ELKHART, IN -- (BUSINESS WIRE)
-- April 23, 2007 -- Coachmen Industries, Inc. (NYSE: COA)
today announced its financial results for the first quarter
ended March 31, 2007."At
the bottom line, results for the first quarter were very
disappointing. However, much of this was due to events which we
do not expect to re-occur, and generally due to the continued
contraction of the markets in both our industry segments.
Further, increases in market share on the RV side, and the
coming on line of several projects on the Housing side, make us
feel confident that these results will not be repeated in the
second quarter," commented Rick Lavers, Chief Executive Officer.
"Compounding last year's market declines, for the first two
months of 2007, total industry shipments of all RV types fell
16.3%, while in housing, single-family housing starts fell 24.6%
from March 2006. These declines exacted a severe penalty on our
financial results. Nonetheless, in the face of these market
conditions, it is extremely encouraging that in the most current
Industry data, through February we achieved retail market share
gains in both Class C and Rear Diesel Class A motorhomes.
Further, total company sales increased sequentially month over
month in the first quarter of 2007. We reduced finished goods
inventory levels by $4.2 million from last quarter. In addition,
we managed our balance sheet, reducing our debt levels and
managing working capital, resulting in $4.1 million in operating
cash flows for the quarter."
Sales for the first quarter
were $130.2 million, 19.9% less than the $162.6 million reported
for the same period last year. Gross profits declined as a
result of increased discounts on RVs and reduced operating
leverage with lower production levels. Warranty expense declined
by $1.1 million from the first quarter of 2006, however as a
percent of sales, warranty expense increased due to the lower
revenue levels. Selling, general and administrative expenses
increased $4.0 million from last year, but the first quarter of
2006 included legal settlements that reduced total SG&A expenses
last year by $3.6 million. The remaining $0.4 million increase
in SG&A expenses was largely the result of costs associated with
the introduction of new products at the Housing Group during the
quarter. Pre-tax loss for the first quarter was $10.4 million
compared with a pre-tax profit of $0.6 million in 2006. Results
for the first quarter of 2007 include pre-tax gains on the sale
of assets of $0.4 million whereas results for the prior year's
first quarter included gains on the sale of assets of
approximately $2.7 million. At the bottom line, the Company
reported a net loss from continuing operations of $10.4 million,
or $0.67 per share, versus net income from continuing operations
of $0.4 million, or $0.03 per share in the first quarter of
2006.
During the first quarter, the
Company also altered its method of reporting delivery income and
expense to make its financial statements more comparable to its
industry peers. Beginning in 2007, delivery expenses will be
included in the cost of goods sold, while delivery income will
remain in total revenues, causing reported gross profit and
operating expenses to decrease, however the bottom line results
are unchanged. Results from the prior year's quarter have been
adjusted to reflect the current method of accounting for
delivery income and expense.
Recreational Vehicle Segment
"The RV Group's financial
results for the first quarter were far below our goals, largely
due to soft market conditions resulting in an incentive rich
selling environment. Even so, the changes to our products and
organizational structure undertaken in late 2006 began to show
encouraging results in the quarter. The positive reception to
our new product offerings resulted in retail market share gains
in Rear Diesel Class A and Class C motorhomes as well as growing
momentum in our fifth-wheel and sport utility trailer offerings
which should bolster future revenues," said Michael R. Terlep,
President of the Coachmen RV Group. "Despite these positive
developments, the Group's margins were sharply reduced due
largely to a selling environment replete with discounts and
incentives coupled with a shift to lower priced units and much
lower production levels."
The Company's Recreational
Vehicle Group reported sales of $104.2 million during the first
quarter of 2007, down 13.1% from the $119.9 million reported for
the comparable period last year. Gross margins for the RV Group
fell due to increased discounts and lower operating leverage and
fixed overhead absorption with lower capacity utilization
levels. The Group's operating expenses increased over the first
quarter of 2006 due mainly to legal settlements that reduced net
operating expenses in the prior year as well as increased sales
incentives in the current year. The RV Group generated a pre-tax
loss from continuing operations for the quarter of $8.0 million
compared with a pre-tax loss of $2.7 million for the year-ago
quarter. The Group effectively managed its inventory to avoid a
build-up of product. RV Group finished goods inventory was
reduced by $5.4 million from the end of 2006 and now stands at
the lowest level since the third quarter of 2003, at $29.7
million, consisting virtually entirely of current model
products.
Housing and Building Segment
The continued nationwide
softening of the housing market along with unusual winter
weather patterns created an especially challenging environment
for the Housing and Building Group, particularly in its core
Midwestern markets. In addition, timing of initial deliveries of
the Ft. Bliss project was delayed into the second quarter,
resulting in lower revenues and profits in the first quarter.
