ANNUAL REPORT 2020
DISCOVERING EXPANDING HORIZONS
MARINE PRODUCTS CORPORATION
(NYSE: MPX) designs, manufactures and distributes
premium-branded Chaparral sterndrive and outboard
pleasure boats, Robalo outboard sport fishing boats and
Vortex jet boats through 206 domestic and 89 international
independent dealers
With premium brands, a solid capital structure and a strong
independent dealer network, Marine Products Corporation
has consistently generated strong financial performance
and has created long-term stockholder value Marine
Products Corporation also seeks to utilize its financial
strength to capitalize on opportunities that profitably
increase its market share and broaden its product offerings
within the pleasure boat market For more information, visit
our website at MarineProductsCorp com
The symbols in the logo on the front cover and other parts of our
Did You Know?
Annual Report are international maritime signal flag depictions
of our NYSE ticker symbol. Ships have used nautical flags to
communicate with each other since the 1700’s, so we are proud
to continue this heritage as a symbol of our company’s longevity
M = Mike
P = Papa
and dedication to recreational boating. The international code
X = X-ray
words connected to the signal flags are:
Our customers continue to discover the enjoyment of outdoor recreational
experiences with family and friends on their high-quality Robalo and
Chaparral boats Enjoy images of their experiences scattered throughout the
Marine Products 2020 Annual Report!
01 2020 Financial Highlights
02 Letter to Stockholders
04 Discovering New Horizons
05 Expanded Products
06 2021 Product Overview
07 2020 FORM 10-K
Inside Back Cover Corporate Information
246 n CAYMAN BAY BOAT
24 n SSI
2430 n VORTEX
250 n SUNCOAST
25 n SURF
2020 Financial HIGHLIGHTS
NET SALES
(thousands)
NET INCOME
(thousands)
0
3
3
,
1
4
2
$
,
6
1
3
7
6
2
$
6
1
6
,
8
9
2
$
6
3
1
,
2
9
2
$
5
2
8
,
9
3
2
$
5
4
7
6
1
,
$
0
0
3
,
9
1
$
8
8
4
,
8
2
$
9
3
2
,
8
2
$
4
4
4
,
9
1
$
2016
2016
2017
2017
2018
2018
2019
2019
2020
2016
2016
2017
2017
2018
2018
2019
2019
2020
TOTAL NUMBER OF BOATS SOLD
AVERAGE SELLING PRICE PER UNIT
(thousands)
9
4
0
,
5
1
0
3
,
5
0
4
3
,
5
5
2
8
,
4
9
8
6
,
3
2
4
$
4
4
$
9
4
$
3
5
$
2016
2016
2017
2017
2018
2018
2019
2019
2020
2016
2016
2017
2017
2018
2018
2019
2019
6
5
$
2020
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
NET SALES
GROSS PROFIT
2016
2017
$ 241,330 $ 267,316
2018
$ 298,616
2019
2020
$ 292,136 $ 239,825
$ 50,467 $ 59,020
$ 66,323
$ 65,394 $ 53,605
OPERATING INCOME
$ 23,052 $ 29,759
$ 35,387
$ 34,135
NET INCOME
$ 16,745 $
19,300
$ 28,488
$ 28,239
$ 24,361
$ 19,444
EARNINGS PER SHARE-DILUTED
$
0.44 $
0.55
$
0.83
$
0.83
$
0.57
GROSS PROFIT MARGIN
OPERATING MARGIN
20.9%
9.6%
22.1%
11.1%
22.2%
22.4%
22.4%
11.9%
11.7%
10.2%
R302 n CENTER CONSOLE
300 n OSX
R317 n DUAL CONSOLE
347 n SSX
LETTER TO
STOCKHOLDERS
Marine Products Corporation experienced a remarkable year in
2020. We began with a normal winter boat show season and our
preparation for a typical retail selling season. Our preparation was
disrupted by the COVID-19 pandemic, which forced us to idle our
production facility temporarily during the second quarter. At the
same time, retail demand for pleasure boats soon began to surge,
as consumers turned to recreational boating because it allows
families and small groups to engage in an enjoyable socially
distanced outdoor activity close to home. We resumed production
late in the second quarter facing rapidly depleting inventories
and the strongest demand we have experienced in decades. We
finished 2020 and entered 2021 with a healthy dealer network and
appealing products that hold leading market share.
