MARINE PRODUCTS CORP MANAGEMENT REPORT OF FINANCIAL POSITION AND RESULTS OF OPERATIONS (Form 10-Q)


Marine Products Corporation, through our wholly owned subsidiaries Chaparral and
Robalo, is a leading manufacturer of recreational fiberglass powerboats. Our
sales and profits are generated by selling the products that we manufacture to a
network of independent dealers who in turn sell the products to retail
customers. These dealers are located throughout the continental United States
and in several international markets. Many of these dealers finance their
inventory through third-party floorplan lenders, who pay Marine Products
generally within seven to ten days after delivery of the products to the
dealers.

The discussion on business and financial strategies of the Company set forth
under the heading "Overview" in the Company's annual report on Form 10-K for the
fiscal year ended December 31, 2021 is incorporated herein by reference. There
have been no significant changes in the strategies since year-end.

In executing these strategies and attempting to optimize our financial returns,
management closely monitors dealer orders and inventories, the production mix of
various models, and indications of near term demand such as consumer confidence,
inflation concerns, interest rates, dealer orders placed at our annual dealer
conferences, and retail attendance and orders at annual winter boat show
exhibitions. We also consider trends related to certain key financial and other
data, including our historical and forecasted financial results, market share,
unit sales of our products, average selling price per boat, and gross profit
margins, among others, as indicators of the success of our strategies. Our
financial results are affected by consumer confidence - because pleasure boating
is a discretionary expenditure, interest rates - because many retail customers
finance the purchase of their boats, and other socioeconomic and environmental
factors such as availability of leisure time, consumer preferences, demographics
and the weather.

Our net sales of $95.8 million were 42.5 percent higher during the second
quarter of 2022 compared to the second quarter of 2021 primarily due to a 15.0
percent increase in number of units sold and an increase in the average selling
price per boat. Unit sales volumes were higher during the second quarter of 2022
in comparison to the same period of the prior year due to higher production and
increased shipments of boats in the current quarter compared to the second
quarter of the prior year. The results in the second quarter of the prior year
were also negatively impacted by a brief production shutdown due to supply chain
issues. Average selling price per boat during the second quarter of 2022
increased by 22.2 percent compared to the second quarter of 2021 due to model
price increases to cover increased costs of materials and components as well as
a favorable model mix.

Cost of goods sold as a percentage of net sales improved to 76.0% of net sales for the three months ended June 30, 2022 78.3% for the comparable period of the previous year, mainly due to a favorable model mix.

Operating income increased 78.1 percent to $13.1 million during the second
quarter of 2022 from $7.4 million during the same period in the prior year
primarily due to higher net sales. Selling, general and administrative expenses
as a percentage of net sales improved slightly to 10.3 percent during the second
quarter of 2022 compared to 10.8 percent in the same period in the prior year.

OUTLOOK

The discussion of the outlook for 2022 is incorporated herein by reference from
the Company's annual report on Form 10-K for the fiscal year ended December 31,
2021.

We believe that the strong retail demand for new recreational boats which began
during the second quarter of 2020 and throughout 2021 will continue during 2022
because of the ongoing impact on consumer preferences caused by the COVID-19
pandemic. The Company believes that recreational boating's appeal to U.S.
consumers has grown because people perceive it to be a safe outdoor activity
which does not involve large groups of people. Beginning in the second quarter
of 2020, many consumers chose recreational boating when they left urban areas to
spend time in vacation homes or in smaller groups, often located near
recreational bodies of water. We believe that retail demand will continue to
exceed the recreational boating industry's production capacity for the
foreseeable future, though we note that high fuel prices and concerns regarding
a possible recession in 2022 may reduce consumer demand during the third and
fourth quarters of 2022. In addition, interest rates for consumer loans have
risen during 2022. Since many recreational boat purchases finance their
purchases, higher interest may force them to choose smaller, less expensive
boats or forgo the purchase of a boat altogether.