"We are making steady progress in our strategy of pursuing
growth opportunities beyond our traditional scattered-lot
single-family business," commented Housing Group President Rick
Bedell. "We started production of the second phase of the Fort
Bliss barracks project at our Iowa plant, we are continuing our
efforts to grow our traditional business with new products and
we remain focused on controlling costs and enhancing margins."
In March, the Group introduced its new Craftsman home collection
which generated an enthusiastic response by its builders. The
Craftsman collection supplements the entry-level Harwick
collection introduced late in the fourth quarter.
For the quarter, the Group
reported sales of $26.1 million, down 38.9% from $42.7 million
in the first quarter of 2006 due in large part to the continued
weakness in single-family housing, particularly in the Midwest.
With the lower sales level, and costs associated with initial
production of several larger projects which will not be recouped
until delivery, gross profit fell to $2.3 million, or 8.8% of
sales from $5.1 million, or 12.0% of sales in the first quarter
of 2006 while operating expenses were flat compared to last
year. Accordingly, the Group generated a pre-tax loss of $2.7
million, compared with a pre-tax profit of $0.1 million for the
year-ago quarter.
Coachmen Industries will
conduct a conference call to discuss its financial results in
this release at 10:00 a.m. (Eastern Time), Tuesday, April 24,
2007. Members of the news media, investors and the general
public are invited to access a live broadcast of the conference
call over the internet at
www.earnings.com. The online replay will be available at
approximately 12:00 p.m. (Eastern Time) and continue for 30
days.
Coachmen Industries, Inc. is
one of America's leading manufacturers of recreational vehicles,
systems-built homes and commercial buildings, with prominent
subsidiaries in each industry. The Company's well-known RV brand
names include COACHMEN(R), GEORGIE BOY(TM), SPORTSCOACH(R) and
VIKING(R). Through ALL AMERICAN HOMES(R), Coachmen is one of the
nation's largest producers of systems-built homes, and also a
major builder of commercial structures with its ALL AMERICAN
BUILDING SYSTEMS(TM) products. Coachmen Industries, Inc. is a
publicly held company with stock listed on the New York Stock
Exchange (NYSE) under the ticker COA.
This release contains
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Investors are
cautioned not to place undue reliance on forward-looking
statements, which are inherently uncertain. Actual results may
differ materially from that projected or suggested due to
certain risks and uncertainties including, but not limited to,
the potential fluctuations in the Company's operating results,
increased interest rates the availability for floorplan
financing for the Company's recreational vehicle dealers and
corresponding availability of cash to Company, uncertainties and
timing with respect to sales resulting from recovery efforts in
the Gulf Coast, uncertainties regarding the impact on sales of
the disclosed restructuring steps in both the recreational
vehicle and housing and building segments, the ability of the
company to generate taxable income in future years to utilize
deferred tax assets and net operating loss carry-forwards
available for use, the impact of performance on the valuation of
intangible assets, the availability and the price of gasoline,
price volatility of raw materials used in production, the
Company's dependence on chassis and other suppliers, the
availability and cost of real estate for residential housing,
the supply of existing homes within the company's markets, the
impact of home values on housing demand, the ability of the
Housing and Building segment to perform in new market segments
where it has limited experience, adverse weather conditions
affecting home deliveries, competition, government regulations,
legislation governing the relationships of the Company with its
recreational vehicle dealers, consolidation of distribution
channels in the recreational vehicle industry, consumer
confidence, uncertainties of matters in litigation, further
developments in the war on terrorism and related international
crises, oil supplies, and other risks identified in the
Company's SEC filings.
Coachmen Industries, Inc.
Consolidated Statements of Operations
(In Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended
March 31,
2007 2006
------------ ------------
Net Sales $130,244 $162,554
Gross Profit - $ 1,427 6,413
Gross Profit - % 1.1% 3.9%
GS&A - $ 12,048 8,030
GS&A - % 9.2% 4.9%
(Gain)/Loss on Sale of Property - $ (445) (2,677)
(Gain)/Loss on Sale of Property - % (0.3)% (1.7)%
Operating Income/(Loss) - $ (10,176) 1,060
Operating Income/(Loss) - % (7.8)% 0.7%
Other Expense 273 442
Pre-Tax Income/(Loss) from Continuing - $
Operations (10,449) 618
Pre-Tax Income/(Loss) from Continuing - %
Operations (8.0)% 0.4%
Tax Expense (Credit) (1) 214
Net Income/(Loss) from Continuing Operations (10,448) 404
Loss from Discontinued Operations (net of
taxes) - (329)
Gain on Sale of Discontinued Operations (net
of taxes) - 2,835
Net Income/(Loss) (10,448) 2,910
Earnings (Loss) per share - Basic and
Diluted
Continuing Operations (0.67) 0.03
Discontinued Operations 0.00 0.16
------------ ------------
Net Income/(Loss) per share (0.67) 0.19
Weighted Average Shares Outstanding
Basic 15,700 15,593
Diluted 15,700 15,650
Coachmen Industries, Inc.
