WASHINGTON, N.C. – Fountain Powerboat Industries, Inc. (AMEX: FPB), a manufacturer of sport boats, fish boats and express cruisers, today reported declines in sales and profits for the fiscal third quarter and nine-month period ended March 31.
Net sales for the third quarter of fiscal 2007 were $16,475,688, an 11-percent decrease, when compared to net sales of $18,526,332 for the third quarter of fiscal 2006, the company stated.
Net sales for the nine-month period of fiscal 2007 were $48,922,327, a decrease of 14 percent, when compared to net sales of $55,894,161 for the nine-month period of fiscal 2006.
“The decrease in sales over the nine-month period was a result of continued concern over economic conditions and rising fuel prices, which together have created a weakness within the entire recreational boating industry,” commented Fountain’s Chairman and CEO Reggie Fountain. “We have experienced greater attendance and more retail orders at this year’s boat shows than last year’s, and sales of our larger sport fish boats have continued to increase. We are maintaining market share in the sport boat market, but are currently experiencing softness in the sales of our top-of-the-line express cruisers. As we enter the 2007 retail season, management will continue to closely monitor dealer inventories and buying indicators for demand in specific product lines.”
Gross profit for the quarter was $1,335,657, with a gross profit margin of approximately 7 percent, versus a gross profit of $2,764,533, with a gross profit margin of 14.9 percent, for the third quarter of fiscal 2006, the company reported.
Gross profit for the nine-month period was $5,461,682, with a gross profit margin of approximately 11.2 percent, versus a gross profit of $9,338,349, with a gross profit margin of approximately 17 percent, for comparable nine-month period of fiscal 2006.
“The decline in gross profit for the last nine months is attributed to inefficiencies due to lower production volumes, reduced fixed-cost absorption from production cuts, increases in material costs — especially those associated with petrochemicals, nickel and wood,” commented Fountain Powerboats Chief Financial Officer Irving Smith.
Net loss for the third quarter was $(3,912,189), or a net loss per share of $(0.81) on a basic and diluted basis, versus net income of $22,410, or net earnings per share of $0.00 on a basic and diluted basis, for the third quarter of fiscal 2006.
The net loss for the nine-month period was $(5,478,168), or a loss per share of $(1.13) on a basic and diluted basis, compared to a net income of $1,038,764, or a net income per share of $0.21 on a basic and diluted basis, for the nine-month period of fiscal 2006.
The net loss for the three-month and nine-month periods was affected by the Deferred Tax Expense, which was approximately $2.2 million for the three-month period and $1.3 million for the nine-month period, the company explained.
“Fountain’s international sales continue to maintain growth paralleling that of fiscal 2006,” commented Fountain President David Knight. “Our dealer inventories in the U.S. are down more than 18 percent and are expected to have a favorable effect on sales during the upcoming 2007 retail season. Currently we have a backlog of approximately $30 million, and enjoyed strong sales from our winter boat shows, which have historically been an indication of a strong summer season. We will continue to work closely with our dealers, and have established a dealer council to improve communications and assist in model planning to meet consumer demands. Our goal is to increase market penetration while focusing on reducing overall expenses.”
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