The year 2020 marked Marine Products Corporation’s eleventh
consecutive year of strong profitability. Net sales for 2020 were
$239.8 million, a decrease of 17.9 percent compared with $292.1
million in 2019. Net sales decreased principally due to a 23.5
percent decrease in unit sales volume. Unit sales decreased due
to our production facility shutdown as well as low production
at the beginning of the year as we managed relatively high
dealer inventory levels. Additionally, unit sales decreased as we
de-emphasized some smaller Chaparral sterndrive models. We also
sold fewer of our small Robalo models and Vortex jet boats. These
unit sales decreases were partially offset by increased sales of our
Chaparral Surf Series and selected SSI, SSX and mid-sized Robalo
models. Average selling prices improved by 6.7 percent due to a
model mix that included increased sales of larger boats, such as
the Chaparral 280 OSX and 267 SSX models.
A recounting of Marine Products Corporation’s annual financial
results does not provide insight into the extreme volatility that we
experienced during the year. For the second quarter of 2020, net
sales decreased by 54.0 percent compared to the second quarter
of 2019, because we closed our manufacturing facility for almost
half of the quarter due to COVID-19. By contrast, net sales
increased by 47.6 percent during the fourth quarter compared to
the same period of the prior year, as we operated at seasonally
higher production levels in order to fulfill pre-sold retail orders and
began to rebuild dealer inventory levels depleted by high retail
demand during the second half of the year.
Gross profit in 2020 was $53.6 million, a decrease of 18.0 percent
compared with $65.4 million in 2019. Gross margin was 22.4 percent
of net sales in both years. Gross profit decreased in 2020 due
to lower net sales. Selling, general and administrative expenses
decreased slightly to $29.2 million in 2020, compared with $31.3
million in 2019, due principally to expenses that vary with sales and
profitability, such as incentive compensation and warranty expense.
Operating income in 2020 was $24.4 million, or 10.2 percent of net
sales, compared with $34.1 million, or 11.7 percent of net sales, in 2019.
The year 2020 marked Marine
Products Corporation’s eleventh
consecutive year of strong profitability.
Interest income was $95 thousand in 2020, a 70.6 percent decrease
compared with $323 thousand in 2019. Interest income decreased
due to a lower yield on our investments in money market funds,
partially offset by an increase in our average cash balance.
Net income in 2020 was $19.4 million, 31.1 percent lower than
2019 net income of $28.2 million. In addition to the impact of
lower income before income taxes, net income also decreased
because our effective tax rate was 20.5 percent in 2020, compared
with an effective tax rate of 18.0 percent in 2019. Our effective
tax rate increased due to a non-deductible item related to stock
compensation, but we project that our effective tax rate in 2021
will be approximately 19 percent. Diluted earnings per share were
$0.57 in 2020, compared to $0.83 in 2019.
During 2020 Marine Products Corporation used $1.4 million in
cash to repurchase its common stock in the open market. We
historically have viewed open market share repurchases as an
important part of our capital allocation strategy, as well as an
important tool to increase overall shareholder return. Our Board
of Directors continued the Company’s cash dividend, although
the Board reduced the regular quarterly dividend from $0.12 per
share to $0.08 per share during the second quarter because of
the uncertainty relating to the COVID-19 pandemic. Including a
year-end special dividend of $0.04 per share, Marine Products
Corporation issued cash dividends of $0.40 per share in 2020, a
decrease of $0.18 per share compared to 2019. In consideration of
our strong financial position and optimistic near-term outlook, our
Board of Directors authorized a 25 percent increase in the regular
quarterly dividend early in the first quarter of 2021.
Marine Products Corporation’s net cash provided by operating
activities was $29.9 million in 2020, a decrease compared with
$33.9 million in 2019. Net cash provided by operating activities
declined principally due to lower net income in 2020, partially
offset by working capital declines related to lower sales and
improved dealer inventory turns, which resulted in lower accounts
2
300 OSX
receivable. Capital expenditures of $2.1 million were slightly lower
than capital expenditures of $2.3 million in 2019. In addition,
we issued $13.6 million in dividends, a decrease of $6.2 million
compared with $19.8 million in 2019. As a result, we finished 2020
with $31.6 million in cash, an $11.8 million increase compared
with $19.8 million in cash at the end of 2019. We believe that this
cash balance continues to provide liquidity to support our current
operations, fund future growth opportunities and make value-added
capital allocation decisions.
