Good morning, and thank you for joining us for Marine Products Corporation's First Quarter 2022 Financial Earnings Conference Call. Today's call will be hosted by Rick Hubbell, President and CEO, and Ben Palmer, Chief Financial Officer. Also to present is Jim Landers, Vice President of Corporate Services. At this time, all participants are in a listen-only mode. Following the presentation, we will be conducting question and answer session. Instructions will be provided at that time for you to queue up for questions. I would now like to advise everyone that this conference call is being recorded. Jim will get us started by reading the forward-looking disclaimer.
Thank you, Operator, and good morning. Before we get started today, I'd like to remind everyone that some of the statements that we will make on this call may be forward-looking in nature and reflect a number of known and unknown risks. I'd like to refer you to our press release issued today, our 2021 10-K, and our other SEC filings that outline these risks. All of these are available on our website at marineproductscorp.com. Also, in today's earnings release and conference call, we refer to EBITDA, which is a non-GAAP measure of operating performance. We use this non-GAAP measure because it allows us to compare performance consistently over various periods without regard to changes in our capital structure. Our press release issued today at the website contain a reconciliation of this non-GAAP financial measure to net income, which is the nearest GAAP financial measure.
Please review this disclosure if you're interested in seeing how it's calculated. If you've not received our press release, please visit our website again at marineproductscorp.com for a copy. We'll make a few comments about the quarter, and then we'll be available for your questions. Now I will turn the call over to our President and CEO, Rick Hubbell.
Yeah, Jim, thank you. We issued our earnings press release for the first quarter of 2022 this morning. Ben Palmer, our CFO, will discuss the financial results in more detail in a moment. Now for a few highlights in the quarter. Marine Products Corporation continues to be impacted by significant supply chain challenges. As a result, we shipped fewer units during the first quarter of 2022 than in the prior year as we continue to experience the effect of ongoing supply chain challenges related to delays in receiving key components required to efficiently complete final assembly of many boats. These delays, coupled with driver shortages, are impacting our ability to deliver boats on a normal schedule. Our unit sales decline was substantially offset by increases in the average selling prices.
Average selling prices increased during the quarter because of price increases necessitated by raw materials and labor cost increases, as well as a favorable model mix, which included larger boats. Backlog of actual orders plus order indications from dealers remain at historic highs, and dealer inventories remain low. The updated market share statistics for the 12 months ended December 31, 2021 indicate that the combination of Robalo and Chaparral Outboards in the 18 ft to 36 ft category had a market share of 6.3%, with Robalo brand holding the third highest market share in this category.
Chaparral held a market share of 20.2% in the 21 ft to 34 ft sterndrive category, which was the second highest in this category, had an increase in market share compared to the last reporting period. We also announced this morning that our board of directors declared a regular quarterly dividend of $0.12 per share. With that overview, I will now turn it over to our CFO, Ben Palmer.
Thank you, Rick. Net sales for the first quarter of 2022 were $76.6 million, a 2.2% decrease compared to the first quarter of last year. Average selling prices increased by 23.3% due to price increases we were forced to implement due to increases in cost for materials and components and labor, as well as the continued migration in customer preferences to larger boats. As Rick mentioned, unit sales declined by 20.9% as supply chain problems impacted scheduling of production and boat deliveries, resulting in a higher than normal level of inventory at our facilities. Every company employee is working hard to build and deliver as many quality boats as possible during these challenging times. Gross profit in the first quarter was $18.4 million, a 0.4% decrease compared to the first quarter of 2021.
Gross margins in current quarter increased to 24% compared to 23.6% in the first quarter of 2021. Gross margin as a percentage of net sales improved due to a more profitable model mix comprised of larger boats despite the cost increases that we faced. Selling, general, and administrative expenses were $9.2 million in the first quarter of 2022, an increase of 9.5% compared to $8.4 million in the first quarter of last year. These expenses increased because we participated in more boat shows in 2022 than last year and because of higher employment-related costs. EBITDA in the first quarter of 2022 was $9.6 million, a decrease of $985 thousand or 8.1% compared to the first quarter of 2021.
For the quarter ended March 31, 2022, we reported net income of $7.1 million, a 12.8% decrease compared to $8.1 million in the first quarter of 2021. Diluted earnings per share were $0.21 compared to 0.24 diluted earnings per share in the first quarter of last year. Our effective tax rate during the first quarter was 22.7% compared to 19.3% last year. We project a full year 2022 effective tax rate of approximately 21%. Our international sales accounted for 5.4% of the total, representing a 5.9% increase compared to the first quarter of last year. Sales to our Canadian dealers decreased but improved in other international markets.
