Challenger Powerboats Inc. (OTCBB: CPWB) is out with major news today that again proves its recent acquisition of IMAR Group was a very slick maneuver indeed. Besides signing on four new boat dealers; CPWB announced this morning that it has received orders for 19 Sugar Sand boats valued at more than $450,000.

Add this $450K on to the $1 million or so in revenues generated by newly acquired business segments (Gekko & Sugar Sand) since January and one can make a very compelling case for Challenger’s growth going forward.

Banner Year in ’07?

The company’s recent revenue surge is quite impressive since Challenger (then Xtreme Companies Inc.) notched only $1.8 million in ’05 revenues. On the other hand, 2007 was already shaping up to be a banner year at CPWB prior to the big acquisition.

Challenger had significantly drilled down operations, brought on an all-star cast of battle-tested industry executives, and launched its first ever sales/marketing campaign and dealer network strategy. With restructuring in its rearview mirror, Challenger was well-poised to improve on 2006 revenues, which seem to reflect the company’s transitional period.

The addition of IMAR group, which notched more than $12 million in un-audited consolidated ’06 revenues, brings with it an added boost both operationally and financially. In addition to a fast growing and very sizable dealer network that currently exceeds 100 affiliates, IMAR is already contributing significantly to a surge in ’07 revenues.

Commenting on today’s news CEO Laurie Philips stated “We continue to see good order flow for our Sugar Sand jet boats and more dealers continue to sign on to carry this line. As we have previously stated, the jet boat market represents one of the fastest growing segments of the overall recreational boating market, and feel we are well positioned to benefit from these positive dynamics.”

By the Numbers

Very conservatively, if Challenger is able to derive $2 million in revenues from sales of Challenger branded boats and $8 million through shipments of Sugar Sand and Gekko boats during 2007, $10 million would be added to the top line. An increase of this stature would exhibit exponential growth on a year-over-year basis, particularly as CPWB’s revenues for the first three months of 2006 were 829,000.

In today’s economy; 2007 revenues in the ballpark of $10 million would undoubtedly translate into a grossly higher share price (at least fundamentally speaking) than we see today. We suggest you take this into close consideration when highlighting your “companies to watch” list for the new-year.

Labels: Boating Industry, CPWB