Our Company underwent profound changes within our leadership
and Board of Directors during 2020. Most significantly, Chairman
R. Randall Rollins passed away in the third quarter following a
brief illness. Randall had served as our Chairman since Marine
Products’ formation and had been involved with Chaparral Boats
since 1986. Randall’s consistent focus on quality and long-term
success motivated us over many years. Gary W. Rollins, who also
served on the Board at the Company since its founding, succeeded
Randall. In addition to this transition at the Chairman level, three
of our other long-standing Directors retired during the year. Their
successors on the Board of Directors come to the Company with
significant financial and corporate governance experience, and we
look forward to working with them in the coming years.
We are pleased to report continued strong market share within all of
our product lines. During 2020, Robalo achieved the highest market
share within its size range in the outboard fiberglass category. In
combination with Chaparral’s outboard products, Marine Products’
outboard offerings reached a market share of 6.5 percent, a slight
improvement compared to a market share of 6.2 percent in 2019.
Chaparral’s sterndrive market share also improved to 16.5 percent
during 2020, and it continued to rank second in its size category.
of the 2021 winter boat shows were cancelled due to COVID-19
pandemic restrictions related to social distancing. To compensate
for these cancellations, we are conducting virtual marketing efforts
in cooperation with our dealers. We are pleased that consumers are
increasingly comfortable evaluating important purchasing decisions
virtually.
The unprecedented societal upheaval caused by the COVID-19
pandemic during the past year has challenged the entire globe to
redefine how and where we work, live and spend time together. For
some individuals, the new vision involved spending time away from
urban areas and crowds, and engaging in safe outdoor activities.
Recreational boating fits into this lifestyle for many consumers,
and we are excited to meet this revived demand with dedicated
employees and management, excellent products and a strong
dealer network.
We are operating at the highest operational cadence possible that
also will allow us to prioritize our employees’ well-being. Along
with other industries experiencing high demand, we are monitoring
the potential for labor and supply chain constraints. Our low dealer
inventories and high order backlogs encourage us to increase
production, but we continue to evaluate this goal against our
emphasis on product quality.
As we finish an extraordinary year and look toward an expanding
horizon, we appreciate the hard work of our employees, the support
of our dealers and suppliers, and the continued loyalty of our
customers and stockholders.
Sincerely,
In a typical first quarter, we attend winter boat shows with our
dealers to present our new models and assess retail demand
for the upcoming retail selling season. This year, however, most
RICHARD A. HUBBELL
President and Chief Executive Officer
3
DISCOVERING NEW HORIZONS
One feature of our remarkable year was the number of American
consumers who have discovered recreational boating for the first
time. Through anecdotal evidence from our dealers and other
sources, we believe that first-time boat ownership exceeds even those
levels that our industry observed almost 20 years ago, following the
September 11 terror attacks. Many of those catalysts mirror those we
observe today. With the pandemic, people have been forced to stay
at home and avoid air travel, large crowds and uncontrolled social
settings. Some consumers have taken the additional step of leaving
large urban areas for less crowded, safer destinations, constituting
a human migration our society has not seen in several generations.
Whether confined at home or in an isolated location away from home,
families have been impacted by the cancellation of many recreational
activities such as beach trips and summer camps.
The virtual customer experiences and online marketing
tools we have developed during the past few years
prepared us for this radical new environment.
Many consumers discovered recreational boating as one solution to
this extraordinary, unexpected set of circumstances. By definition,
recreational boating takes place outdoors during times of the
year when summer camps and beach vacations also take place.
It became a safe choice in 2020 because of the limited number of
people on a boat in a controlled environment. Furthermore, a boat
is a self-contained entertainment center with something for multiple
generations of a large family group. Boating was the perfect option
for 2020, and our industry encountered unprecedented consumer
demand which extended beyond the traditional retail selling season
and into 2021.