Our cash balance at the end of the first quarter was $13.6 million, a 500,000 decrease compared to the cash balance at the end of the fourth quarter. The quarter end cash balance is significantly lower than the $35 million balance at the end of the first quarter of 2021. The year-over-year and sequential declines in our cash are a direct result of higher inventories caused by delayed deliveries from suppliers of critical components and the resulting delayed shipments of substantially completed boats. Scheduling of production and boat deliveries will continue to be a focal point for us. Dealer inventories are slightly higher than at the end of the fourth quarter of 2021, but significantly lower than at the end of the first quarter of 2021. Dealer inventories remain at historic lows. Demand and orders remain at historic highs.
With that, I'll turn it back over to Rick for a few closing remarks.
Thanks, Ben. Marine Products Corporation continues to focus on recreational boating's resurgence over the past two years as a popular American leisure activity. This revival motivates our new model designs, our continued emphasis on quality, and our enduring efforts to produce and ship as many boats as possible under uniquely challenging circumstances. Our optimism is supported by continued strong demand indications. Although there were a limited number of winter boat shows because of the ongoing COVID restrictions, the shows that did take place were well attended and generated strong order volumes. As we enter the retail selling season, our dealer inventories remain low and backlog remains high, and our dealers continue to report strong demand from their customers.
Judging by the recently published retail boat sales data, it appears that most of our industry is working through the same supply chain problems and production bottlenecks that have prevented Marine Products from completely satisfying historically high demand. We are tackling these problems and appreciate the dedication of our employees, assistance from our suppliers, and the continued support of our dealers and retail customers. I'd like to thank you for joining us this morning, and we'd be happy to take any questions that you may have.
At this time, if you would like to ask a question, please press star one on your telephone keypad. Again, to ask a question, simply press star one on your telephone keypad. Your first question comes from the line of Fred Wightman from Wolfe Research. Your line's open. Please go ahead.
Hey, guys. Good morning. Could you just give a little bit more detail on where exactly you're seeing the supply chain bottlenecks, if there's a handful of components where that is the most acute, or is it just sort of rotate?
Good morning. This is Ben. It's a variety of different items. Unfortunately, it's not consistent. You know, that greatly increases the complexity of trying to deal with the issue. There are some particular components that are unique to us that are contributing to part of the problem. Some of our innovative features, you know, like our power step, again, because it's maybe not as widely available or used on other models. Also some of our maneuverability kits on some of the larger outboard engines has been a particular problem as well. Unfortunately, these particular items are not easily put into the boat other than at the factory.
Unfortunately, we're just having to wait for these things to come in and catch up so that we can complete that construction. Fortunately, in terms of materials and things like that could impact our ability to initiate new construction of boats has not yet impacted us in any significant way. It's some of the other components, as I've kind of described here, that we're able to put on after the boats have worked their way through the plant. It does take a lot of time, and it is frustrating for everybody that's involved in the process to deal with these kind of issues.
Makes sense. You guys had also called out the impact from some driver shortages? Just as far as shipping some of the finished products. Could you just give a little bit of color? Is that something that you've been dealing with and it's just more acute? Any signs of that improving in the second quarter? What are you sort of seeing there?
Fred, this is Jim. Yeah. So part of the issue, and you see the inventory on our balance sheet, is that we do have some boats which are finished and are ready to go, and are waiting on transportation. We're allowing or requesting our dealers to come get boats if they can. And that is getting a little bit better. Those boats don't stay there forever. Certainly, we would like to ship boats as soon as they're ready. At any given time when you close the books, you'll see, finished goods, completely finished goods on our balance sheet that are awaiting transport. There is some indication that that's getting better, but we can't say exactly when or to what degree.
Fred, this is Ben. We have, you know, we do have company drivers. We have historically outsourced some of our transportation. To try to address this issue, we are seeking other sources of drivers and ability to ship. The driver shortage is a, you know, U.S. economic problem. We see it in many industries, and unfortunately, it's impacting us as well. Hopefully, it's only a timing difference. Hopefully, things will free up a bit. We're hopeful. We're seeing some signs that come from the supply chain issues, both receiving parts from vendors, but also the driver shortage as well, it's getting a little bit better. Hopefully that will ease as the year progresses and will, in the not too distant future, maybe get it back toward normalized levels again.
Great. One final one for me. Just, you know, you make the comment that price increases and higher interest rates aren't really expected to impact demand or backlogs. Could you just sort of give a lay of the land for how you think the marine customer looks or feels, today?
Fred, it's Jim again. There may be the marginal customer who decides not to buy a boat if interest rates do increase. If you look at the average loan term interest rates, things like that, you know, the 100 basis point increase in interest rates could increase the monthly cost of boat ownership by a little less than $100. At some point, some of the marginal buyer's gonna say, "$450 a month was fine, but at $550, I may not buy one.
