The manufacturing process begins with the design of a product to meet dealer and customer needs. Plugs are constructed in the research and development phase from designs. Plugs are used to create a mold from which prototype boats can be built. Adjustments are made to the plug design until acceptable parameters are met.
Plugs are used to create a mold from which prototype boats can be built. Adjustments are made to the plug design until acceptable parameters are met. The final plug is used to create the necessary number of production molds. Molds are used to produce the fiberglass hulls and decks.
The combination of low inventory levels and continued high demand has forced the Company to allocate its production to dealers to fulfill as many orders as possible and rebuild dealer inventories to levels that both the Company and its dealers believe to be appropriate. Marine Products believes that this allocation of production will continue during 2023.
The combination of low inventory levels and high demand through the first half of 2023 forced the Company to allocate its production to dealers to fulfill as many orders as possible and rebuild dealer inventories. Beginning in the second half of 2023, demand moderated and inventories were fully replenished.
Marine Products also realizes that innovative marketing is an increasingly important component of the full customer experience and is leading the way with marketing and branding that consistently present a luxury-oriented message that integrate themselves into the boater’s entire experience. 10 ​ A component of Marine Products’ overall strategy is to consider making strategic acquisitions which complement existing product lines, expand its geographic presence in the marketplace and strengthen its capabilities depending upon availability, price and complementary product lines.
A component of Marine Products’ overall strategy is to consider making strategic acquisitions which complement existing product lines, expand its geographic presence in the marketplace and strengthen its capabilities depending upon availability, price and complementary product lines. We periodically review potential acquisition targets.
The results for any quarter are not necessarily indicative of results to be expected in any future period. Inflation During 2021 and 2022, inflation in the general economy has 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.
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, supply chain constraints, and U.S. fiscal policy. As a result, the market prices of the raw materials and components used by the Company’s manufacturing processes increased during these periods.
The Company’s key human capital management objectives are focused on fostering talent in the following areas: Diversity and Equality - The Company’s workforce reflects the diversity of the community in which it operates. Our dedicated team of employees work toward a common purpose.
Beginning in the second half of 2023, the Company adjusted its production levels and employee headcount in response to lower dealer and retail demand. The Company’s key human capital management objectives are focused on fostering talent in the following areas: Diversity and Equality - The Company’s workforce reflects the diversity of the community in which it operates.
The Company will continue to monitor the number of boats in dealer inventories and adjust its production levels as it deems necessary to manage dealer inventory levels. Due to the high retail demand, over 96 percent of our boats have been in dealer inventory less than 12 months as of December 31, 2022.
The Company will continue to monitor the number of boats in dealer inventories and adjust its production levels as it deems necessary to manage dealer inventory levels. The Company typically does not manufacture a significant number of boats for its own inventory.
These arrangements contain incentives and discount provisions, which may reduce the cost of the engines purchased, if specified purchase volumes are met during specified periods of time. Although no minimum purchases are required, Marine Products expects to continue purchasing sterndrive engines through the ABA on a voluntary basis in order to receive volume-based purchase discounts.
Although no minimum purchases are required, Marine Products expects to continue purchasing sterndrive engines through the ABA on a voluntary basis in order to receive volume-based purchase discounts. Marine Products does not have a long-term supply contract with the ABA. Marine Products has outboard engine supply contracts with Yamaha and Mercury Marine which were not negotiated through the ABA.
Engines are generally specified by the dealers at the time of ordering a boat, usually based on anticipated customer preferences or actual customer orders. Sterndrive engines are purchased through the American Boatbuilders Association (“ABA”), which has entered into engine supply arrangements with Mercury Marine and Volvo Penta, the two currently existing suppliers of sterndrive engines.
Sterndrive engines are purchased through the American Boatbuilders Association (“ABA”), which has engine supply arrangements with Mercury Marine and Volvo Penta, the two currently existing suppliers of sterndrive engines. These arrangements contain incentives and discount provisions, which may reduce the cost of the engines purchased, if specified purchase volumes are met during specified periods of time.
Robalo’s current models utilize the Hydro Lift TM design and we plan to continue to provide this design on Robalo models. 8 ​ In support of its new product development efforts, Marine Products incurred research and development costs of $437 thousand in 2022, $776 thousand in 2021, and $751 thousand in 2020.
In support of its new product development efforts, Marine Products incurred research and development costs of $757 thousand in 2023, $437 thousand in 2022, and $776 thousand in 2021.
Marine Products utilizes five different plants to, among other things, manufacture interiors, design new models, create fiberglass hulls and decks, and assemble various end products. Quality control is conducted throughout the manufacturing process. When fully assembled and inspected, the boats are loaded onto either Company-owned trailers or third-party marine transport trailers for delivery to dealers.
Quality control is conducted throughout the manufacturing process. When fully assembled and inspected, the boats are loaded onto either Company-owned trailers or third-party marine transport trailers for delivery to dealers. The manufacturing process begins with the design of a product to meet dealer and customer needs. Plugs are constructed in the research and development phase from designs.
Marine Products’ brands compete with several large national or regional manufacturers that have substantial financial, marketing and other resources. However, we believe that our corporate infrastructure and marketing and sales capabilities, in addition to our financial strength, and our nationwide presence, enable us to compete effectively against these companies.
However, we believe that our corporate infrastructure and marketing and sales capabilities, in addition to our financial strength, and our nationwide presence, enable us to compete effectively against these companies. In each of our markets, Marine Products competes on the basis of responsiveness to customer needs, the quality and range of models offered, and the competitive pricing of those models.
The Company has historically grown its boat sales and net sales primarily through increasing market share and by expanding its number of models and product lines.
The Company has historically aimed to 9 ​ grow its boat sales, net sales and market share by differentiating our product lines through industry-leading feature innovations and designs.
However, if in the future the Company is forced to raise the prices of its products due to increased raw materials and component costs, it may not be able to continue to pass these increased costs along to dealers and consumers, which could impact the Company’s 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.
The Company believes that the recent increases in interest rates creates a risk to retail demand for recreational boats.
The Company believes that the recent increase in interest rates (which is generally linked to higher inflation) has reduced retail demand for smaller boats, since purchasers of smaller boats are typically more sensitive to increases in the cost of boat ownership.
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During the period beginning in the second quarter of 2020, at various times Marine Products experienced significant shortages in, and delayed shipments of, several of these raw materials and component parts used in manufacturing its products.
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Additionally, Marine Products, with the combination of Robalo and Chaparral outboards, holds the third highest position in the outboard market of this size range, with a market share of 6.2%. 4 ​ Products Marine Products distinguishes itself by offering a wide range of products to the family recreational markets through its Chaparral brands and to the sport fishing market through its Robalo brands.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeDuring 2021, we experienced increases in raw materials prices and successfully preserved our profitability by increasing prices for our products. However, if inflation continues in the prices of these or other raw materials or parts and components, there is no assurance that we can continue to increase the prices of our products and preserve our profitability.
Biggest changeThere is no assurance that we will be able to increase the prices of our products and preserve our profitability in the event of future inflation and cost increases. Marine Products may be Unable to Identify, Complete or Successfully Integrate Acquisitions.
The failure to integrate acquisitions successfully may divert management’s attention from Marine Products’ existing operations and may damage Marine Products’ relationships with its key customers and suppliers. Increasing Expectations from Customers, Investors and Other Stakeholders Regarding Our Environmental, Social and Governance (ESG)Practices may affect Our Business, may Create Additional Costs for us, or Expose Us to Related Risks.