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In spite of strong consumer demand, retail sales in 2021 and the first two
quarters of 2022 declined compared to comparable prior year periods. The Company
believes that these declines have been caused by the industry's supply chain and
labor problems which are preventing recreational boat manufacturers from
producing sufficient units to meet retail and consumer demand. The overall cost
of boat ownership has increased over the last several years. In particular, the
cost to purchase a boat has increased because of increased materials and labor
costs and higher interest rates, which increase the financing costs of boat
ownership. In addition, the price of fuel increased during 2021 and again more
significantly in 2022, which increases the cost of operating a boat. The higher
cost of boat ownership may discourage consumers from purchasing recreational
boats. For years, Marine Products and other boat manufacturers have been
improving their customer service capabilities, marketing strategies and sales
promotions to attract more consumers to recreational boating as well as improve
consumers' boating experiences. The Company provides financial incentives to its
dealers for receiving favorable customer satisfaction surveys. In addition, the
recreational boating industry conducts a promotional program which involves
advertising and consumer targeting efforts, as well as other activities designed
to increase the potential consumer market for pleasure boats. Many
manufacturers, including Marine Products, participate in this program.
Management believes that these efforts have incrementally benefited the industry
and Marine Products. During the 2022 model year Marine Products produced a
smaller number of models than in previous years in order to increase production
efficiency. The Company intends to continue to produce a smaller number of
models during the 2023 model year, which began in July. In addition, the average
size of the models the Company is producing has increased in response to
evolving retail demand, although concern regarding higher fuel prices may
encourage consumers to purchase smaller boats, which use less fuel.

In a typical year, Marine Products and its dealers present our new models to
retail customers during the winter boat show season, which takes place during
the fourth and first calendar quarters. There were a limited number of winter
boat shows during the first quarter of 2022 due to ongoing pandemic-related
restrictions, although there were more boat shows than in 2021, and we and our
dealers attended all of the shows that were conducted. We plan to continue to
attend upcoming boats shows and believe that the number of boat shows will
increase as pandemic-related restrictions continue to ease.

Due to strong demand across the recreational sector, key materials and
components are in tight supply. Supply chain disruptions impacted our production
and sales during 2021 and the first and second quarters of 2022, and we believe
that these challenges will continue to impact our production and sales
throughout 2022. In addition, supply chain challenges have caused delays in the
receipt of key components required to efficiently complete the final assembly of
a significant percentage of our boats. Also, our delivery of completed boats has
been negatively impacted by driver shortages. These issues have caused our
working capital requirements to increase significantly. At the present time, we
do not know when these problems will be resolved, so we are concentrating on
production and delivery scheduling that will decrease our inventory levels to
the extent possible.

During the first quarter of 2022, the Russian invasion of Ukraine interrupted
supplies of wood products sourced from Russia and the Baltic States which are
utilized in Marine Products' manufacturing processes. The Company located
alternate supplies of these products and this supply interruption did not have a
material impact on Marine Products' manufacturing operations.

Our financial results during 2022 will depend on a number of factors, including
our ability to meet dealer and consumer demand in the face of ongoing supply
chain challenges which have impacted our manufacturing operations, the health of
American consumers and economic recovery from the pandemic, and potential
changes in consumer behavior as society recovers from the pandemic. Additional
factors that could impact our results include interest rates, the availability
of credit to our dealers and consumers, fuel costs, the continued acceptance of
our new products in the recreational boating market, the near-term effectiveness
of our marketing efforts, the availability and cost of labor and certain of our
raw materials and key components used in manufacturing our products and the
availability of qualified employee and contract drivers to deliver our finished
products to dealers.

