ONLINE LISTINGS COPYRIGHT UPHELD p. 12
® INSIDE: San Diego, a fun
town with a good-as-it-gets weather reputation,
is undergoing a waterfront transformation. The
city is convinced it can
rival Fort Lauderdale as a
megayacht center. p. 16
THE BOATING BUSINESS NEWSPAPER VOL. XLV, NO.
2 AUGUST 2007
$5.00
www.tradeonlytoday.com
CAN THEY TURN IT AROUND?
Fountain president:
We’ll ride out ‘blip’
Knight says belt-tightening strategy working,
expects sales and stock price to rebound soon
By JoAnn W. Goddard / Associate Editor
j.goddard@tradeonlytoday.com
The jury is still out on whether Fountain Powerboats can mirror last year’s financial results of record-breaking sales
and its strong backlog of $43 million,
considering its recent losses.
But overseas expansion, across-the-board cost cutting and a lean manufacturing plan are part of an aggressive strategy
to ride out the stormy economic times.
The company, which manufactures
high-performance boats, this year has had
lackluster results, with declining second-and third-quarter sales, dwindling stock
prices and a net loss of $5.48 million for
the nine-month period ending March 31.
Year-end results were not yet available.
“Our operating results were a little
soft,” acknowledges company president
David Knight.
Looking back, company officials blame
the decline on a variety of external factors, but primarily Knight says confi-
n Fountain Powerboats is one of
an increasing number of boat-
builders turning to the “lean”
manufacturing system. p. 32
The company’s dwindling stock price remains a concern.
Last year, shareholders questioned why it hovered around
$4, and they wanted to know when they would see greater
returns. In the past year, Fountain shares have plummeted
to record lows of around $2.50 a share.
“Sure, it’s a concern when our stock prices go down,”
said company president David Knight. But he says the declining share prices are indicative of the decline in the
recreational boating market. “Consequently, when we turn
this thing around, you’ll see our profits go up.”
dence in the economy has been shattered by gloom-and-doom news of layoffs, declining sales at other marine companies and lowered earnings guidance.
West Marine, for example, recently lowered its guidance, citing lackluster sales.
As a result of this economic uneasiness, dealers are placing fewer orders
and boaters are buying fewer boats.
“So it’s been uncertainty that’s been
our biggest foe,” said Knight.
Increased prices for raw materials,
particularly nickel and wood, also
led to declines, according to CFO
Irving Smith.
The company in May reported a net
continued on Page 29
Great Lakes boating: $19B impact
Advocates will use hard economic data to buttress dredging case
Great
Lakes
states
4,282,507
By Melanie M. Winters / Associate Editor
m.winters@tradeonlytoday.com
Dredging of recreational harbors has long taken a
back seat to other spending needs in the Army Corps
of Engineers budget. Boating interests in the Great
Lakes region hope this will change now that they’re
armed with a new study showing the economic value
that boating represents.
“This report shows the critical role of boating in the re-
gion’s economy, and underscores the importance of protecting our freshwater resources,” said Michigan Lt. Gov.
John Cherry, who chairs the Great Lakes Commission.
Many others echoed those sentiments, calling the report a great tool for boating interests in the Great Lakes.
The report describes a network of manufacturers, retailers, restaurants, marinas, charter operators, repair facilities, lodgings and other businesses that depend upon
See Great Lakes, Page 30
New to the pipeline:
Heavy-duty battery switches
from Guest. p. 54-55
All
other
states
8,414,500
(2003 figures)
Nearly a third of all U.S. boats are in Great Lakes states.
Formula
for sales
While others
struggle, CEO Jim
Dillon is racking
up sales of For-
mula boats at his
six Passport Ma-
rine outlets. p. 26