The failure to integrate acquisitions successfully may divert management’s attention from Marine Products’ existing operations and may damage Marine Products’ relationships with its key dealers and suppliers. Increasing Expectations from Customers, Investors and Other Stakeholders Regarding Our Environmental, Social and Governance (ESG)Practices may affect Our Business, may Create Additional Costs for us, or Expose Us to Related Risks.
While such licensing requirements are not expected to be unduly restrictive, regulations may discourage potential first-time buyers, thereby reducing future sales. Risks Related to our Labor Force. Marine Products’ Success Will Depend on its Key Personnel, and the Loss of any Key Personnel may Affect its Powerboat Sales.
While such licensing requirements are not expected to be unduly restrictive, regulations may discourage potential first-time buyers, thereby reducing future sales. 16 ​ Risks Related to our Labor Force Marine Products’ Success Will Depend on its Key Personnel, and the Loss of any Key Personnel may Affect its Powerboat Sales.
The number of independent boat dealers supporting the Chaparral and Robalo trade names and the quality of their marketing and servicing efforts are essential to Marine Products’ ability to generate sales. A deterioration in the number of Marine Products’ network of independent boat 14 ​ dealers could have a material adverse effect on its boat sales.
The number of independent boat dealers supporting the Chaparral and Robalo trade names and the quality of their marketing and servicing efforts are essential to Marine Products’ ability to generate sales. A deterioration in the number of Marine Products’ network of independent boat dealers could have a material adverse effect on its boat sales.
If Marine Products is Unable to Comply with Environmental and Other Regulatory Requirements, its Business may be Exposed to Liability and Fines. Marine Products’ operations are subject to extensive regulation, supervision and licensing under various federal, state and local statutes, ordinances and regulations.
Regulatory Risks If Marine Products is Unable to Comply with Environmental and Other Regulatory Requirements, its Business may be Exposed to Liability and Fines. Marine Products’ operations are subject to extensive regulation, supervision and licensing under various federal, state and local statutes, ordinances and regulations.
Internal threats in cybersecurity are 18 ​ caused by the misuse of access to networks and assets by individuals within the Company by maliciously or negligently disclosing, modifying or deleting sensitive information. Individuals within the Company include current employees, contractors and partners.
Internal threats in cybersecurity are caused by the misuse of access to networks and assets by individuals within the Company by maliciously or negligently disclosing, modifying or deleting sensitive information. Individuals within the Company include current employees, contractors and partners.
Marine Products’ manufacturing operations are conducted in a single location in Nashville, Georgia. 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.
Marine Products’ manufacturing operations are conducted in a single location in Nashville, Georgia. To support our operations, several of our suppliers have also established facilities close to our manufacturing facility to provide timely delivery of fabricated components.
While dealer floor plan credit is currently available for many of our dealers during the 2023 model year, the Company’s sales and profitability could be adversely affected in the event of a decline in floor plan financing availability, or if financing terms change unfavorably. Interest Rates and Fuel Prices Affect Marine Products’ Sales.
While dealer floor plan credit is currently available for many of our dealers during the 2024 model year, the Company’s sales and profitability could be adversely affected in the event of a decline in floor plan financing availability, or if financing terms change unfavorably. Interest Rates and Fuel Prices Affect Marine Products’ Sales.
Marine Products is dependent on third-party suppliers to provide raw materials, engines and components essential to the construction of its various powerboats. Especially critical are the availability and cost of marine engines and commodity raw materials used in the manufacture of Marine Products’ boats. Marine Products has only four suppliers for the three types of engines it purchases.
Marine Products is dependent on third-party suppliers to provide raw materials, engines and components essential to the construction of its various powerboats. Especially critical are the availability and cost of marine engines and commodity raw materials used in the manufacture of Marine Products’ boats. Marine Products has three suppliers for the three types of engines it purchases.
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. We do not own or have access to alternate manufacturing locations.
Catastrophic weather, civil unrest, natural disasters 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. We do not own or have access to alternate manufacturing locations.
Once integrated, acquired operations may not achieve anticipated levels of sales or profitability, or otherwise perform as expected.
Once integrated, acquired operations may not achieve anticipated levels of sales or 15 ​ profitability, or otherwise perform as expected.
The Company’s products are often financed by our dealers and the retail boat consumers. Higher interest rates increase the borrowing costs and, accordingly, the cost of doing business for dealers and the cost of boat purchases for consumers. Fuel costs can represent a large portion of the costs to operate our products.
The Company’s products are often financed by our dealers and the retail boat consumers. Higher interest rates increase the borrowing costs and, accordingly, the cost of doing business for dealers and the cost of boat ownership for consumers. Fuel costs can represent a large portion of the costs to operate our products.
Marine Products’ executive officers, directors and their affiliates hold directly or through indirect beneficial ownership, in the aggregate, approximately 76 percent of Marine Products’ outstanding shares of common stock. As a result, these stockholders effectively control the operations of Marine Products, including the election of directors and approval of significant corporate transactions such as acquisitions.
Marine Products’ executive officers, directors and their affiliates hold directly or through indirect beneficial ownership, in the aggregate, approximately 71% of Marine Products’ outstanding shares of common stock. As a result, these stockholders effectively control the operations of Marine Products, including the election of directors and approval of significant corporate transactions such as acquisitions.
Risk Management Risks. Marine Products has Potential Liability for Personal Injury and Property Damage Claims. The products we sell or service may expose Marine Products to potential liabilities for personal injury or property damage claims relating to the use of those products. Historically, the resolution of product liability claims has not materially affected Marine 16 ​ Products’ business.
Risk Management Risks Marine Products Has Potential Liability for Personal Injury and Property Damage Claims. The products or services we sell may expose Marine Products to potential liabilities for personal injury or property damage claims relating to the use of those products. Historically, the resolution of product liability claims has not materially affected Marine Products’ business.
We compete with several large national or regional manufacturers that have substantial financial, marketing and other resources. 15 ​ Because Marine Products Relies on Third-party Suppliers, Marine Products may be Unable to Obtain Adequate Raw Materials, Engines and Components Which Could Increase our Working Capital Requirements and Adversely Affect Sales and Profit Margins.
We compete with several large national or regional manufacturers that have substantial financial, marketing and other resources. Because Marine Products Relies on Third-party Suppliers, Marine Products may be Unable to Obtain Adequate Raw Materials, Engines and Components at Reasonable Prices or at All, Which Could Increase our Working Capital Requirements and Adversely Affect Sales and Profit Margins.
Our operations rely on digital systems and processes that are subject to cyber-attacks or other threats that could have a material adverse effect on our business, consolidated results of operations and consolidated financial condition. Our operations are dependent on digital technologies and services.
Risks Related to Digital Operations, Cybersecurity and Business Disruption Our Operations Rely on Digital Systems and Processes That are Subject to Cyber-Attacks or Other Threats That Could Have a Material Adverse Effect on our Business, Consolidated Results of Operations and Consolidated Financial Condition. Our operations are dependent on digital technologies and services.
The Company’s results can be negatively affected if a dealer defaults because Marine Products or its subsidiaries may be contractually required to repurchase inventory up to certain limits, although for business reasons, the Company may decide to purchase additional boats in excess of this contractual obligation. Marine Products’ Sales are Affected by Weather Conditions.
The Company’s results can be negatively affected if a dealer defaults because Marine Products or its subsidiaries may be contractually required to repurchase inventory up to certain limits, although for business reasons, the Company may decide to purchase additional boats in excess of this contractual obligation. 14 ​ Marine Products’ Sales are Affected by Weather Conditions, Which May Involve Long-term Impact from Global Warming.