The same environment that created this demand presented new
marketing challenges for us. As 2020 unfolded, our dealers did not
26 SURF
have sufficient inventory to show potential customers a full range
of new model year products. As the year continued, we cancelled
our annual dealer meeting and learned that most winter boat
shows, which are a traditional mainstay of the marketing and
sales cycle, also were cancelled. A recreational boat is a large
purchase that relies on a customer’s tangible experience with
the look and feel of the product. This experience especially is
important for a consumer who has never owned a boat.
The virtual customer experiences and online marketing tools we
developed over the past few years prepared us for this radical
new environment. We developed and promoted video product
tours, which to date almost 20,000 potential customers have
viewed. They can experience augmented reality boat simulations
followed by secure online order tracking when they order a boat.
We also maintain that our dealers remain important to all aspects
of the sales and service process. Although we cancelled our
annual in-person dealer meeting, we held a global virtual dealer
conference with over 300 attendees. We also transitioned our
dealer sales and service training to an online format and used
this setting to improve the product knowledge of our dealers’
sales and service employees.
Our unique website visits, social media engagements and
resulting leads have increased by at least 50 percent compared
to previous years. As a result, we know consumers are
increasingly comfortable with a safe virtual setting that considers
their recreational boating needs.
Our industry recognizes that one key to our future success
lies in creating a positive experience for first-time boat buyers.
We want them to enjoy the boat, learn to use it safely and be
confident enough to seek new boating experiences. The industry
is nurturing this positive experience with industry-wide training
of dealers to familiarize first-time boat buyers with knowledge
that will make boating an enduring part of their lifestyle. When
life returns to normal, we believe that the expanded interest in
recreational boating will remain with us.
4
R360 CENTER CONSOLE
EXPANDED PRODUCTS
For our 2021 model year, we have
introduced the biggest Robalo ever–the
R360. Robalo’s new flagship is available
with twin or triple outboards, providing up
to 1,200 horsepower. This is the first Robalo
to offer triple outboards and the first Robalo
with a stepped hull. The stepped bottom of
the R360 is custom-designed by Michael
Peters Yacht Design, a long-time leading
designer of performance boats and hulls.
By combining this design with a 23-degree
deadrise, the R360 is able to accelerate
quickly, stay on plane at lower speed, cut
through offshore chop, and turn quickly.
Combined, these design elements result in
a dry, comfortable, and efficient ride.
The R360 delivers a number of standard
features for offshore anglers, including
twin fish boxes, two 30-gallon livewells,
a convertible casting platform and 14 rod
holders. For family cruising, the R360’s
11-foot beam provides lots of room for
passengers, and the forward area features
a U-shaped social area with chaise lounges
and a drop-in table. The cockpit has
three-person bench seating behind three
helm chairs, all of which are shaded by a
standard fiberglass hardtop. When an angler
is not busy in the cockpit, there is another
drop-down seat in the transom to seat three
additional people.
Whether the R360 is being used for cruising
or fishing, side entry doors on both the port
and starboard sides of the boat are useful
for passenger boarding and landing big fish.
The standard Helm Master joystick makes
docking against the current or maneuvering
for a fish a lot easier. Although it is a center
console, the Robalo R360 is large enough to
have a mini-cabin under the console with a
sink, porcelain head, bench seat and berth.
The Robalo R360, which is suitable for
any kind of offshore activity, is finding
an expanded audience. As we begin
another exciting year, our team is thrilled
to introduce this world-class offshore sport
fishing boat.
An expanded audience
is discovering Robalo’s
new flagship, suitable
for any kind of
offshore activity.
SSX 267 anchored in Lake Powell, UT
5
2021 PRODUCT OVERVIEW
SURF SERIES
Endless wave, endless fun. The SURF Series combines everything
you love about the SSi and SSX lines with the excitement of the
SURF series. Wakesurfing is more thrilling and easier to enjoy
than ever, thanks to the Malibu Surf GateTM that lets you instantly
adjust your wake—no repositioning necessary! Powered by Volvo
and Mercruiser forward-facing drives, the Surf features a Medallion
touch-screen display that makes controlling your ride easy and
straightforward. Fiberglass multipurpose bowriders, the Surf Series
models are marketed to both experienced and value-conscious
buyers. These boats are designed to enhance the wake of the boat
to accommodate the popular sport of wake surfing. Additionally,
the 26 and 30 SURF are standard with the award-winning Infinity
Powerstep for easy onboarding and exiting to and from the water!
