Good morning, and thank you for joining us for Marine Products Corporation's Third Quarter 2020 for financial earnings conference call. Today's call will be hosted by Ben Palmer, President and CEO, and Michael Schmit, Chief Financial Officer. At this time, all participants are in listen only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for you to queue up for questions. I would like to advise everyone that this conference call is being recorded. I will now turn the call over to Mr. 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 the number of known and unknown risks. Please refer to our press release issued today along with our 2023 10K and other public filings that 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. Today's press release and our website contains reconciliations of these non-GAAP measures to the most directly comparable GAAP measures. I'll now turn the call over to our President and CEO, Ben Palmer.
Thanks, Mich, and thank you all for joining our call. Q1 results remain negative compared to prior year as we have signaled that would in a very difficult demand environment. So we and our peers in the marine industry to continue to navigate a tough period, managing costs and production as best we can until consumer demand picks up. There have been some minor positive developments regarding channel inventory levels and interest rates. However, dealers continue to exhibit caution with respect to new orders, we have produced cost as appropriate through manufacturing headcount reductions and scaled back our production to allow showroom inventories to shrink. We are taking decisive and prudent measures in the near term without sacrificing longer-term opportunities for jeopardizing our operations. With regard to the dealer inventory levels of our products in the fields come down and we are comfortable with cereal levels well without this all details quarterly base here to the we will please perks in the field or trending lower. comparative second quarter of this year, sales units were down 13% versus prior year were down 4% this is we did last quarter. We have extended our promotional programs as we believe these are critical to supporting our dealers and incentivizing consumers. We have also enhanced our third party floorplan financing program to include added features and more promotional capabilities. We were also encouraged to see the first interest rate cut in several years come through in September with a 50 basis point cut by the fact that we reiterate that while we don't believe the single Fed cut will have a dramatic impact on demand, we consider a first step toward reducing dealer carrying costs and lowering consumers prospect and hopefully downward momentum and financing costs were lower buyers back into the market. Our August dealer conference in South Florida was an exciting event as we celebrated Chaparral's 60th anniversary and connected with many of our dealers. We unveiled new models, colors, features and options across both Chaparral revolver lineups and the dealer was response was very positive. The approach each model years new opportunity to refine our offerings and give customers products that continuously raise the high bar for quality and design. They have come to expect from our brands. Border payout patterns clearly remain a headwind, but we assure you there's no shortage of enthusiasm within our dealer network. Now Mich will provide an overview of the financial results.
Michael Schmit
Thanks, Ben. For the third quarter of 2024. Compared to the third quarter of 2023. Sales were down 36% to $49.9million, driven by a 40% decrease from the number of boats sold, price and mix netted to a positive 4%. Gross profit decreased to $9.2 million, with the gross margin of 18.4%, down 630 basis points. First last year's strong results. On a sequential basis, gross margin declined only slightly from 18.9% in the second quarter. Significant efforts have been made to control labor expenses. However, we are also being impacted by under absorption of fixed costs. Sg&a expenses were $5.6 million in the quarter, down 36% for $3.1 million compared to last year's third quarter. These expenses decreased primarily due to costs that vary with sales and profitability such as incentive compensation, sales commissions and warranty expenses. SG&A as a percentage of sales was 11.3%, consistent with last year's third quarter. Diluted EPS was $0.1 in the third quarter, down from $0.3 last year when we had a $0.04 per share gain from a real estate transactions related to a warehouse sale. EBITA was $4.3 million, down from $13 million last year, which included the $1.8 million real estate transaction gave year to date, we have generated operating cash flow of $24.9 million and free cash flow of 21.3 million. Capex was $3.6 million and picked up in the third quarter with a solar panel installation project at our manufacturing facility. We still expect CapEx to be approximately $5 million for the full year. I'll now turn it back over to Ben for a few closing remarks.