If our systems for protecting against cybersecurity risks prove to be insufficient, we could be adversely affected by, among other things, loss of or damage to intellectual property, proprietary or confidential information, or customer, supplier, or employee data, as well as, interruption of our business operations and increased costs required to prevent, respond to, or mitigate cybersecurity attacks.
To date, these attacks have not had a material impact on our operations. ​ If our systems for protecting against cybersecurity risks prove to be insufficient, we could be adversely affected by, among other things, loss of or damage to intellectual property, proprietary or confidential information, or customer, supplier, or employee data, as well as, interruption of our business operations and increased costs required to prevent, respond to, or mitigate cybersecurity attacks.
We currently have an effective Form S-3 registration statement on file with the Securities and Exchange Commission that would allow the sale of significant blocks of our common stock by us and certain of our largest shareholders. 17 ​ Risks Related to Our Capital and Ownership Structure.
We currently have an effective Form S-3 registration statement on file with the Securities and Exchange Commission that would allow the sale of significant blocks of our common stock by us and certain of our largest shareholders. ​
These risks could harm our reputation and our relationships with customers, suppliers, employees and other third parties, and may result in claims against us. These risks could have a material adverse effect on our business, consolidated results of operations and consolidated financial condition. ​
These risks could harm our reputation and our relationships with customers, suppliers, employees and other third parties, and may result in claims against us. These risks could have a material adverse effect on our business, consolidated results of operations and consolidated financial condition. ​ General Risks Marine Products’ Stock Price Has Been Volatile.
Competition for dealers among recreational powerboat manufacturers continues to increase based on the quality of available products, the price and value of the products, and attention to customer service. The Company faces intense competition from other recreational powerboat manufacturers in attracting and retaining independent boat dealers.
Competition for dealers among recreational powerboat manufacturers continues to increase based on the quality of available products, the price and value of the products, and attention to customer service, and individual dealers frequently also sell boats manufactured by our competitors. The Company faces intense competition from other recreational powerboat manufacturers in attracting and retaining independent boat dealers.
Marine Products may be Unable to Identify, Complete or Successfully Integrate Acquisitions. Marine Products intends to pursue acquisitions and form strategic alliances that will enable Marine Products to acquire complementary skills and capabilities, offer new products, expand its customer base, and obtain other competitive advantages.
Marine Products intends to pursue acquisitions and form strategic alliances that will enable Marine Products to acquire complementary skills and capabilities, offer new products, expand its customer base, and obtain other competitive advantages.
In the event the Controlling Group were to engage in any of these actions, our common stock price could be negatively impacted, such actions could cause volatility in the market for our common stock or could have a material adverse effect on our results of operations and our financial condition.
In the event the Controlling Group were to engage in any of these actions, our common stock price could be negatively impacted, such actions could cause volatility in the market for our common stock or could have a material adverse effect on our results of operations and our financial condition. 17 ​ Provisions in Marine Products’ Certificate of Incorporation and Bylaws may Inhibit a Takeover of Marine Products.
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. As a “Controlled Corporation,” the Company need not comply with certain NYSE rules including those requiring a majority of independent directors and independent nominating and compensation committees.
Rollins, each of whom is a director of the Company, and certain companies under their control (the “Controlling Group”), controls in excess of fifty percent of the Company’s voting power. As a “Controlled Corporation,” the Company need not comply with certain NYSE rules including those requiring a majority of independent directors and independent nominating and compensation committees.
In response to the risk of cyber-attacks, we regularly review and update processes to prevent unauthorized access to our networks and assets and misuse of data. We provide security awareness training for all employees, and closely manage the accounts and privileges of all employees and contractors. We also maintain an up-to-date incident response plan to quickly address cybersecurity incidents.
In response to the risk of cyber-attacks, we regularly review and update processes to prevent unauthorized access to our networks, information technology assets and misuse of data. We provide security awareness training for appropriate employees, and closely manage the information system accounts and privileges of all employees and contractors.
Provisions in Marine Products’ Certificate of Incorporation and Bylaws may Inhibit a Takeover of Marine Products. Marine Products’ certificate of incorporation, bylaws and other documents contain provisions including advance notice requirements for stockholder proposals and director nominations, and staggered terms of office for the Board of Directors.
Marine Products’ certificate of incorporation, bylaws and other documents contain provisions including advance notice requirements for stockholder proposals and director nominations, and staggered terms of office for the Board of Directors. These provisions may make a tender offer, change in control or takeover attempt that is opposed by Marine Products’ Board of Directors more difficult or expensive.
Likewise, the market price of our common stock has varied significantly in the past.
Historically, the market price of common stock of companies engaged in the discretionary consumer products industry has been highly volatile. Likewise, the market price of our common stock has varied significantly in the past.
Marine Products’ Executive Officers, Directors and Their Affiliates Together Have a Substantial Ownership Interest, and Public Stockholders may have no Effective Voice in Marine Products’ Management. The Company has elected the “Controlled Corporation” exemption under Section 303A of the New York Stock Exchange (“NYSE”) Listed Company Manual. The Company is a “Controlled Corporation” because a group that includes Gary W.
The Company has elected the “Controlled Corporation” exemption under Section 303A of the New York Stock Exchange (“NYSE”) Listed Company Manual. The Company is a “Controlled Corporation” because a group that includes Gary W. Rollins, Pamela R. Rollins, Amy Rollins Kreisler and Timothy C.
There are no assurances that Marine Products will be able to attract and retain qualified employees to meet current and/or future growth needs. General Risks. Marine Products’ Stock Price has been Volatile. Historically, the market price of common stock of companies engaged in the discretionary consumer products industry has been highly volatile.
There are no assurances that Marine Products will be able to attract and retain qualified employees to meet current and/or future growth needs. Risks Related to Our Capital and Ownership Structure Marine Products’ Executive Officers, Directors and Their Affiliates Together Have a Substantial Ownership Interest, and Public Stockholders may Have no Effective Voice in Marine Products’ Management.
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These provisions may make a tender offer, change in control or takeover attempt that is opposed by Marine Products’ Board of Directors more difficult or expensive. Risks Related to Digital Operations, Cybersecurity and Business Disruption.
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We also maintain an up-to-date incident response plan to quickly address cybersecurity incidents. We have experienced unsuccessful cyber-attack attempts to gain unauthorized access to our network.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeMarine Products’ total square footage under roof is allocated as follows: manufacturing — 724,700, research and development — 68,500, warehousing — 315,700, office and other — 136,100. ​
Biggest changeMarine Products’ total square footage under roof is allocated as follows: manufacturing — 729,400, research and development — 68,500, warehousing — 446,900, office and other — 122,200. ​
Item 2. Properties Marine Products’ corporate offices are in Atlanta, Georgia. These offices are currently shared with RPC and are leased. The monthly rent paid is allocated between Marine Products and RPC. Under this arrangement, Marine Products pays approximately $4,200 per month in rent. Marine Products may cancel this arrangement at any time after giving a 30-day notice.
Item 2. Properties Marine Products’ corporate offices are in Atlanta, Georgia. These offices are currently shared with RPC and are leased. The monthly rent paid is allocated between Marine Products and RPC. Under this arrangement, Marine Products pays approximately $4,300 per month in rent. Marine Products may cancel this arrangement at any time after giving a 30-day notice.
Chaparral owns and maintains approximately 1,162,000 square feet of space utilized for manufacturing, research and development, warehouse, sales office and operations in Nashville, Georgia. In addition, the Company owns 83,000 square feet of manufacturing space in Valdosta, Georgia.