Remember, our backlogs are so high and dealer inventories are so low that we still believe that there are enough consumers who are waiting to buy a boat that that it's not gonna impact our financial results, at least at this time or for the foreseeable future. Okay. I agree with that. I agree with that, Tom.
Perfect. Thanks, guys.
Thanks, Fred.
Thank you. Your next question comes from the line of Craig Kennison from Baird. Your line is open. Please go ahead.
Hey, good morning. Thanks for taking my question.
Sure.
Yeah. Good to talk to you. Sounds like demand is well ahead of supply. I guess I'm wondering what the process is for you and your dealers to make sure you capture that demand, even if you can't deliver on it today. How willing are consumers to be patient versus just move to another boat or even a used boat to take advantage of it this season?
Craig, this is Ben. I think that's a good question. Kind of relates back or my answer would relate back to what Jim said, which is, you know, we feel that demand at this point is so strong, we think that, you know, the indications are that everyone is experiencing similar type of issues. You know, we are not at the plant, we are not accepting every order that's out there. Certainly, our dealers are working hard, taking deposits, taking indications of orders. We are reluctant to take, you know, actual orders from.
That any and every order that we could actually procure and have in hand at the plant because of the planning, you know, that's required to get the parts and so forth and schedule production to be able to manufacture the boats. We still feel there's really no indication of any demand going away. We've not heard of any of that. I'm sure there's some instances, but we feel that our, you know, reputation for quality and our styling and I think frankly our price point. You know, there's many boats out there that are in high demand that are even more expensive than our boats. We think we're well-positioned. Hopefully the retail customer will remain, you know, patient.
Hopefully, the supply chain issues are gonna free up here soon so that we can begin to better meet that demand. And that obviously, again, as I've indicated in my remarks, will make everybody happy, right? Make the retail customer happier, the dealer happier, and certainly all of our company employees, 'cause it's really a frustrating situation to deal with.
Thanks. As a follow-up, do you have much visibility into the profile of your buyer base? Are they new boaters? Are they repeat buyers? Are you seeing any behavior change among those groups relative to what might have happened, you know, during the pandemic?
Craig, this is Jim. In general, since the pandemic started, we're seeing that a greater percentage of buyers are first-time buyers, defined as people who have never owned a boat before. I don't have a recent update for you, but we know that it's north of 30%, probably less than 40%. More than 30% of the people who are buying new boats today have never owned a boat before. The demographic profile at this time does not seem to have changed in terms of you know, age, income, professional status, that sort of thing. We have long thought that as baby boomers retire and that wave gets bigger, there will be more retiring baby boomers buying boats. The numbers don't show that right this moment, but they may in the future.
Then maybe a follow-up on the repeat buyer. I don't know if you have this data, but you know, my thesis might be that repeat customer looking at a really tight boat market may say, "Look, I'm just gonna sit this out," and ultimately just defer a purchase. Is there any evidence of any sort of deferred purchases where some of your existing customers are delaying a buy that, you know, would give you confidence that even as you look out a couple of years, there might be some pent-up repeat demand?
I think that's a great point, Craig, and I actually overheard a conversation at the Miami Boat Show of one of our customers who was sort of debating that out loud with, you know, the management team was standing around, and this person happened to be there, and he was debating, you know, "If I sell my boat, you know, I'm not sure what I would buy. I'm pleased with it." And he was a Chaparral owner. He said, "I'm pleased with the boat I have. You know, why sell it? I'll just wait. You know, I want this particular model. I think it's gonna be perfect for me. And I understand. I know, you know, in the car industry also, you know, there's a lot of delays in being able to take delivery.
You know, I understand the issue. You know, this particular person, again, they were gonna wait it out. I think you make a great point that if things sort of free up, I think there may be some existing, whether they're Chaparral or other, existing boat owners that have a boat, they may be able to flip it in the used market and be able to get a new boat. I think that very likely could be a scenario where there's, you know, undetected demand that's out there beyond what we know right now from direct indications from consumers. I think you make a great point. I think that's another opportunity for us.
That's great. Well, thank you so much.
Sure. Yeah. Thanks, Craig.
Again, to ask a question, simply press star one on your telephone keypad. To ask a question, please press star one on your telephone keypad. There are no further questions at this time. I would now like to hand back the call over to Jim Landers, Vice President of Corporate Services, for any closing remarks.
Thank you, operator. Fred and Craig, thanks for your questions, and thanks to everybody else who called in and listened. We appreciate the interest. Hope everybody has a good day, and we will talk to you soon.
This concludes today's conference call. Thank you for your participation. You may now disconnect.