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RESULTS OF OPERATIONS

Key operating and financial statistics for the three and six months ended June 30, 2022 and 2021 are as follows:

                                                   Three months ended June 30,             Six months ended June 30,
                                                     2022                2021                2022               2021
Total number of boats sold                               1,121                 975               2,037              2,133
Average gross selling price per boat (in
thousands)                                      $         74.9      $         61.3      $         74.2     $         59.1
Net sales (in thousands)                        $       95,813      $       67,259      $      172,425     $      145,634
Percentage of cost of goods sold to net
sales                                                     76.0 %              78.3 %              76.0 %             77.3 %
Gross profit margin percent                               24.0 %              21.7 %              24.0 %             22.7 %
Percentage of selling, general and
administrative expenses to net sales                      10.3 %              10.8 %              11.1 %             10.8 %
Operating income (in thousands)                 $       13,114      $        7,363      $       22,269     $       17,388
Warranty expense (in thousands)                 $        1,335      $      

911 $2,432 $1,958

THREE MONTHS ENDED JUNE 30, 2022 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2021

Net sales for the three months ended June 30, 2022 increased $28.6 million or
42.5 percent compared to the same period in 2021. The change in net sales during
the quarter compared to the prior year was due primarily to a 15.0 percent
increase in the number of units sold and an increase in the average gross
selling price per boat. Unit sales volumes were higher during the second quarter
of 2022 in comparison to the same period of the prior year due to higher
production and increased shipments of boats in the current quarter compared to
the second quarter of the prior year. The results in the second quarter of the
prior year were also negatively impacted by a brief production shutdown due to
supply chain issues.

Average selling price per boat during the second quarter of 2022 increased by
22.2 percent compared to the second quarter of 2021 due to model price increases
to cover increased costs of materials and components as well as a favorable
model mix. Domestic net sales increased 38.0 percent to $88.0 million and
international net sales increased 124.5 percent to $7.8 million compared to the
second quarter of the prior year. In the second quarter of 2022, net sales
outside of the United States accounted for 8.1 percent of net sales compared to
5.1 percent of net sales in the second quarter of 2021. International net sales
remain low due in part to continued tariffs imposed on boat imports into Mexico
and the European Union.

Cost of goods sold for the three months ended June 30, 2022 was $72.8 million
compared to $52.7 million for the comparable period in 2021, an increase of
$20.2 million or 38.3 percent. Cost of goods sold as a percentage of net sales
improved to 76.0 percent of net sales for the second quarter of 2022 from 78.3
percent for the comparable period in 2021, due to a favorable model mix.

Selling, general and administrative expenses for the three months ended June 30,
2022 were $9.9 million compared to $7.2 million for the comparable period in
2021, an increase of $2.6 million or 36.4 percent. This increase was primarily
due to costs that increase with higher sales and profitability, such as
incentive compensation, sales commissions and warranty expenses. Selling,
general and administrative expenses as a percentage of net sales decreased
slightly to 10.3 percent in the second quarter of 2022 from 10.8 percent in the
second quarter of 2021.

Operating result for the three months ended June 30, 2022 has been $13.1 million
compared to $7.4 million at the same time in 2021.

Interest (expense) income, net for the three months ended June 30, 2022
decreased to interest expense of $7 thousand from interest income of $10
thousand the prior year. Interest expense for the three months ended June 30,
2022 is recorded for the revolving credit facility, including fees on the unused
portion of the facility. Additionally, Marine Products generates interest income
primarily from investments of excess cash in money market funds.

Income tax provision for the second quarter of 2022 reflects an effective tax
rate of 24.0 percent compared to 21.4 percent for the comparable period in the
prior year. The increase in the 2022 effective tax rate is primarily due to
unfavorable permanent adjustments and detrimental discrete adjustments in the
second quarter of 2022 compared to the same period of the prior year.