21 SURF 23 SURF 26 SURF 30 SURF
SSi SPORT BOATS
Chaparral’s SSi sport boat and premium bowrider is produced for the
quality and style-conscious recreational boater. The 19 to 23 foot SSi
continues to set a high standard for engineering excellence, attractive
styling, and quality materials and workmanship. Our fiberglass
sterndrive and outboard-powered SSi’s are high-value runabouts
marketed to family groups. The SSi is designed to feature the handling
of a runabout, with the style of a sport boat and open concept layout.
Select models offer Ski & Fish options to meet specific needs. All
lengths are marketed with National Advertised Prices.
OSX OUTBOARD LUXURY SPORT BOATS
Chaparral’s OSX luxury sport line takes advantage of the growing
popularity of outboard power in larger boats to create a boat that
combines the generous seating of a large bowrider with the functional
advantages of a center console. A seating area in the cockpit and a
helm station that rotates to one side of the cockpit provides plenty of
room for entertaining passengers. The enclosed cabin on the 300 OSX
also provides many amenities found in larger traditional cruisers. The
OSX is offered in a 28 and 30 foot length.
280 OSX 300 OSX
SUNCOAST OUTBOARD BOWRIDERS
Designed for big lakes, rivers and coastal waters, the sensational
SunCoast marks the return of Chaparral to its outboard-powered roots
with Real Deal pricing and in sizes ranging from 23 to 25 feet. With
more seating capacity, storage space, luxury, quality and performance,
SunCoast brings a whole new look to the outboard sport boat market.
230 250
ROBALO CAYMAN BAY BOATS
The Cayman Series ranges from 20 to 24 feet and brings Robalo
quality, style and performance to a bay boat. Robalo engineers have
successfully mixed a shallow water draft with a soft-riding Extended
V-PlaneTM hull design. Robalo’s Cayman models offer rock-solid
stability; high-quality upholstery; high-tech, space-efficient cockpit; a
tower with upper station controls on the 246 Sky Deck; and a wide
array of fishing features at Reel Deal pricing.
19 SSi 19 SKI & FISH SSi
21 SSi 21 SKI & FISH SSi 23 SSi
206 226 246 246SD
SSX LUXURY SPORT BOATS
For the 2021 model year, Chaparral offers 23 to 34 foot Luxury Sport
Boats. Various SSX Luxury Sport Boat models are offered with an
enclosed head, integrated swim platform, transom sun lounge, and
most have the option of a wet bar in the cockpit. The SSX series offers
high-end performance with premium components from bow to stern.
Additionally, multiple SSX boats are standard with the award-winning
Infinity Powerstep for easy onboarding and exiting to and from the water!
237 SSX 267 SSX 267 SSX OB
287 SSX 307 SSX
317 SSX 347 SSX
VORTEX JET BOATS
Chaparral’s award-winning design team built a line of jet boats
equipped with fuel-saving Eco-Mode, Chaparral’s Extended V-PlaneTM
hull, Rotax® power and innovation. National fixed retail pricing includes
a trailer and targets younger, first-time boat owners and wakeboard
enthusiasts. The NMMA Innovation Award Winning Aerial Surf Platform
(ASP) is available as the next innovation in Surfing!
ROBALO DUAL CONSOLES
Multi-purpose outboard fishing boats like the Robalo Dual Console with
Reel Deal pricing are enjoying increased popularity in today’s market!
Today’s fishermen want a boat that does more than just fish, and the
dual console does just that. Serious anglers will appreciate the secure
rod storage, raw water wash down, self-bailing cockpit and standard
livewell. Fish in the morning, tow the kids all afternoon and then cruise
as the sun sets.
R207 R227 R247 R317
ROBALO CENTER CONSOLES
Robalo’s Reel Deal pricing is available for 16 to 36 foot models. The
Kevlar® reinforcement and a seaworthy hull design on the Robalo
Center Console series provides the serious boater with peace of mind.
