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Participants

Michael Schmit; Chief Financial Officer, Vice President, Treasurer, Company Secretary; Marine Products Corp

Benjamin Palmer; President, Chief Executive Officer, Director; Marine Products Corp

Presentation

Operator

Good morning, and thank you for joining us for the Marine Products Corporation's first quarter 2025 earnings conference call. Today's call will be hosted by Ben Palmer, President and CEO; and Mike Schmit, Chief Financial Officer. (Operator instructions)
I would like to advise everyone that this conference call is being recorded. I will now turn the call over to Mr. Schmit.

Michael Schmit

Thank you, and good morning. Before we begin, I want to remind you that some of the statements that will be made on this call could be forward-looking in nature and reflect a number of known and unknown risks. Please refer to our press release issued today, along with our 2024 10-K and other public filings, to outline those risks, all of which can be found at www.marineproductscorp.com.
In today's earnings release and conference call, we'll be referring to several non-GAAP measures of operating performance and liquidity. We believe these non-GAAP measures allow us to compare performance consistently over various periods. Our press release issued today in our website contains reconciliations of these non-GAAP measures to the most directly comparable GAAP measures.
I will now turn the call over to our President and CEO, Ben Palmer.

Benjamin Palmer

Thanks, Mike, and thank you all for joining our call. First-quarter results were down compared to prior year. However, our trends are beginning to stabilize following significant top-line declines last year. For context, in 2024, our quarterly sales declines were in the low 30% to low 40% range following unprecedented post-COVID demand through the mid part of 2023, whereas in the first quarter of 2025, sales were down 15% year over year.
On a more positive note, sales were up 23% sequentially compared to the fourth quarter of 2024. As we said last quarter, we are seeing some signs of stabilization, and we still believe we're in a position to see year-over-year sales growth in the second half of the year. While that trend is headed in the right direction, we are still in a challenging, uncertain environment. Marine industry continues to work through elevated levels of channel inventory and unclear interest rate environment and now, uncertainty with respect to tariff impacts.
However, we are still cautiously optimistic that we have reached a trough. We are focused on managing costs and production levels as tightly as possible, maximizing cash flow, and positioning ourselves for improved demand in the future.
Channel inventory has been the most pressing challenge we and our peers have faced over the past 18 months or so. A few months ago, we disclosed our field inventory units were down 15% when comparing to the end of '23 to the end of '24, and we are pleased to report that our first-quarter channel inventories were down 18% versus the year ago quarter.
So we continue to make progress and are comfortable where we stand from a channel inventory perspective. This has been a collaborative effort with our dealers, balancing the need for smooth production schedules and fixed cost absorption with the hesitation from the dealer network and taking more inventory without visible near-term demand catalysts. Conservatism and prudence continue to be our approach.
We know tariffs are top of mind for investors, and it's too soon to project anything definitively given the ongoing nature of negotiations to this point. From input cost standpoint, key purchases would be engines, navigation systems, stainless steel, aluminum, and fiberglass. It's highly likely that tariffs on these items and other materials would result in model price increases. We have limited visibility on the outcome, but we're doing everything possible to keep an open dialogue with our government representatives, trade associations, and tender partners. Together, we are communicating the potential negative impacts of tariffs on our industry and hoping for as much relief as possible.
Regarding interest rates, while we had originally been hoping for steady rate relief, the outlook for rates remains unclear as the Fed balances economic impacts from tariffs and trade policy on inflation and the growth outlook. It's fair to say that we hope for lower rates but acknowledge that if rates come down, it could be in response to a deteriorating domestic economy, which would inherently be unfavorable.
As we pass from the spring selling season into summer, we will be in close touch with our dealers on our model year 2026 rollout. In the current environment, we will proceed carefully, being mindful of channel inventory and dealer and consumer appetite for new votes but still look forward to delivering new models and feature and design enhancements across both Chaparral and Robalo brands.
Regardless of market conditions, our brand reputation is still the lifeblood of our business. Constant innovations and new designs must continue, and fortunately, we have the financial strength to sustain those efforts.
Now, Mike will provide an overview of the financial results.