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SIX MONTHS ENDED JUNE 30, 2022 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2021

Net sales for the six months ended June 30, 2022 increased $26.8 million or 18.4
percent compared to the same period in 2021. The change in net sales during the
current period compared to the prior year was due primarily to an increase in
the average gross selling price per boat, partially offset by a 4.5 percent
decrease in the number of units sold. Unit sales volumes during the six months
ended June 30, 2022 were negatively impacted by supply chain challenges during
the first six months of 2022. Average selling price per boat during the six
months ended June 30, 2022 increased by 25.5 percent compared to the same period
of 2021 due to model price increases to cover increased costs of materials and
components as well as a favorable model mix. Domestic net sales increased 16.2
percent to $160.5 million and international net sales increased 59.0 percent to
$11.9 million during the six months ended June 30, 2022 compared to the same
period of the prior year. In the six months ended June 30, 2022, net sales
outside of the United States accounted for 6.9 percent of net sales compared to
5.1 percent of net sales in the same period of the prior year. International net
sales remain low due in part to continued tariffs imposed on boat imports into
Mexico and the European Union.

Cost of goods sold for the six months ended June 30, 2022 was $131.0 million
compared to $112.6 million for the comparable period in 2021, an increase of
$18.5 million or 16.4 percent. Cost of goods sold as a percentage of net sales
improved to 76.0 percent of net sales for the six months ended June 30, 2022
from 77.3 percent for the comparable period in 2021, due to a favorable model
mix.

Selling, general and administrative expenses for the six months ended June 30,
2022 were $19.1 million compared to $15.7 million for the comparable period in
2021, an increase of $3.4 million or 21.9 percent. This increase was primarily
due to costs that increase with higher sales and profitability, such as
incentive compensation, sales commissions and warranty expenses. Selling,
general and administrative expenses as a percentage of net sales increased to
11.1 percent in the six months ended June 30, 2022 from 10.8 percent in the same
period of 2021.

Operating result for the six months ended June 30, 2022 has been $22.3 million
compared to $17.4 million at the same time in 2021.

Interest (expense) income, net for the six months ended June 30, 2022 decreased
to interest expense of $24 thousand from interest income of $18 thousand the
prior year. Interest expense for the six months ended June 30, 2022 is recorded
for the revolving credit facility, including fees on the unused portion of the
facility. Additionally, Marine Products generates interest income primarily from
investments of excess cash in money market funds.

Income tax provision for the six months ended June 30, 2022 reflects an
effective tax rate of 23.5 percent compared to 20.2 percent for the comparable
period in the prior year. The increase in the 2022 effective tax rate is
primarily due to unfavorable permanent adjustments and detrimental discrete
adjustments in the six months ended June 30, 2022 compared to the same period of
the prior year.

CASH AND CAPITAL RESOURCES

Cash flow

The Company’s cash and cash equivalents at June 30, 2022 were $21.6 million
compared to $14.1 million at December 31, 2021. The following table presents the cash flows for the applicable periods:

                                                Six months ended June 30,
(in thousands)                                    2022               2021

Net cash flow generated by operating activities $17,157 $6,103
Net cash used for investing activities

                (798)              

(541)

Net cash used for financing activities              (8,893)            

(8,526)


Cash provided by operating activities for the six months ended June 30, 2022
increased $11.1 million compared to the six months ended June 30, 2021. This
increase includes net income of $17.0 million partially offset by a net
unfavorable change in the primary components of our working capital (including
accounts receivable, inventories and accounts payable) of $6.3 million. This net
unfavorable change is due primarily to increases in accounts receivable due to
higher net sales and inventories as a result of increased

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

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

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

Financial situation and liquidity

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

Cash requirements

The Company currently expects capital expenditures in 2022 to be approximately $3.6 millionwhose $0.8 million was spent through June 30, 2022.

The Company participates in a multiple 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 in early 2023. The Company currently expects
that no additional cash contributions to the plan will be required. As of the
plan termination completion date, the Company will recognize a pre-tax, non-cash
settlement charge representing the unamortized net loss in the plan which was
approximately $3.2 million as of June 30, 2022. The final amount is subject to
change based on the actual return on plan assets and the periodic actuarial
updates of the plan net losses. For the year ending December 31, 2022, the
Company is utilizing an expected return on plan assets of zero percent based on
the current short-term rates and investment horizon as a result of the expected
plan termination.

