Form 10-Q MARINE PRODUCTS CORP By: June 30

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production levels and supply chain challenges of critical components needed to complete boats in a timely manner, partially offset by increased accounts payable consistent with higher production levels and timing of payments.

Cash flows used in investing activities for the six months ended June 30, 2022 of $0.8 million representing capital expenditures were higher compared to the same period in 2021.

Cash flows used in financing activities for the six months ended June 30, 2022 increased by $0.4 million compared to the six months ended June 30, 2021, mainly due to the increase in dividends per share paid to common shareholders, partially offset by a reduction in share repurchases related to the acquisition of restricted stock.

Financial situation and liquidity

The Company believes that the liquidity provided by existing cash, cash equivalents and marketable securities, its strong overall capitalization, cash generated from operations and the Company’s revolving credit facility will provide sufficient capital to meet the needs of the Company for at least the next twelve months. The Company’s decisions regarding 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 generated from operations.

Cash needs

The Company currently expects capital expenditures in 2022 to be approximately $3.6 million, of which $0.8 million has been spent through June 30, 2022.

The Company participates in a multi-employer retirement income plan sponsored by RPC, Inc. (“RPC”). The Company did not contribute to this plan during the six months ended June 30, 2022. During the fourth quarter of 2021, the Company initiated actions to terminate the defined benefit pension plan, which are expected to be completed at the beginning of of 2023. The Company expects that no additional cash contribution to the plan will be required. From the date of completion of the plan, the Company will recognize a non-cash pre-tax settlement charge representing the unamortized net loss of the plan, which amounted to approximately $3.2 million as of June 30, 2022. The amount is subject to change based on the actual return on plan assets and periodic actuarial updates of the plan’s net losses. For the year ending December 31, 2022, the Company uses an expected return on plan assets of zero percent based on current short-term rates and the investment horizon following the planned termination of the regime.

The Company has repurchased a total of 6,679,572 shares on the open market under the Company’s share buyback program, which began in 2002. As of June 30, 2022, 1,570,428 shares remain available for repurchase in under the current authorization. No shares were repurchased under this program during the six months ended June 30, 2022.

On July 26, 2022, the Board of Directors declared a regular quarterly cash dividend of $0.12 per share payable on September 9, 2022 to common shareholders of record at the close of business on August 10, 2022. The Company expects to continue to pay cash dividends to common stockholders, subject to industry conditions and Marine Products‘ earnings, financial condition and other relevant factors.

OFF-BALANCE SHEET ARRANGEMENTS

To assist dealers in obtaining financing for the purchase of its stock boats, the Company has entered into agreements with various third-party floor plan lenders under which the Company guarantees various amounts of debt for eligible dealers on the boats in stock. The Company’s obligation under these guarantees is effective upon default under the financing agreement between the dealer and the third-party lender. The agreements provide for the return of all repossessed boats to the company in new and unused condition as defined, in exchange for the company assuming specified percentages of the debt on those boats, up to certain dollar limits. contractually determined which vary according to the lender. . The Company did not make any material redemptions of dealer inventory during the six months ended June 30, 2022 and June 30, 2021.

Management continues to monitor default risk and resulting redemption obligations based in part on information provided by third-party floor plan lenders and will adjust collateral liabilities at the end of each reporting period accordingly. based on information reasonably available at the time.

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