Ben M Palmer
Thank you, Mich. We know our employees, dealers and investors are feeling the consequences of weak end market demand, but we remain steadfast in our commitment to manage prudently through this difficult patch. We've returned a significant amount of cash to our investors this year through both our regular $0.14 per share quarterly dividends and the $0.7 special dividend we paid out in the second quarter, and we still ended the third quarter with over $53 million in cash on the balance sheet, testament to our strong cash generation. Despite the lackluster environment, we have ample liquidity to see us through this current down cycle, make investments in the business and execute on potential acquisition opportunities. However, as we noted last quarter for over time, if we do not deploy substantial capital, we'll look at further actions to return cash to rush through our investors. Lastly, we're also fortunate that the highly disruptive hurricanes that pass through the southern states in recent weeks inflicted minimal damage at our national toward their production facility. So we know, however, we know, however, that not everyone in the community fared as well, and we have offered many forms of support to our community and our employees facing our chips. We're also mindful of all our dealers driven towards severe disruptions in their local markets. We are working diligently to support them. So from what we've been told, they are faring relatively well with respect storm recovery. That said, we have some minor damage, but we have seen some minor ordering delays in the early weeks of Q4 status when Hurricane Milton calls the most disruption. But before we turn the call over for questions, I'd like to thank our employees for their contributions every day. And our vendors and dealers who continue to partner with us for mutual success. With that, operator, please open the line for questions.
Operator
Thank you. If you have dialed in and I'd like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again, if you are called upon to ask your question and they're listening via loudspeaker on your device, please pickup your handset and ensure that your phone is not. I mean when asking your question. And your next question comes from the line of Chris and Brian with DA Davidson. Please go ahead.
Yeah. Thanks, guys. It's kind of curious how the cadence of retail play out throughout the quarter, right? So we got those September retail numbers yesterday. It just seems like there's some categories that kind of improved a decent bit. So you got to say anything like this in October. And do you think this kind of marks the bottom? Or is that a bit too early to tell?
Ben M Palmer
Hey, grip, and this is Ben a appreciates your question on how I see nothing in particular, what we look to the home provides for. So the biggest ray of light at this point is more broadly the team's done a fantastic job getting our production levels down such that we can begin to see a decline in the field inventory. So that kind of especially looking at that impressive 13% decline in field inventory in the third quarter, despite the fact that we were still producing. But obviously, more more boats were being solely to retail than we were shipping to the dealers. So that's that's a great time, especially given the Q3 typically is seasonally in a relatively low weaker, relatively weaker quarter. So what we were very pleased to see that. But if it's really hard to point, if any, any particular model or size or whatever, that's driving that, but but it's good to see some of those positive overall industry results.
Fair enough. You mentioned that your dealer levels are at a reasonable level. Do you think of kind of like a broader trend or something that you guys are seeing specifically? And then what those reasonable levels, what are your dealers that appetite to take on model year 25 units at this time?
Ben M Palmer
So again, if we if we could have our way, we would have lover build inventory to be lower, but we are comfortable where it is at this point, given what we've been through in the last 12 plus months, we think we've done a team has done a good job navigating through this period of time for dealers will stepping of and helping of Yes, and obviously, we we want to have as much production as we can have, but we tried to reach that appropriate equilibrium where we have some level of production. So that requires them to be committed to taking 25 models and their stair stepping up. They know that, you know, to hopefully meet whatever demand. They're going to have a specially next spring that they need to begin to take some boats now. So they're doing a great job partner partnering or partnering with for us to get some reasonable order flow at this point in time. And we'll just have to react to what you know, what happens over the next few quarters. Typically, obviously, Q4 is seasonally weak period, so not expecting a strong retail environment, but everybody's looking forward to the winter boat shows and next spring. That's what we're all trying to plan for and for a project project out or and looks at the team's doing a great job navigating through that, working with our dealers who are who were up supporting us in that regard. And we really appreciate that.
Got it. And then on the promotional front, we've seen some OEMs today some pretty drastic rebates on model year 24 units at this point. Any sort of pressure have you guys and maybe just kind of talk about your philosophy for promotions and its retail environment and how that kind of play out for the rest of the year.