Chaparral owns and maintains approximately 1,284,000 square feet of space utilized for manufacturing, research and development, warehouse, sales office and operations in Nashville, Georgia. In addition, the Company owns 83,000 square feet of manufacturing space in Valdosta, Georgia.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Equity Securities The Company has a stock buyback program initially adopted in 2001 and subsequently amended in 2013 and 2019 that authorizes the aggregate repurchase of 8,250,000 shares in the open market. The Company did not repurchase any shares under this program in 2022 and 2021.
Biggest changeIssuer Purchases of Equity Securities The Company has a stock buyback program initially adopted in 2001 and subsequently amended in 2013 and 2019 that authorized the repurchase of 8,250,000 shares, in the aggregate, in the open market. The Company did not repurchase any shares under this program in 2023 and 2022.
The companies in the Peer Group are Brunswick Corporation, MarineMax, Inc., Malibu Boats, Inc. and Mastercraft Boat Holdings, Inc. The Russell 2000 is used because the Company is a component of the Russell 2000, and because the Russell 2000 is a stock index representing small capitalization U.S. stocks.
The companies in the Peer Group are Brunswick Corporation, MarineMax, Inc., Malibu Boats, Inc. and Mastercraft Boat Holdings, Inc. 20 ​ The Russell 2000 is used because the Company is a component of the Russell 2000, and because the Russell 2000 is a stock index representing small capitalization U.S. stocks.
There are 1,570,428 shares that remain available for repurchase as of December 31, 2022. The program does not have a predetermined expiration date.
There are 1,570,428 shares that remain available for repurchase as of December 31, 2023. The program does not have a predetermined expiration date.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Marine Products’ common stock is listed for trading on the New York Stock Exchange under the symbol “MPX.” As of February 17, 2023, there were 34,437,678 shares of common stock outstanding and approximately 5,100 beneficial holders of our Company’s common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Marine Products’ common stock is listed for trading on the New York Stock Exchange under the symbol “MPX.” As of February 20, 2024, there were 34,682,949 shares of common stock outstanding and approximately 6,400 beneficial holders of our Company’s common stock.
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During 2022, the components of the Russell 2000 had an average market capitalization of $2.8 billion, and a median market capitalization of $950 million. The graph below assumes the value of $100.00 invested on December 31, 2017. ​ 21 ​
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The graph below assumes the value of $100.00 invested on December 31, 2018. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, Company/Index ​ 2018 ​ 2019 ​ 2020 ​ 2021 ​ 2022 ​ 2023 ​ ​ Base Period ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Marine Products Corporation Common Stock ​ 100 ​ 88 ​ 92 ​ 81 ​ 80 ​ 77 Peer Group ​ 100 ​ 126 ​ 161 ​ 228 ​ 162 ​ 205 Russell 2000 Index ​ 100 ​ 123 ​ 146 ​ 166 ​ 131 ​ 147 ​ ​

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeCash used for financing activities in 2022 increased $1.1 million compared to 2021 primarily due to increased dividends paid to common shareholders, partially offset by a reduction in the cost of stock repurchases related to the vesting of restricted shares. Cash Requirements Management expects that capital expenditures during 2023 will be approximately $4.0 million.
Biggest changeCash used for investing activities in 2023 increased $5.4 million in comparison to the same period in 2022 due to higher capital expenditures including transportation equipment and warehouse space partially offset by proceeds from sale of assets. 23 ​ Cash used for financing activities in 2023 increased $2.4 million compared to 2022 primarily due to increased dividends paid to common shareholders, coupled with an increase in the cost of stock repurchases related to the vesting of restricted shares.
The Company believes that, of its significant accounting policies and estimates, the following may involve a higher degree of judgment and complexity. Sales incentives and discounts – The Company sells its boats through its network of independent dealers and recognizes revenues from contracts with its customers based on the consideration received in exchange for the goods sold.
The Company believes that of its significant accounting policies and estimates, the following may involve a higher degree of judgment and complexity. 25 ​ Sales incentives and discounts The Company sells its boats through its network of independent dealers and recognizes revenues from contracts with its customers based on the consideration received in exchange for the goods sold.
Discussions of 2021 items and year-to-year comparisons of 2021 and 2020 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021, which Item is incorporated herein by reference.
Discussions of 2022 items and year-to-year comparisons of 2022 and 2021 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022, which Item is incorporated herein by reference.
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. The Company also has a revolving line of credit facility to increase its flexibility for managing its investment in its working capital.
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. The Company also has a revolving line of credit facility to increase its flexibility for managing its investment in its working capital or for funding other purposes.
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 ability to sell up to approximately $150 million in shares of its common stock under the Company’s shelf registration statement will provide sufficient capital to meet the Company’s requirements for at least the next twelve months.
The Company believes that the liquidity provided by existing cash, cash equivalents, its overall strong capitalization, cash generated by operations and the Company’s ability to sell up to approximately $150 million in shares of its common stock under the Company’s shelf registration statement will be sufficient to meet the Company’s requirements for at least the next twelve months.
For defined benefit plan and Supplemental Executive Retirement Plan (“SERP”) investments measured at net asset value, the values are computed using inputs such as cost, discounted future cash flows, independent appraisals and market based comparable data or on net asset values calculated by the investment fund and not publicly available.
The Supplemental Executive Retirement Plan (“SERP”) investments are measured at net asset value, which is computed using inputs such as cost, discounted future cash flows, independent appraisals and market based comparable data or net asset values calculated by the investment fund which are not publicly available.
A 0.10 percentage point increase in the estimated warranty expense as a percentage of net sales during 2022 would have increased selling, general and administrative expenses and reduced operating income by approximately $0.4 million.
Warranty expense as a percentage of net sales was 1.5% in 2023, 1.5% in 2022 and 1.2% in 2021. A 0.10 percentage point increase in the estimated warranty expense as a percentage of net sales during 2023 would have increased selling, general and administrative expenses and reduced operating income by approximately $0.4 million.
The facility includes (i) a $5 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 million and EBITDA over the most recently completed twelve month period at the time of incurrence.
The facility includes (i) a $5 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 million and adjusted EBITDA (as calculated under the Credit Agreement) over the most recently completed twelve-month period.
The Company evaluates its warranty obligation for each product line on a model year basis. The Company provides warranties against manufacturing defects for various components of the boats, primarily the fiberglass deck and hull, with warranty periods extending up to a lifetime. Warranty costs, if any, on other components of the boats are generally absorbed by the original component manufacturer.
The Company provides warranties against manufacturing defects for various components of the boats, primarily the fiberglass deck and hull, with warranty periods extending up to a lifetime. Warranty costs, if any, on other components of the boats are generally absorbed by the original component manufacturer.
Liquidity and Capital Resources Cash and Cash Flows The Company’s cash and cash equivalents were $43.2 million at December 31, 2022, $14.1 million at December 31, 2021 and $31.6 million at December 31, 2020.
Liquidity and Capital Resources Cash and Cash Flows The Company’s cash and cash equivalents were $72.0 million at December 31, 2023, $43.2 million at December 31, 2022 and $14.1 million at December 31, 2021.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Presentation The following discussion should be read in conjunction with the Consolidated Financial Statements included elsewhere in this document. See also “Forward-Looking Statements” on page 2.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Presentation The following discussion should be read in conjunction with the Consolidated Financial Statements included elsewhere in this document. See also “Forward-Looking Statements” in Part I included in this Form 10-K.
