boat shows in the next few weeks as an opportunity to showcase our newest products and gauge retail demand ahead of the 2024 retail selling season.
“We generated strong cash flow in 2023, and our balance sheet now boasts over $70 million in cash. We will continue to pay an attractive dividend, while evaluating potential acquisitions to increase our scale and options to return additional capital to our shareholders,” concluded Palmer.
4Q:23 Consolidated Financial Results: Year-Over-Year Comparisons (versus 4Q:22)
Net sales were $70.9 million, down 35%. The decrease in net sales was primarily due to a 34% decrease in the number of boats sold during the quarter. A 4% increase in gross average selling price was offset by higher retail incentives for a new program announced during the quarter. The incentive program is effective for our boats sold during the fourth quarter and in prior periods remaining in dealer inventory. The company believes net sales have also been impacted by a normalization of high post-COVID demand and higher interest rates. Higher rates impact financing costs for consumers, as well as inventory carrying costs for dealers. Management also believes that while boat production and sales have stabilized, year-over-year comparisons will likely remain soft in the near term.
Gross profit was $13.5 million, down 51%. Gross margin was 19.0%, down 620 basis points. Gross margin reflected lower sales volumes and associated manufacturing cost inefficiencies, coupled with the impact of higher retail incentives. The retail incentive program resulted in a pronounced impact to gross margin in the fourth quarter, given the terms of the program as described above. Production schedules and labor costs have been adjusted to align more with current demand.
Selling, general and administrative expenses were $7.7 million, down 38%, and represented 10.9% of net sales, down 60 basis points. The decrease in SG&A expenses was due to costs that vary with sales and profitability, such as incentive compensation, sales commissions and warranty expense.
Interest income of $794 thousand increased due to higher cash balances and interest rates.
Income tax provision was $1.2 million, or 18.0% of income before income taxes.
Net income and diluted EPS were $5.4 million and $0.16, respectively, down from $11.9 million and $0.35, respectively, in 4Q:22. Net income margin was 7.7%, down 320 basis points.
EBITDA (earnings before interest, taxes, depreciation and amortization) was $6.5 million, down from $15.3 million; EBITDA margin was 9.2%, down 490 basis points.
Balance Sheet, Cash Flow and Capital Allocation
Cash and cash equivalents were $72.0 million at the end of 4Q:23, with no outstanding borrowings under the Company’s $20 million revolving credit facility.
Net cash provided by operating activities and free cash flow were $56.8 million and $46.7 million, respectively, for the full year 2023.