Jupiter Marine reports record revenue increase

FORT LAUDERDALE, Fla. and PALMETTO, Fla. – Boat builder Jupiter Marine International Holdings, Inc. saw record revenues during the third quarter and nine months ended April 29, the company said in a press release Thursday.

Net sales for the fiscal 2006 third quarter increased 37.2 percent to $4.1 million from $3 million in the same period last year, due primarily to higher sales of the Jupiter 38-foot model and price increases instituted subsequent to the fiscal 2005 third quarter.

Gross profit margin decreased to 21.8 percent in the second quarter of fiscal 2006 from 25.8 percent in the third quarter of fiscal 2005, largely due to start up costs associated with the Palmetto facility and expenses in scaling up Jupiter 29-foot production at this location.

“While Palmetto sales were minimal this quarter, we expect production will ramp up considerably during the balance of calendar 2006,” said Carl Herndon, Jupiter Marine president. “The costs associated with this new facility impacted third quarter results. However, operating expenses at Palmetto going forward should be offset as we achieve our production goals. We believe expanding into these new facilities is vital to the long-term growth of our business, as the increased production capacity could potentially double the number of boats we manufacture and accelerate new product introduction.

“Throughout our expansion, the company has been supported by strong customer demand and a steady six-month order backlog for our existing models,” Herndon continued.

Jupiter said it continues to closely monitor the effects of higher fuel prices, higher interest rates, increases in cost of other raw material and lower consumer confidence, which may contribute to an economic slow down and subsequently temper Jupiter’s sales growth.

General and administrative expenses increased to $523,000, or 12.8 percent of sales, for the fiscal 2006 third quarter, from $315,000, or 10.6 percent of sales, reported in the year earlier period. This was largely due to the adopting Financial Accounting Standards No. 123 (SFAS No. 123R), share-based payment method. As a result of adopting this accounting pronouncement, the company recorded $80,000 of compensation costs from employee stock options that vested during the quarter. During the third quarter, the company also reported other expenses totaling $315,000, related to the issuance of stock to management for loan guarantees and employee agreements.

Primarily as a result of the aforementioned expenses, Jupiter Marine reported a net loss applicable to common shareholders in the third quarter of fiscal 2006 of $181,000, or $.01 per diluted share on approximately 18 million diluted shares outstanding, versus net income of $202,000, or $.01 per diluted share on approximately 16 million diluted shares outstanding, in the third quarter of fiscal 2005.

Net sales for the first nine months of fiscal 2006 increased 27.7 percent to $10.6 million from $8.3 million in the same period last year. Gross profit increased 14.7 percent to $2.5 million, or 23.4 percent of net sales, from $2.2 million, or 26.1 percent of net sales, in the year earlier period. Higher sales and lower gross profit margin for the first nine months of fiscal 2006 were due primarily to the reasons outlined above.

During the nine months ended April 29, 2006, the company decided to temporarily discontinue the 27′ Forward Seating model. Consequently, a provision for loss on disposition of assets in the amount of $79,000 was recorded on Jan. 28, 2006.

The company reported net income applicable to common shareholders for the first nine months of fiscal 2006 of $156,000, or $.01 per diluted share on approximately 17 million diluted shares outstanding, versus $469,000, or $.03 per diluted share on approximately 15.6 million diluted shares outstanding, in the same period last year.

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