Results of Operations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ ​ 2022 ​ 2021 ​ 2020 ​ Total number of boats sold ​ 4,331 ​ 4,165 ​ 3,689 Average gross selling price per boat (in thousands) ​ $ 76.8 ​ $ 62.1 ​ $ 56.1 ​ Net sales (in thousands) ​ $ 380,995 ​ $ 298,014 ​ $ 239,825 ​ Gross profit margin percent ​ 24.6 % 22.9 % 22.4 % Percentage of selling, general and administrative expenses to net sales ​ ​ 11.0 % ​ 10.7 % ​ 12.2 % Operating income (in thousands) ​ $ 51,796 ​ $ 36,392 ​ $ 24,361 ​ Warranty expense (in thousands) ​ $ 5,903 ​ $ 3,702 ​ $ 2,845 ​ ​ Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Net Sales.
Results of Operations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ ​ 2023 ​ 2022 ​ 2021 ​ Total number of boats sold ​ 4,139 ​ 4,331 ​ 4,165 Average gross selling price per boat (in thousands) ​ $ 82.4 ​ $ 76.8 ​ $ 62.1 ​ Net sales (in thousands) ​ $ 383,729 ​ $ 380,995 ​ $ 298,014 ​ Gross profit margin percent ​ 23.6 % 24.6 % 22.9 % Percentage of selling, general and administrative expenses to net sales ​ ​ 11.3 % ​ 11.0 % ​ 10.7 % Operating income (in thousands) ​ $ 49,202 ​ $ 51,796 ​ $ 36,392 ​ Warranty expense (in thousands) ​ $ 5,829 ​ $ 5,903 ​ $ 3,702 ​ ​ Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Net Sales.
The Company had no repurchases of dealer inventory under contractual agreements during 2022 and 2021. Management continues to monitor the risk of additional defaults and resulting repurchase obligations based primarily upon information provided by the third-party floor plan lenders and to adjust the guarantee liability at the end of each reporting period based on information reasonably available at that time.
Management continues to monitor the risk of additional defaults and resulting repurchase obligations based primarily upon information provided by the third-party floor plan lenders and to adjust the guarantee liability at the end of each reporting period based on information reasonably available at that time.
The Company records incentives as a reduction of sales or as a cost of sales as appropriate. Using historical trends and management estimates, adjusted for current changes, the Company estimates the amount of incentives that will be paid in the future on boats sold and accrues an estimated liability.
The Company records incentives as a reduction of sales. Using historical trends and management estimates, adjusted for current changes, the Company estimates the amount of incentives that will be paid in the future on boats sold and accrues an estimated liability. The Company offers various incentives that promote sales to dealers and, to a lesser extent, retail customers.
The program does not have a predetermined expiration date. The Company has entered into agreements with third-party floor plan lenders where it has agreed, in the event of default by a qualifying dealer, to repurchase MPC boats repossessed from the dealer.
There are 1,570,428 shares that remain available for repurchase as of December 31, 2023. The program does not have a predetermined expiration date. The Company has entered into agreements with third-party floor plan lenders where it has agreed, in the event of default by a qualifying dealer, to repurchase MPC boats repossessed from the dealer.
These arrangements are subject to maximum repurchase amounts and the associated risk is mitigated by the value of the boats repurchased. The Company had no repurchases of dealer inventory in 2022 and 2021. See further information regarding repurchase obligations in “NOTE 11: COMMITMENTS AND CONTINGENCIES” of the Consolidated Financial Statements which is incorporated herein by reference.
These arrangements are subject to maximum repurchase amounts and the associated risk is mitigated by the value of the boats repurchased. The Company had no material repurchases of dealer inventory in 2023 and 2022. See further information regarding repurchase obligations in note titled Commitments and Contingencies in the Notes of the Consolidated Financial Statements.
The following table sets forth the historical cash flows for the twelve months ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) 2022 2021 2020 Net cash provided by operating activities ​ $ 49,348 ​ $ 457 ​ $ 29,874 Net cash used for investing activities ​ (2,500) ​ (1,248) ​ (2,065) Net cash used for financing activities ​ (17,779) ​ (16,680) ​ (16,040) ​ Cash provided by operating activities in 2022 increased $48.9 million compared to 2021.
The following table sets forth the historical cash flows for the twelve months ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, (in thousands) 2023 2022 2021 Net cash provided by operating activities ​ $ 56,846 ​ $ 49,348 ​ $ 457 Net cash used for investing activities ​ (7,871) ​ (2,500) ​ (1,248) Net cash used for financing activities ​ (20,194) ​ (17,779) ​ (16,680) ​ Cash provided by operating activities in 2023 increased $7.5 million compared to 2022.
The Company currently has an agreement with one of the floor plan lenders whereby the contractual repurchase limit, subject to a minimum of $8.0 million, is based on a specified percentage of the amount of the average net receivables financed by the floor plan lender for our dealers less repurchases during the prior 12 month period, which was a repurchase limit of $8.0 million as of December 31, 2022.
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 of December 31, 2022, the Company believes the fair value of its guarantee liability is immaterial. See further information regarding repurchase obligations in “NOTE 11: COMMITMENTS AND CONTINGENCIES” of the Consolidated Financial Statements which is incorporated herein by reference.
As of December 31, 2023, the Company believes the fair value of its guarantee liability is immaterial. See further information regarding repurchase obligations in note titled Commitments and Contingencies in the Notes of the Consolidated Financial Statements.
Impact of Recent Accounting Pronouncements: See “NOTE 1: SIGNIFICANT ACCOUNTING POLICIES” of the Consolidated Financial Statements, which is incorporated herein by reference, 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.
Impact of Recent Accounting Pronouncements: See note titled Significant Accounting Policies in the Notes of the 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.
Marine Products’ net sales increased by $83.0 million or 27.8 percent in 2022 compared to 2021. The increase was primarily due to a 4.0 percent increase in the number of boats sold, as well as an increase in parts and accessories sales, coupled with a 23.7 percent increase in the average gross selling price per boat.
Marine Products’ net sales increased slightly by $2.7 million or 0.7% in 2023 compared to 2022. The increase was primarily due to a 7.3% increase in the average gross selling price per boat, partially offset by increased promotional costs and a 4.4% decrease in the number of boats sold.
The Company has contractual repurchase agreements with additional lenders with an aggregate maximum repurchase obligation of $4.3 million, with various expiration and cancellation terms of less than one year. Accordingly, the aggregate repurchase obligation with all financing institutions was approximately $12.3 million as of December 31, 2022.
As defined by the agreement, the repurchase limit for this lender was $18.9 million as of December 31, 2023. The Company has contractual repurchase agreements with additional lenders with an aggregate maximum repurchase obligation of $7.7 million, with various expiration and cancellation terms of less than one year.
Interest income, net increased due to an increased cash balance and higher investment yields to $338 thousand in 2022 compared to $16 thousand in 2021. Marine Products generated 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.
Marine Products generated interest income primarily from investments of excess cash in money market funds. Additionally, interest expense is recorded for the revolving credit facility, primarily related to fees on the unused portion of the facility. Income Tax Provision. The income tax provision decreased to $10.4 million in 2023 compared to $11.8 million in 2022.
The dealer incentive programs are a combination of annual volume commitment discounts, and additional discounts at time of invoice for those dealers who do not finance their inventory through specified floor plan financing agreements. The annual dealer volume discounts are primarily based on July 1 through June 30 model year purchases.
These incentives are designed to encourage timely replenishment of dealer inventories after peak selling seasons, stabilize manufacturing volumes throughout the year, and improve production model mix. The dealer incentive programs are a combination of annual volume commitment discounts, and additional discounts at time of invoice for those dealers who do not finance their inventory through specified floor plan financing agreements.
The Company has a stock buyback program initially adopted in 2001 and subsequently amended in 2013 and 2019 that authorizes the aggregrate repurchase of 8,250,000 shares in the open market. The Company did not repurchase any shares under this program in 2022 and 2021. There are 1,570,428 shares that remain available for repurchase as of December 31, 2022.