The Company has repurchased an aggregate total of 6,679,572 shares in the open
market under the Company stock repurchase program, which began in 2002. As of
June 30, 2022, there are 1,570,428 shares that remain available for repurchase
under the current authorization. There were no shares 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 September 9, 2022 to common stockholders of
record at the close of business 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 boats for
inventory, the Company has entered into agreements with various third-party
floor plan lenders whereby the Company guarantees varying amounts of debt for
qualifying dealers on boats in inventory. The Company's obligation under these
guarantees becomes effective in the case of a default under the financing
arrangement between the dealer and the third-party lender. The agreements
provide for the return of all repossessed boats to the Company in a new and
unused condition as defined, in exchange for the Company's assumption of
specified percentages of the debt obligation on those boats, up to certain
contractually determined dollar limits which vary by lender. The Company had no
material repurchases of dealer inventory during the six months ended June 30,
2022 and June 30, 2021.

Management continues to monitor the risk of defaults and resulting repurchase
obligations based in part on information provided by the third-party floor plan
lenders and will adjust the guarantee liability at the end of each reporting
period based on information reasonably available at that time.

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The Company currently has an agreement with one of the floor plan lenders
whereby the contractual repurchase limit, subject to minimum of $8.0 million, is
based on a specified percentage of the amount of the average net receivables
financed by the floor plan lender for our dealers less repurchases during the
prior 12 month period, which was a repurchase limit of $8.0 million as of June
30, 2022. The Company has contractual repurchase agreements with additional
lenders with an aggregate maximum repurchase obligation of approximately $0.8
million with various expiration and cancellation terms of less than one year,
for an aggregate repurchase obligation with all financing institutions of
approximately $8.8 million as of June 30, 2022.

CERTAIN RELATED-PARTY TRANSACTIONS

In conjunction with its spin-off from RPC in 2001, the Company and RPC entered
into various agreements that define their relationship after the spin-off. RPC
charged the Company for its allocable share of administrative costs incurred for
services rendered on behalf of Marine Products totaling approximately $473
thousand for the six months ended June 30, 2022 and approximately $437 thousand
for the six months ended June 30, 2021.

Marine Products and RPC own 50 percent each of a limited liability company
called 255 RC, LLC that was created for the joint purchase and ownership of a
corporate aircraft. Marine Products recorded certain net operating costs
comprised of rent and an allocable share of fixed costs of $80 thousand for the
six months ended June 30, 2022 and 2021.

CRITICAL ACCOUNTING METHODS

The discussion of critical accounting policies is incorporated herein by reference from the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021. There have been no material changes in significant accounting policies since year end.

IMPACT OF RECENT ACCOUNTING STATEMENTS

See Note 2 in the accompanying Consolidated Financial Statements for a
description of recent accounting pronouncements, including the expected dates of
adoption and expected effects on results of operations and financial condition,
if known.

SEASONALITY

Marine Products' quarterly operating results are affected by weather and general
economic conditions. Quarterly operating results for the second quarter have
historically recorded the highest sales volume for the year because this
corresponds with the highest retail sales volume period. The results for any
quarter are not necessarily indicative of results to be expected in any future
period.