Condensed Consolidated Balance Sheets
(In Thousands)
(Unaudited)
March 31, December 31,
ASSETS 2007 2006
-------------------------------------------- ------------ ------------
Current Assets
--------------------------------------------
Cash and cash equivalents $3,669 $2,651
Accounts receivable 36,544 25,874
Inventories 86,187 83,511
Refundable income taxes 4,161 10,820
Prepaid expenses and other 5,322 6,289
Assets held for sale - 288
------------ ------------
Total Current Assets 135,883 129,433
Property, plant & equipment, net 55,895 57,018
Goodwill 16,865 16,865
Cash value of life insurance 33,196 31,119
Note receivable 6,191 6,269
Other 2,389 2,430
------------ ------------
Total Assets $250,419 $243,134
============ ============
March 31, December 31,
LIABILITIES AND SHAREHOLDERS' EQUITY 2007 2006
-------------------------------------------- ------------ ------------
Current Liabilities
--------------------------------------------
ST borrowings & current portion of LT debt $8,651 $10,361
Accounts payable, trade 35,062 16,998
Floor plan notes payable 4,319 4,156
Accrued income taxes 5 18
Other accruals 36,604 35,116
------------ ------------
Total Current Liabilities 84,641 66,649
Long-term debt 3,825 3,862
Postretirement deferred comp benefits 7,854 7,768
Deferred income taxes 4,524 4,524
Other 22 -
Total Liabilities 100,866 82,803
------------ ------------
Shareholders' Equity 149,553 160,331
------------ ------------
Total Liabilities and Shareholders'
Equity $250,419 $243,134
============ ============
Coachmen Industries, Inc.
Condensed Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)
Three Months Ended
March 31,
2007 2006
------------ ------------
Net income/(loss) $(10,448) $2,910
Depreciation 1,506 1,669
Changes in current assets and liabilities 13,060 786
------------ ------------
Net Cash Provided by Operations 4,118 5,365
Net Cash Provided by/(Used in) Investing
Activities (1,091) 14,939
Net payments on borrowings (1,584) (13,326)
Net issuance of stock 46 85
Dividends paid (471) (937)
------------ ------------
Net Cash Used in Financing Activities (2,009) (14,178)
Increase in Cash and Cash Equivalents 1,018 6,126
Beginning of period cash and cash
equivalents 2,651 2,780
------------ ------------
End of Period Cash and Cash Equivalents $3,669 $8,906
============ ============
Coachmen Industries, Inc.
Quarterly Segment Data
(In Thousands)
(Unaudited)
Three Months Ended
March 31,
2007 2006
------------ ------------
Sales
--------------------------------------------
Recreational Vehicle $104,152 $119,854
Housing and Building 26,092 42,700
------------ ------------
Total $130,244 $162,554
============ ============
Gross Profit
--------------------------------------------
Recreational Vehicle $(866) $1,306
Housing and Building 2,293 5,107
------------ ------------
Total $1,427 $6,413
------------ ------------
Gross Profit Percentage
--------------------------------------------
Recreational Vehicle (0.8)% 1.1%
Housing and Building 8.8% 12.0%
------------ ------------
Total 1.1% 3.9%
------------ ------------
Operating Expenses
--------------------------------------------
Recreational Vehicle $7,072 $3,654
Housing and Building 5,022 4,999
Other (491) (3,300)
------------ ------------
Total $11,603 $5,353
============ ============
Operating Expense Percentage
--------------------------------------------
Recreational Vehicle 6.8% 3.0%
Housing and Building 19.2% 11.7%
------------ ------------
Total 8.9% 3.3%
============ ============
Operating Income/(Loss)
--------------------------------------------
Recreational Vehicle $(7,938) $(2,347)
Housing and Building (2,729) 107
Other 491 3,300
------------ ------------
Total $(10,176) $1,060
============ ============
Pre-Tax Income/(Loss) from Continuing
Operations
--------------------------------------------
Recreational Vehicle $(8,044) $(2,668)
Housing and Building (2,677) 142
Other 272 3,144
------------ ------------
Total $(10,449) $618
============ ============
CONTACT: Coachmen Industries, Inc.
Colleen Zuhl, 574-262-0123
Chief Financial Officer
or
Jeffery A. Tryka, CFA, 574-262-0123
Director of Planning and Investor Relations
SOURCE: Coachmen Industries, Inc.