Management expects this reduction to continue to favorably impact operating cash flow in future periods. The Company has a stock buyback program initially adopted in 2001 and subsequently amended in 2013 and 2019 that authorizes the aggregate repurchase of 8,250,000 shares in the open market. The Company did not repurchase any shares under this program in 2023 and 2022.
Total cost of incentives recorded in net sales as a percentage of gross sales was 5.6 percent in 2022, 5.8 percent in 2021, and 6.7 percent in 2020.
The Company regularly analyzes the historical incentive trends and adjusts recorded liabilities for changes in trends and terms of incentive programs. Total cost of incentives recorded in net sales as a percentage of gross sales was 7.3% in 2023, 5.6% in 2022, and 5.8% in 2021.
Warranty costs can vary depending upon the size and number of components in the boats sold, the pre-sale warranty claims, and the desired level of customer service.
Warranty costs can vary depending upon the size and number of components in the boats sold, the pre-sale warranty claims, and the desired level of customer service. Additionally, we focus on high quality manufacturing programs and processes, including actively monitoring the quality of our component suppliers and managing the dealer and customer service warranty experience and reimbursements.
In addition, the Company offers at various times other time-specific or model-specific incentives. The factors that complicate the calculation of the cost of these incentives are the ability to estimate incentive payments of the Company, the volume and timing of inventory financed by specific dealers, and the identification of boats sold subject to certain incentives.
The factors that complicate estimating the cost of incentives are the ability to estimate incentive payments of the Company, the volume and timing of inventory financed by specific dealers, and the notification of boats sold subject to certain incentives. Settlement of the incentives generally occurs from three to twelve months after the sale.
A 0.25 percentage point change in cost of incentives as a percentage of gross sales during 2022 would have increased or decreased net sales, gross margin and operating income by approximately $0.8 million. 27 ​ Warranty costs -The Company records as part of selling, general and administrative expenses an experience-based estimate of the future warranty costs to be incurred when sales are recognized.
A 0.25 percentage point change in cost of incentives as a percentage of gross sales during 2023 would have increased or decreased net sales, gross margin and operating income by approximately $0.9 million.
While we focus on high quality manufacturing programs and processes, including actively monitoring the quality of our component suppliers and managing the dealer and customer service warranty experience and reimbursements, our estimated warranty obligation is based upon the warranty terms and the Company’s enforcement of those terms over time, manufacturing defects or issues, repair costs, and the volume and mix of boat sales.
Our estimated warranty obligation is based upon the warranty terms and the Company’s enforcement of those terms over time, manufacturing defects or issues, repair costs, and the volume and mix of boat sales. The estimate of warranty costs is regularly analyzed and is adjusted based on several factors including the actual claims that occur.
The agreements typically provide for the return of all repossessed boats in “new and unused” condition subject to normal wear and tear, as defined, to the Company, in exchange for the 26 ​ 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 agreements provide for the return of repossessed boats to the Company in new and unused condition, subject to normal wear and tear, in exchange for the Company’s assumption of the debt obligation on those boats, as contractually defined by each lender. The Company had no material repurchases of dealer inventory under contractual agreements during 2023 and 2022.
Selling, general and administrative expenses as a percentage of net sales were 11.0 percent in 2022 compared to 10.7 percent in 2021. As a percentage of net sales, warranty expense was 1.5 percent in 2022 and 1.2 percent in 2021. 24 ​ Interest Income, net.
Selling, general and administrative expenses as a percentage of net sales were 11.3% in 2023 compared to 11.0% in 2022. As a percentage of net sales, warranty expense was 1.5% in both 2023 and 2022. The Company incurred lower incentive compensation costs in 2023 compared to 2022 due to lower profitability for the full year.
As a percentage of net sales, cost of goods sold decreased to 75.4 percent in 2022 compared to 77.1 percent in 2021 primarily due to price increases and a favorable model mix during 2022 compared to the prior year. Selling, General and Administrative Expenses .
As a percentage of net sales, cost of goods sold increased to 76.4% in 2023 compared to 75.4% in 2022 primarily due to higher 22 ​ promotional costs coupled with manufacturing inefficiencies as boat demand moderated and dealer orders decreased in the current year compared to the prior year. Selling, General and Administrative Expenses .
The net cash provided by operating activities in 2022 includes net income of $40.3 million coupled with a favorable change in other accrued expenses of $4.0 million and net favorable changes in other components of our working capital (including accounts receivable, inventory and accounts payable) totaling $2.2 million.
These favorable changes are coupled with a net favorable change in other components of our working capital (including accounts receivable less accounts payable and accrued expenses) totaling $1.8 million, partially offset by an unfavorable change in other non-current assets.
For additional information with respect to MPC’s contractual obligations , see Note 7: Long-term debt and Note 14: Leases of the Consolidated Financial Statements included in this report and which is incorporated herein by reference .
For additional information with 24 ​ respect to MPC’s contractual obligations , see notes titled Notes Payable to Banks and Leases in the Notes of the Consolidated Financial Statements .
Additionally, the favorable change in inventory is due to finishing and shipping substantially completed boats from inventory as a result of improvement of supply chain issues in the current year in comparison to the prior year which was negatively impacted by supply chain disruptions of critical components needed to complete boats.
The net favorable change in inventory during 2023 was primarily due to clearing inventory of partially completed boats as supply chain disruptions of critical components improved during 2023 in comparison to the prior year.
In 2022, international net sales were $25.6 million, an increase of 61.2 percent compared to the prior year. Cost of Goods Sold . Cost of goods sold increased 25.0 percent in 2022 compared to 2021 consistent with the increase in net sales.
In 2023, international net sales were $22.5 million, a decrease of 12.2% compared to the prior year. Cost of Goods Sold . Cost of goods sold increased 2.1% in 2023 compared to 2022 due to higher materials and labor costs.
Although the Company has these agreements with financial institutions, in certain situations, the Company may decide for business reasons to repurchase boats in excess of these contractual amounts. Related Party Transactions See “NOTE 13: RELATED PARTY TRANSACTIONS” of the Consolidated Financial Statements, which is incorporated herein by reference, for a description of related party transactions.
Accordingly, the aggregate repurchase obligation with all financing institutions was approximately $26.6 million as of December 31, 2023. Although the Company has these agreements with financial institutions, in certain situations, the Company may decide for business reasons to repurchase boats in excess of these contractual amounts.
During 2022, aggregate retail sales of the boating segments in which Marine Products operates increased by approximately 3.5 percent compared to the prior year. Our consolidated net sales increased in 2022 compared to 2021 due to a 4.0 percent increase in unit sales to dealers coupled with a 23.7 percent increase in the average gross selling price per boat.
Overview Consolidated net sales increased slightly in 2023 compared to 2022 due to a 7.3% increase in the average gross selling price per boat due to model mix, partially offset by increased promotional costs and a 4.4% decrease in unit sales to dealers.
Average selling prices increased compared to the prior year primarily due to a favorable model mix coupled with price increases to cover increased costs including primarily materials and components. Domestic net sales were $355.4 million, an increase of 26.0 percent compared to the prior year.
Average selling prices increased compared to the prior year primarily due to a favorable model mix partially offset by an increase in retail incentive costs for a new program announced during the fourth quarter of 2023. Domestic net sales were $361.2 million, an increase of 1.7% compared to the prior year.
Outlook We believe that the strong retail demand for new recreational boats which began with the onset of the COVID-19 pandemic will continue through 2023 though growth may moderate as retail demand is satisfied and consumers return to more normal lifestyles coupled with economic concerns and other factors such as interest rates.