Whether you’re trolling with hooks in the water or motoring through the
tough stuff in search of a trophy catch, a powerful engine and Robalo’s
Hydro LiftTM hull design can speed you to the hottest fishing spots.
R160 R180 R200 R222
R230 R242 R272 R302 R360
203 VR 203 VRX
223 VR 223 VRX
2430 VR 2430 VRX
ROBALO EXPLORER – CENTER CONSOLES
The Explorer Series of Center Consoles embraces the classic design of
a center console, equipped with luxury standard touches that let the
entire family enjoy being on the water.
R202EX R222EX R242EX
6
CORPORATE INFORMATION
OFFICERS
Richard A. Hubbell
President and Chief Executive Officer
Ben M. Palmer
Vice President, Chief Financial Officer and Corporate Secretary
DIRECTORS
Gary W. Rollins §
Non-Executive Chairman of the Board of Directors and
Chairman and Chief Executive Officer, Rollins, Inc
Susan R. Bell *
Retired Partner, Ernst & Young LLP
Harry J. Cynkus °
Vice Chairman, Trustee and Chair of the Resources
and Finance Committee, Utica College Board of Trustees
Patrick J. Gunning *
Chief Financial Officer, Robert W Woodruff Arts Center, Inc
Richard A. Hubbell §
President and Chief Executive Officer, RPC, Inc
STOCKHOLDER INFORMATION
Corporate Offices
Marine Products Corporation
2801 Buford Highway NE, Suite 300
Atlanta, Georgia 30329
Telephone: (404) 321-7910
Stock Listing and Ticker Symbol
New York Stock Exchange - NYSE: MPX
Investor Relations Website
MarineProductsCorp com
Transfer Agent and Registrar
For inquiries related to stock certificates, including changes of address,
please contact:
American Stock Transfer & Trust Company, LLC
Shareholder Services Department
6201 15th Avenue
Brooklyn, NY 11219
Telephone: (877) 864-5055
Help@ASTFinancial com
ASTFinancial com
Jerry W. Nix †
Lead Director; Retired Vice Chairman, Executive Vice President
and Chief Financial Officer, Genuine Parts Company
Annual Meeting
The Annual Meeting of Marine Products Corporation will be held at 12:00 p m ,
April 27, 2021, at 2170 Piedmont Road, NE, Atlanta, GA 30324
Caution Concerning Forward-Looking Statements
The Annual Report contains statements that constitute “forward-
looking statements” under the Private Securities Litigation Reform Act
of 1995, including all statements that look forward in time or express
management’s beliefs, expectations or hopes In particular, such
statements include, without limitation: our belief that our effective
tax rate during 2021 will be approximately 19 0%; our optimistic near
term outlook; and our outlook toward an expanding horizon The
actual results of the Company could differ materially from those
indicated by the forward-looking statements because of various risks
and uncertainties, including, without limitation, those identified under
the title “Risk Factors” in the Company’s Annual Report on Form 10-K
included as part of this Annual Report All of the foregoing risks and
uncertainties are beyond the ability of the Company to control, and in
many cases the Company cannot predict the risks and uncertainties
that could cause its actual results to differ materially from those
indicated in the forward-looking statements The Company does not
undertake to update these forward looking statements
Pamela R. Rollins
Vice President, LOR Investment Company, LLC
Timothy C. Rollins
Vice President, LOR, Inc
§ Member of the Executive Committee
* Member of the Audit Committee
° Chairman of the Audit Committee
† Chairman of the Compensation Committee,
Diversity Committee, and Nominating and
Governance Committee
Member of the Compensation Committee,
Diversity Committee, and Nominating and
Governance Committee
In Memoriam
R. Randall Rollins
November 5, 1931 – August 17, 2020
At the time of his passing, Mr. Rollins served as:
Chairman of the Board of Directors, Marine Products Corp
Chairman of the Board of Directors, RPC, Inc
Chairman of the Board of Directors, Rollins, Inc
MarineProductsCorp.com
2801 Buford Highway NE, Suite 300 Atlanta, Georgia 30329 (404) 321-7910
©2021 Marine Products Corporation
All rights reserved The names of other companies and products mentioned herein may be the trademarks of their respective owners