WASHINGTON, N.C. – Boat builder Fountain Powerboat Industries, Inc. (AMEX: FPB) saw its sales and profits increase for the quarter and six months ended Dec. 31, it reported in a recent statement.
The manufacturer of high performance sport boats, fish boats and express cruisers attributed the increase in sales in part to a jump in demand for its top-of-the-line models, while the profit growth was driven by a streamlining of its manufacturing operation.
Net sales for the second quarter of fiscal 2006 were $18,210,092, an increase of approximately 5.5 percent, compared to net sales of $17,256,520 for the comparable quarter of fiscal 2005.
Gross profit increased to $2,897,702, with a gross profit margin of approximately 16 percent, versus a gross profit of $2,375,903 and a gross profit margin of 13.8 percent for the second quarter of fiscal 2005. Operating profit increased to approximately $537,229, a 33-percent increase, compared to $404,191 for the second quarter of fiscal 2005.
Net income was $319, 296, or net earnings per share of $0.07 on a basic and diluted basis, versus net income of $137,405, or net earnings per share of $0.03 on a basic and diluted basis, for the second quarter of fiscal 2005.
“The increase in gross profit over the comparable quarter is attributable to increased productivity and improved efficiencies from streamlined manufacturing operations,” commented Fountain Powerboats CFO Irving Smith. “Gross profit for the second quarter of fiscal 2006 was partially offset by cross-training our manufacturing team to accommodate a shift in product mix during the quarter. However, by December 2005 the improvements realized from our cross-training quickly brought gross margins back to approximately 19.5 percent, and ensures our agility to meet the just-in-time production schedule required by our dealers on all boat models.”
Six-month results also up
Net sales for the first six months of fiscal 2006 ended Dec. 31 increased approximately 10 percent to $37,367,828, compared to net sales of $33,998,827 for the first six months of fiscal 2005.
Gross profit increased to $6,573,816, with a gross profit margin of approximately 17.5 percent, versus a gross profit of $4,369,051, with a gross profit margin of 12.8 percent for the first six months of fiscal 2005. Operating income was $1,875,653, compared to $304,385 for the first six months of fiscal 2005.
Net income was $1,016,354, or earnings per share of $0.21 on a basic and diluted basis, compared to a net loss of $(235,932), or a net loss per share of $(0.05) on a basic and diluted basis, for the first six months of fiscal 2005.
“We would like point out to our shareholders and the financial community that operating profit for the first six months of fiscal 2006 exceeded operating profit for our entire fiscal 2005,” said Chief Executive Officer and President Reginald M. Fountain, Jr. “We anticipated that with our top-line growth and the benefits we’re already seeing from tightened operational controls and improved manufacturing processes, our operating profit in the last half of the year should be as good as the first half of the year.”
“Industry experts are projecting sales in recreational boating to increase 4.8 percent annually through 2009, with a shift to larger, more sophisticated boats,” continued Fountain. “Feedback from our dealer network is validating this trend as there is currently an increased demand for our top-of-the-line boats both here and abroad. All indicators point to another exceptional year for Fountain Powerboats.”
The company reports that its balance sheet offered up $3.1 million in cash and cash equivalents and a current ratio of 1.28:1. Fountain also has $7 million in key man life insurance policies on CEO and President Reginald M. Fountain, Jr., with a cash surrender value of $2.2 million. The funds are immediately available for withdrawal by the company as a loan, which provides an additional $2.2 million in available cash, according to the boat builder.
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