Outlook We believe that the strong retail demand for new recreational boats which began in 2020 with the onset of the COVID-19 pandemic has subsided and has now normalized. In addition, consumers are returning to pre-pandemic routine lifestyles and rising interest rates are contributing to higher costs of boat ownership.
Management believes that these efforts have incrementally benefited the industry and Marine Products. Since the 2021 model year, Marine Products has produced a smaller number of models than in previous years in order to increase production efficiency.
We have adjusted production levels to more closely align with expected demand. During the past three model years, Marine Products has produced a smaller number of boat designs than in previous years to increase production efficiency.
Selling, general and administrative expenses increased by 31.5 percent in 2022 compared to 2021 primarily due to an increase in costs that vary with sales and profitability, such as incentive compensation, sales commissions and warranty expense. In addition, the Company recorded a $1.2 million pension settlement charge in 2022 associated with its defined benefit pension plan.
Selling, general and administrative expenses increased by $1.3 million or 3.1% in 2023 compared to 2022. The increase was primarily due to higher non-cash settlement losses recorded of $2.4 million in 2023 compared to $1.2 million in 2022 related to the termination of the defined benefit pension plan.
As of December 31, 2022, the Company had no outstanding borrowings under the revolving credit agreement. For additional information with respect to MPC’s facility, see Note 7: Notes Payable to Banks of the Consolidated Financial Statements included in this report and which is incorporated herein by reference.
The revolving credit facility includes a full and unconditional guarantee by the Company and its consolidated domestic subsidiaries and is subject to certain financial and other customary covenants. As of December 31, 2023, the Company had no outstanding borrowings under the revolving credit agreement.
Our financial results during 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.
Our financial results during 2024 will depend on a number of factors, including economic trends, demand for discretionary products, the impact of interest rates on consumer financing options and dealer inventory carrying costs, the effectiveness of the Company’s incentive programs, the success of new model launches, and the Company’s ability to manage manufacturing costs in light of lower production levels compared to early 2023.
Since many recreational boat buyers finance their purchases, higher interest rates may force them to choose smaller, less expensive boats or forgo the purchase of a boat altogether. In spite of strong consumer demand, industry retail unit sales in 2021 and 2022 declined compared to comparable prior year periods.
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 have reinstituted certain retail incentives and other allowances to attract more consumers to address lower demand compared to the first half of 2023.
Unit sales increased in all of our Chaparral models as well as many Robalo models during 2022 compared to the prior year due to our success in finishing and shipping substantially completed boats from inventory as a result of improvement of supply chain issues.
Unit sales decreased in most of our Chaparral models as well as many Robalo models during 2023 compared to the prior year. Unit sales during 2023 in comparison to the prior year were negatively impacted by a normalization of demand relative to high post-COVID levels and higher interest rates.
Removed
Overview Marine Products, 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 consumers.
Added
Gross profit decreased to $90.4 million in 2023, from $93.7 million in 2022 due to higher 21 ​ promotional costs coupled with manufacturing cost inefficiencies as boat demand moderated and dealer orders decreased year-over-year. Operating income decreased to $49.2 million, from $51.8 million in the prior year.
Removed
These dealers are located throughout the continental United States and in several international markets. Dealers either remit payment upon receipt of the product or finance their inventory through third-party floor plan lenders, who pay Marine Products generally within ten days of delivery of the products to the dealers.
Added
Net income increased to $41.7 million, from $40.3 million in the prior year, as higher interest income offset the decline in operating income. Diluted earnings per share was $1.21 in 2023, up from $1.18 in 2022.
Removed
We manage our Company by focusing on the execution of the following business and financial strategies: ● Manufacturing high-quality, stylish, and innovative powerboats for our dealers and retail consumers which are competitive in the market, ● Coordinating a complex supply chain to ensure that raw materials and parts used in manufacturing our products are delivered on a timely basis, ● Providing our independent dealer network appropriate incentives, training, and other support to enhance their success and their customers’ satisfaction, thereby facilitating their continued relationship with us, ● Managing our dealer’s expectations regarding our production allocations during periods in which dealer demand exceeds our production capacity, ● Managing our production and dealer order backlog to optimize operating results and reduce risk in the event of a downturn in sales of our products, ● Maintaining a flexible, variable cost structure which can be reduced quickly when deemed appropriate, ● Designing our products and marketing strategies to create a positive, memorable experience for our customers, within an evolving environment which calls for the increased use of technology to conduct virtual marketing and product demonstration, ● Monitoring the recreational boat market for strong complementary product lines which we may enter through new product development or acquisition, ● Extending our brand name recognition to enhance the success of new boat models that complement our existing offerings, ● Improving our sales and profits by increasing the utilization of our manufacturing capacity, ● Monitoring the activities and financial condition of our dealers and of the third-party floor plan lenders who finance our dealers’ inventories, ● Maximizing stockholder return by optimizing the balance of cash invested in the Company’s productive assets, the payment of dividends to stockholders, and the repurchase of the Company’s common stock on the open market, and ● Aligning the interests of our management and stockholders.
Added
In addition, the average size of the models the Company is producing has increased in response to evolving retail demand, and this trend is expected to continue. The Company intends to continue its focus on larger boats given this trend, higher associated price points and higher margins.
Removed
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, evolving customer preferences for socially distanced recreational activities, interest rates, dealer orders placed at our annual dealer conferences, and retail attendance and orders at annual winter boat show exhibitions and through virtual marketing events.
Added
Due to strong demand across the recreational sector following the COVID-19 pandemic, key materials and components had been in tight supply. Supply chain disruptions and constraints negatively impacted our operations in 2022 and early 2023 including our production volumes and manufacturing inefficiencies, however, these issues have improved and are no longer impacting production.
Removed
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 22 ​ products, average selling price per boat, and gross profit margins, among others, as indicators of the success of our strategies.
Added
Management expects the reduction in anticipated incentive compensation to be paid to selected non-executive employees described in the Notes to the Consolidated Financial Statements in note titled Commitments and Contingencies, to favorably impact selling, general and administrative expenses for future periods.
Removed
Marine Products’ financial results are affected by consumer confidence and preferences, because pleasure boating is a discretionary expenditure and consumers have many competing activities for their leisure time. Pleasure boating is also impacted by interest rates, the availability of financing and shifting consumer preferences towards safe activities which do not involve large crowds.
Added
Gain on disposition of assets, net for 2023 was $2.0 million due primarily to a $1.8 million gain related to a real estate transaction recorded during the third quarter of 2023. Interest Income, net. Interest income, net increased to $2.9 million in 2023 compared to $338 thousand in 2022 due to higher cash balances and higher investment yields.
Removed
We periodically monitor our market share in various categories as one indicator of the success of our strategies and the market’s acceptance of our products.
Added
The effective tax rate decreased to 19.9% in 2023 from 22.6% in 2022. The decrease in the 2023 effective tax rate is primarily due to favorable permanent and beneficial discrete adjustments compared to unfavorable permanent and detrimental discrete adjustments in 2022.
Removed
For the 12 month period ended September 30, 2022 (latest data available to us), Robalo’s share of the 18 to 36 foot outboard sport fishing boat market was 4.2 percent, the third highest market share within this category.
Added
The net cash provided by operating activities in 2023 includes net income of $41.7 million and an adjustment for a non-cash pension settlement loss of $2.4 million, coupled with a net favorable change in inventory of $11.4 million.
Removed
Chaparral’s market share in the 19 to 34 foot sterndrive category was 19.8 percent, an increase in comparison to the same period in the prior year and the second highest market share in this category during this period.