INFLATION
During 2021 and the first quarter of 2022, inflation in the general economy has
increased to its highest level in more than 40 years due to economic growth
following the COVID-19 pandemic, labor shortages and U.S. fiscal policy. As a
result, the market prices of the raw materials used by the Company's
manufacturing processes have increased. In addition, the Company purchases
components of which there are a limited number of suppliers, most of whom are
experiencing significant customer orders impacting their ability to provide
needed supply quantities. The costs of most of these components have increased
as demand from recreational boat manufacturers has increased and supply chains
have remained constrained. These cost increases are exacerbated by higher
transportation costs, which are included in the total cost of these components.
In response to historically high consumer demand as well as higher raw materials
and components costs, the Company has increased the prices for its products
periodically beginning in the third quarter of 2021 and continuing through the
beginning of the 2023 model year. The Company's price increases during this
period have had no discernible impact on the Company's sales due to high
consumer demand and strong order backlogs, so they have allowed Marine Products
to maintain its profit margins. However, if the Company is forced to continue
raising the prices of its products due to increased raw materials and component
costs, it may not be able to continue to pass these increased costs along to
dealers and consumers, which could impact the Company's profit margins.
Furthermore, such higher product prices may compel consumers to choose smaller
boats, boats with fewer features or delay the purchase of a boat altogether.

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New boat buyers typically finance their purchases. Higher inflation typically
results in higher interest rates that could translate into an increased cost of
boat ownership. The Company believes that the recent increase in inflation and
the Federal Reserve's current actions to raise interest rates create a risk to
retail demand for recreational boats. However, we do not believe that this risk
will impact production and sales in the near future due to other factors, such
as historically low dealer inventories, high dealer order backlog, and
indications of consumer demand that extend beyond the 2022 retail selling
season.

FORWARD-LOOKING STATEMENTS

Certain statements made in this report that are not historical facts are
"forward-looking statements" under the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements may include, without limitation: our
plans to closely monitor dealer orders and inventories, the production mix of
various models, and indications of near term demand such as consumer confidence,
interest rates, dealer orders placed at our annual dealer conferences, and
retail attendance and orders at annual winter boat show exhibitions; our plans
to consider trends related to certain key financial and other data, including
our historical and forecasted financial results, market share, unit sales of our
products, average selling price per boat, and gross profit margins, among
others, as indicators of the success of our strategies; our belief that our
financial results are affected by consumer confidence; our belief that the
strong retail demand for new recreational boats will continue during 2022
because of the ongoing impact on consumer preferences caused by the COVID-19
pandemic and will endure during the foreseeable future; our belief that
recreational boating's appeal to U.S. consumers has grown because people
perceive it to be a safe outdoor activity which does not involve large groups of
people; our belief that in spite of strong consumer demand, retail sales in 2021
declined slightly compared to retail sales in 2020 because of the industry's
supply chain and labor problems which prevented recreational boat manufacturers
from producing sufficient units in 2021 to meet retail and dealer demand; our
belief that, for years, we have been improving our customer service
capabilities, marketing strategies and sales promotions to attract more
consumers to recreational boating as well as improve consumers' boating
experiences; our belief that the recreational boating industry's promotional
program has incrementally benefited the industry and Marine Products; our plans
to continue to attend upcoming boat shows and our belief that the number of boat
shows will increase as pandemic-related restrictions continue to ease; our plans
to continue to develop and produce additional new products for subsequent model
years; our belief that supply chain disruptions will continue to impact our
production and sales throughout 2022; our plans to concentrate on production and
delivery scheduling to decrease our inventory levels to the extent possible; our
belief that our financial results during 2022 will depend on a number of
factors, including our ability to meet dealer and consumer demand in the face of
ongoing supply chain challenges which have impacted our manufacturing
operations, the health of American consumers and economic recovery from the
pandemic, and potential changes in consumer behavior as society recovers from
the pandemic; our belief that additional factors could impact our financial
results, including interest rates, the availability of credit to our dealers and
consumers, fuel costs, the continued acceptance of our new products in the
recreational boating market, the near-term effectiveness of our marketing
efforts, the availability and cost of labor and certain of our raw materials and
key components used in manufacturing our products and the availability of
qualified employee and contract drivers to deliver our finished products to
dealers; our belief that the liquidity provided by existing cash, cash
equivalents and marketable securities, our overall strong capitalization and
cash expected to be generated from operations and the Company's revolving credit
facility will provide sufficient capital to meet our requirements for at least
the next twelve months; our expectations that capital expenditures in 2022 will
be approximately $3.6 million; our expectations with respect to contributions to
the multiple employer Retirement Income Plan sponsored by RPC in 2022 and beyond
and the expected plan termination; our expectation to continue to pay cash
dividends to common stockholders; our plans to continue to monitor the risk of
defaults and resulting repurchase obligations based in part on information
provided by third-party floor plan lenders and our plans to adjust the guarantee
liability at the end of each reporting period based on information reasonably
available at that time; our belief that if we are forced to continue raising the
prices of our products due to increased raw materials and component costs, we
may not be able to continue to pass these increased costs along to the dealers
and consumers, which could impact the Company's profit margins; our belief that
higher product prices may compel consumers to choose smaller boats, boats with
fewer features or delay the purchase of a boat altogether; statements,
generally, regarding the potential fluctuations in costs of raw materials and
their effect on the costs of manufacturing our products and profit margins; our
belief that our price increase will allow us to maintain or improve our profit
margins and have no material impact on consumer demand; our belief about the
risks of inflation and increases in interest rates and our belief that these
risks will not impact production or sales in the near future due to other
factors, such as historically low dealer inventories, higher dealer order
backlog, and indications of consumer demand that extends beyond the 2022 retail
selling season; and our belief that the outcome of any litigation, arising from
time to time in the ordinary course of our business, will not have a material
effect on the financial position, results of operations or liquidity of Marine
Products.