Ben M Palmer
Well, I think at this point, demand is a continues to be weak. Our philosophy is I would say our promotional program at this point is a little closer to what it traditionally is. We're not getting super aggressive because we think with our inventory levels that again are reasonable compared to where we are at this point in time. We're not so certain that offering really super high incentives are going to do anything other than just shake those two people that are looking for a really, really low pricing. So we're trying to look at it longer term. I'm trying to manage it over over the cycle over the season. So we are not responding with again, significantly elevated programs. We'd rather you have really more normal. I mean, we're certainly stepped up some of Dysport dealers, but we're we don't believe having with the position of our inventory and where we are and what our models and demand we don't, we don't feel that we need to have a super aggressive programs in place at this point in time.
Fair enough. And then we've seen one of your competitors announced that they're exiting the marine industry, not necessarily expecting you guys comment on that specifically, but maybe just kind of speak to the current M&A market within Marine more broadly.
Michael Schmit
Sure. this is Mich. Yes, we saw that and we honestly haven't had a lot of time to look at it in detail since we've been working on a quarter end. But as we've stated, we have been looking for opportunities to grow our business possibly through M&A and on. We are starting to see some deals out there. So we think that's a positive sign that there will be opportunities for companies like us that that you have a strong balance sheet and one to grow. And there's nothing kind of specific to call out on that right now, other than we are encouraged that we believe opportunities will be be out there. So on, yes, we'll see how it shakes out. And hopefully, we'll see some something that will be a great long-term fit for us.
Got it. And just last one for me. So you know, you kind of mentioned the first rate cut being good for floorplan interest, but not necessarily a needle mover. I guess I'm curious if you could think there's a certain point where the cuts actually do start to make an impact on retail demand. And then maybe just kind of what are you guys forecasting internally in terms of rate cut by the kind of playing out for 2025?
Ben M Palmer
Well driven. It's a good question, and I wish we had that kind of prognostication again, where we're not necessarily a trend to set our production levels based on a rate cuts is really more of a feel sort of thing, getting feedback from our dealers and and from vendors and our salesmen who were dispersed across the country in this market to get a feel for where we're our dealer partners are and how they're feeling and what we're feeling. We're really more we're going to react probably to whatever happens more than we're trying to forecast it. We're come notable with the production levels we are at right now. We wish they were higher, but we've adjusted to a level that we can remain steady until demand does pick up, and we feel this will be able to react to that fairly quickly. So so we're more and more monitoring that monitoring the overall demand can picture. Certainly interest rates can factor into that, but may not always. So we think certainly any additional cuts would certainly be positive and would help many, many different sectors of the economy or have the opportunity to sell many different parts of the economy. So so we'll just continue to watch it. And I do think some additional cuts are probably necessary to achieve some improvement. But but we'll just wait and see reasonable question, but we don't we don't try to predict cuts and then set set our production rates based on that, but that we serve interested in glad that there has been that initial. Scott, that occurred.
Yes, I'll just add, we just look at it is seeing heading in the right direction, right? It's something we're always looking for for a long time. And we're also I think as we mentioned in our press release today, been working with our vendors and our dealers have making enhancements to our floor plan financing, which will help you don't get rates down for both our so far, dealers and hopefully the ultimately the consumer. So all those things I think are headed in the right direction.
That coupled with our lower inventory in the field seem to be positive signs. So we're hopeful as rates continue to come down, that things will keep moving to the right direction.
Got it all from me, but we'll work with us. They are going to take scrip.
Operator
again if you would like to ask a question, press star then the number one on your telephone keypad. There are no further questions at this time. I will now turn the conference back over to Mr. Ben Palmer for closing remarks. Fine.
Ben M Palmer
Thank you very much driven per se, to your questions and everybody who listened and we appreciate it and have a good rest of the deck.
Operator
A recording of today's call will be available online products corp.com within two hours following the completion of the call. This concludes today's call. You may now disconnect.