Added
The net favorable change in other components of our working capital was primarily a result of a decrease in accounts receivable of $2.9 million consistent with a decrease in sales during the fourth quarter of 2023, partially offset by a net decrease in accounts payable and accrued expenses consistent with the decline in production levels during the fourth quarter of 2023 compared to the same period in the period year.
Removed
Marine Products Corporation’s share of the outboard recreational market, including both Robalo and Chaparral’s outboard units, was 5.4 percent of the total market within its size range for the 12 months ended September 30, 2022 which was the third highest share among manufacturers of various outboard brands during this period.
Added
The net unfavorable change in other non-current assets is due primarily to an employer contribution of $4.0 million during 2023 to the supplemental retirement plan.
Removed
We will continue to monitor our market share and believe it to be important, but we believe that maximizing profitability takes precedence over growing our market share.
Added
Cash Requirements Management expects that capital expenditures during 2024 will be approximately $5.0 million. The Company participated in a multiple employer Retirement Income Plan (“Plan” ), sponsored by RPC. During 2023, the Plan was fully terminated through a liquidation of the assets held in a trust.
Removed
Furthermore, as we continue to expand the breadth of our product offerings within our core category and new categories, we consider our overall market share across the various powerboat categories to be of greater importance to the long-term health of our company than our market share within any specific type of recreational boat.
Added
On January 23, 2024, the Board of Directors approved a quarterly cash dividend of $0.14 per common share payable March 11, 2024 to stockholders of record at the close of business on February 9, 2024.
Removed
Beginning in the second quarter of 2020, many consumers chose recreational boating when they left urban areas to spend time in vacation homes or in smaller groups, often located near recreational bodies of water.
Added
Subject to industry conditions and Marine Products’ earnings, financial condition, and other relevant factors, the Company expects to continue to pay regular quarterly cash dividends to common stockholders.
Removed
Recreational boating is a leisure activity that supports this transition because people perceive it to be a safe outdoor activity which does not involve large groups of people.
Added
Effective October 1, 2023, the Company began recording short-term cash incentive compensation expense to selected employees in an annual amount equal to nine percent of pre-tax profit (PTP incentive), defined as pretax income before goodwill adjustments and certain allocated corporate expenses.
Removed
We believe that retail demand will continue to exceed the recreational boating industry’s production capacity for the foreseeable future, though we note that fuel prices, higher interest rates, and concerns regarding a possible recession in 2023 may reduce consumer demand during 2023.
Added
Through the third quarter of 2023, this PTP incentive was 16% 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.
Removed
The Company believes that these declines have been caused by the industry’s supply chain and labor problems which are preventing recreational boat manufacturers from producing sufficient units to meet retail and consumer demand. The overall cost of boat ownership has increased over the last several years.
Added
The revolving credit agreement with Truist Bank provides a credit facility of $20.0 million which is scheduled to mature on November 12, 2026 .
Removed
In particular, the cost to purchase a boat has increased because of increased materials and labor costs and higher interest rates, which increase the financing costs of boat ownership. In addition, the price of fuel has fluctuated over the past several years, creating uncertainty regarding the cost of operating a boat.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeMarine Products does not expect any material changes in market risk exposures or how those risks are managed. ​ ​ 28 ​ MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING To the Stockholders of Marine Products Corporation: The management of Marine Products Corporation is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.
Biggest changeMarine Products does not expect any material changes in market risk exposures or how those risks are managed. ​ ​ 26 ​
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 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 material interest rate risk exposure.
As of December 31, 2023, there were no outstanding interest-bearing advances under our credit facility which bore 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 material interest rate risk exposure.
Removed
Marine Products Corporation maintains a system of internal accounting controls designed to provide reasonable assurance, at a reasonable cost, that assets are safeguarded against loss or unauthorized use and that the financial records are adequate and can be relied upon to produce financial statements in accordance with accounting principles generally accepted in the United States of America.
Added
Item 7A. Quantitative and Qualitative Disclosures About Market Risk The Company is subject to interest rate risk exposure through borrowings on its revolving credit agreement.
Removed
The internal control system is augmented by written policies and procedures, an internal audit program and the selection and training of qualified personnel. This system includes policies that require adherence to ethical business standards and compliance with all applicable laws and regulations. There are inherent limitations to the effectiveness of any controls system.
Removed
A controls system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the controls system are met. Also, no evaluation of controls can provide absolute assurance that all control issues and any instances of fraud, if any, within the Company will be detected.
Removed
Further, the design of a controls system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. The Company intends to continually improve and refine its internal controls.
Removed
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operations of our internal control over financial reporting, as of December 31, 2022 based on criteria established in 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Removed
Based on this evaluation, management’s assessment is that Marine Products Corporation maintained effective internal control over financial reporting as of December 31, 2022.
Removed
The independent registered public accounting firm, Grant Thornton LLP, has audited the consolidated financial statements as of and for the year ended December 31, 2022, and has also issued their report on the effectiveness of the Company’s internal control over financial reporting, included in this report on page 30. /s/ Ben M. Palmer /s/ Michael L. Schmit Ben M.
Removed
Schmit President and Chief Executive Officer Vice President, Chief Financial Officer and Corporate Secretary ​ Atlanta, Georgia February 27, 2023 ​ ​ 29 ​ REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Stockholders Marine Products Corporation ​ Opinion on internal control over financial reporting We have audited the internal control over financial reporting of Marine Products Corporation (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2022, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
Removed
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.
Removed
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2022, and our report dated February 27, 2023 expressed an unqualified opinion on those financial statements.
Removed
Basis for opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
Removed
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB.
Removed
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Removed
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Removed
Definition and limitations of internal control over financial reporting A company’s internal control over financial reporting is a process designed 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.
Removed
A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Removed
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Removed
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ GRANT THORNTON LLP Atlanta, Georgia February 27, 2023 ​ 30 ​ REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Stockholders Marine Products Corporation Opinion on the financial statements We have audited the accompanying consolidated balance sheets of Marine Products Corporation (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and financial statement schedule included under Item 15(2) (collectively referred to as the “financial statements”).
Removed
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.
Removed
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 27, 2023 expressed an unqualified opinion.
Removed
Basis for opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits.
Removed
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB.
Removed
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Removed
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Removed
Critical audit matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
Removed
The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Removed
Warranty Liability As described further in Note 1 to the consolidated financial statements, the Company provides a lifetime limited structural hull warranty, a five-year structural deck warranty, and a one-year limited warranty to the original owner for all boats sold to dealers.
Removed
The estimated cost of warranty claims is recorded by the Company at the time of the boat sale based on historical claims experience and may subsequently be adjusted based on items such as production quality.
Removed
We identified the warranty liability ("warranty") as a critical audit matter. 31 ​ The principal consideration for our determination that warranty is a critical audit matter is that the warranty liability has a higher degree of estimation uncertainty related to the estimation of anticipated future warranty claims.
Removed
The estimation uncertainty and subjectivity in determining the liability resulted in the need for significant auditor judgement when assessing the reasonableness of the inputs and assumptions utilized by the Company.
Removed
Our audit procedures related to this matter included the following, among others. ​ ● We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s warranty liability estimation process.
Removed
For example, we tested controls over the development of the assumptions and the verification of the completeness and accuracy of the information used in developing the warranty liability. ● We tested the process used to develop the estimate using information related to recent production trends and the historical experience of the Company. ● We compared the Company’s prior year warranty liability related to anticipated claims in the current year to actual claims paid in the current year to evaluate the historical accuracy of the Company’s estimate. ​ ​ /s/ GRANT THORNTON LLP We have served as the Company’s auditor since 2004.
Removed
Atlanta, Georgia February 27, 2023 ​ ​ ​ 32 ​

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