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The words "may," "should," "will," "expect," "believe," "anticipate," "intend,"
"plan," "seek," "project," "estimate," and similar expressions used in this
document that do not relate to historical facts are intended to identify
forward-looking statements. Such statements are based on certain assumptions and
analyses made by our management in light of its experience and its perception of
historical trends, current conditions, expected future developments and other
factors it believes to be appropriate. We caution you that such statements are
only predictions and not guarantees of future performance and that actual
results, developments and business decisions may differ from those envisioned by
the forward-looking statements. Risk factors that could cause such future events
not to occur as expected include the following: the impact of the COVID-19
pandemic on the economy, our manufacturing operations and our supply chain;
economic conditions, unavailability of credit and possible decreases in the
level of consumer confidence impacting discretionary spending; business
interruptions due to adverse weather conditions, increased interest rates,
unanticipated changes in consumer demand and preferences, deterioration in the
quality of Marine Products' network of independent boat dealers or availability
of financing of their inventory; our ability to insulate financial results
against increasing commodity prices; the impact of rising gasoline prices and a
weak housing market on consumer demand for our products; competition from other
boat manufacturers and dealers; potential liabilities for personal injury or
property damage claims relating to the use of our products; our ability to
successfully identify suitable acquisition candidates or strategic partners,
obtain financing on satisfactory terms, complete acquisitions or strategic
alliances, integrate acquired operations into our existing operations, or expand
into new markets; changes in various government laws and regulations, including
environmental regulations and recent U.S. Government action concerning tariffs
on goods; the possibility of retaliatory tariffs imposed on the export of our
products to countries on which the U.S. has imposed tariffs; the higher prices
of materials, such as hydrocarbon feedstocks, copper, and steel, would increase
the costs of manufacturing our products, and could negatively affect our profit
margins; higher inflation, which typically results in higher interest rates that
could translate into an increased cost of boat ownership and prospective buyers
may choose to forego or delay boat purchases; and the existence of certain
anti-takeover provisions in our governance documents, which could make a tender
offer, change in control or takeover attempt that is opposed by Marine Products'
Board of Directors more difficult or expensive. Additional discussion of factors
that could cause actual results to differ from management's projections,
forecasts, estimates and expectations is contained in Marine Products Form 10-K
filed with the Securities and Exchange Commission for the year ended December
31, 2021.

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