WASHINGTON, N.C. – Fountain Powerboat Industries, Inc.’s (AMEX:FPB) CEO was not happy with the boat builder’s first quarter results.
The manufacturer of high performance sport boats, fish boats and express cruisers reported net sales for the first quarter ended Sept. 30 were $19.4 million, a slight increase when compared to sales of $19.2 for the first quarter of fiscal 2006. The company reported operating profit of $2,195, compared to operating profit of $1.3 million for the comparable quarter of fiscal 2006.
Net loss for the quarter was $155,970, or a net loss per share of $0.03, compared to net income of $697,058, or net income per share of $0.14, for the first quarter of fiscal 2006.
“I am not pleased with the loss in earnings per share and our entire management team and I are completely dedicated to reversing the trend during the remainder of fiscal 2007,” said Fountain Powerboats founder and CEO Reggie M. Fountain, Jr. “I believe that the course we set in fiscal 2006, although having to subsequently carry some costs forward in the first quarter of fiscal 2007, will result in Fountain maintaining its year-over-year trend of increasing earnings for its shareholders.”
“The expenditures associated with the Fountain Race Program end this month,” said Fountain, “and we have accomplished our goal of broadening our presence in the high performance fish boat market, while retaining our dominance in the high performance sport boat market. We are highly focused on reducing manufacturing costs, and at the same time improving our profit margins by reducing some of the sales discounts given to our dealers during fiscal 2006. With revenue of $79,226,224 for fiscal 2006, Fountain increased its revenue 34 percent over the past two years and we are dedicated to making fiscal 2007 a year to maintain our market share and improve our net income.
Fountain Powerboats President David Knight commented that the company’s international market expansion and strengthening of its distribution channel during the fourth quarter of fiscal 2006 and the first quarter of 2007 contributed to an increase in general and administrative expenses.
“While these expenses were higher than normal during the first quarter of 2007 and will be curtailed during the remainder of the year, the result has been a significant expansion in our distribution channel, now with a combined domestic and international network of 66 dealers,” he added. “We expect increased growth in international sales due to the efforts of management in the fourth quarter of 2006, and the company’s yearly participation in nine international boat shows.”
Fountain Powerboats CFO Irving Smith stated that the company currently has a backlog in excess of $43 million, which it expects to increase during the New York International Boat Show in late December and the Miami International Boat Show in February.
“Our fiscal 2007 strategic goals remain intact: Redirecting the company’s focus on improving net income and continuing to implement the ‘Lean Manufacturing’ approach in the company’s production facility using the Toyota Production System,” Smith said. “Implementing the ‘Lean Manufacturing’ approach has required major changes in our processes and procedures and as usual, when a manufacturing operation goes through major changes, costs rise and productivity suffers, but long term benefits of this operating culture will be significant, and management expects to begin seeing benefits in the following quarters.”
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