COBURG, OR — April 26, 2007 —
Monaco Coach Corporation (NYSE: MNC), one of the nation’s leading
manufacturers of recreational vehicles, today reported revenues and
earnings for the first quarter ended March 31, 2007.
First quarter
2007 revenues were $322.2 million, down 16.3% compared to $385.1
million in revenues for the first quarter 2006. First quarter 2006
revenues included $26.8 million of FEMA specific sales. First
quarter 2007 gross profit was $36.0 million, down from $48.4 million
a year ago. Operating income for the first quarter 2007 was $3.6
million, compared to $14.5 million for the first quarter 2006. Net
income for the first quarter 2007 was $1.5 million, compared to $8.3
million a year ago. For the first quarter 2007, diluted earnings
per share were $0.05 versus $0.28 for the same period last year.
Kay Toolson,
Chairman and Chief Executive Officer of Monaco Coach Corporation,
stated, “We are pleased to report a profit for the quarter in the
face of continuing challenges in the motorhome and towables markets.
We are also encouraged by our internal Class A retail registrations,
which showed a 4% increase for the first quarter of 2007, compared
to the first quarter of 2006, and we are up 8% year-to-date through
mid-April as compared to the same period last year. While we remain
optimistic about improved demographics and long-term growth
prospects for our company and the industry, rising fuel prices and
lower consumer confidence give us reasons to be cautious in our
short-term outlook.”
“Our first
quarter results reflect positive changes in our business, including
consolidation of subassembly plants and the realignment of our
production lines, which are beginning to pay off through improved
quality and increased efficiencies in production and product
development. We are confident the steps that we have taken have
helped create a successful 2008 model line-up and will allow us to
quickly respond to future market upturns,” added Toolson.
Gross profit
margin for the Company decreased in the first quarter 2007 to 11.2%,
compared to 12.6% in the first quarter 2006. The decline in gross
profit margin was partially the result of the absence of
FEMA-related business, which benefited the towable segment in the
first quarter 2006 by increased orders, and benefited the motorized
segment through absorption of indirect expenses in the Company’s
Indiana motorized plant, where many of the FEMA units were built.
John Nepute,
President of Monaco Coach Corporation, stated, “While total revenues
for the Company fell short of target, our motorized segment did
well, improving gross profit margins sequentially from the 8.2% in
the fourth quarter 2006 to 10.8% in the first quarter 2007. As
expected, progress was made in labor productivity and absorption of
indirect expenses. We are also very encouraged by the improvement
in quality, which resulted in a reduction of warranty expense.”
“While our
motorhome retail performance has been better than the overall
motorhome RV market, we are still striving for one-to-one
replacements on our dealer partners’ lots. We are comfortable with
the level of dealer inventory and, in part due to the
reconfiguration of production and consolidation of motorized
production lines, our overall backlog should continue to steadily
diminish our need for promotional activity. The consolidation of
similarly priced models on production lines has also resulted in a
smoother transition into the new 2008 model year units.”
Nepute
concluded, “On the towables side, we saw our retail activity decline
in the first quarter of 2007. Accordingly, we have adjusted run
rates in our towable plants. This segment of the business is more
scalable and additional cost-saving measures will be implemented to
improve operating results. In spite of short-term market dynamics,
we view this as a growing segment of our business and believe recent
product offerings will enable us to gain market share and thereby
increase efficiencies in our towable plants.”
For the first
quarter 2007, selling, general and administrative expenses were
$32.4 million, compared to $34.0 million of sales for the first
quarter 2006.
Marty Daley,
Chief Financial Officer, stated, “Incrementally, as compared to
fourth quarter 2006, selling, general and administrative expenses in
the first quarter 2007 were impacted by an increase in settlement
costs and stock-based compensation. The total of other selling,
general and administrative expenses was consistent between fourth
quarter 2006 and first quarter 2007.”
Daley
continued, “We’ve maintained our focus on the Company’s balance
sheet, and will continue to manage our backlog to keep our level of
finished goods in balance with the market. We are pleased to have
ended the quarter with a cash balance of $29 million and finished
goods inventory just over $20 million.”
Motorized Recreational Vehicle Segment
Motorized sales in the first quarter 2007 decreased 3.7% from $255.0
million in the first quarter 2006 to $245.5 million. Industry-wide
Class A motorhome retail registrations, as reported by
Statistical Surveys, Inc., were down 12.6% year-to-date through
February 2007. The Company reported a 3.9% increase in market share
for the same period.
Segment gross profit for the first quarter 2007 was $26.5 million,
or 10.8% of sales, compared to $25.0 million, or 9.8% of sales, for
the first quarter 2006. Selling, general and administrative
expenses including corporate overhead were $23.2 million, compared
to $20.1 million for the first quarter a year ago. Unit sales of the
Motorized RV Segment for the quarter ended March 31, 2007 totaled
1,460, down 9.6% from 1,615 units for the prior year period. Diesel
Class A units shipped were 1,112 versus 1,143, gas Class A units
shipped were 198 versus 357, and Class C units shipped were 150
versus 115.
Towable Recreational Vehicle Segment
The Company reported towable sales
of $69.5 million for the first quarter 2007, compared to sales of
$114.4 million for the first quarter 2006. Deducting FEMA sales in
the first quarter of 2006 of $26.8 million, towable sales would have
decreased 20.7%. Travel trailer and fifth-wheel registrations for
the overall market, according to Statistical Surveys,
reported a year-to-date decline of 8.5% through February 2007.
Gross
margin for the first quarter 2007 for the towable segment was $4.7
million, or 6.8% of sales, compared to $14.3 million, or 12.5% of
sales for the first quarter 2006. Selling, general and
administrative expenses including corporate overhead were $6.4
million, compared to $9.4 million for the first quarter 2006. For
the first quarter 2007, towable unit sales were 4,289 units, down
from 7,217 units for the same period a year ago, which included
2,019 FEMA related units.
Motorhome Resorts Segment
Resort sales for the first quarter
2007 were $7.2 million, down 54.0% from $15.7 million in the first
quarter 2006. Continued poor weather in both Las Vegas, Nevada, and
Indio, California, and extended road closures limiting access to the
Las Vegas resort led to the reduction of lot sales. In the first
quarter 2007, the Company sold 25 lots at the Indio resort and four
lots at the Las Vegas resort. Currently 38 lots are available in
Indio and 51 lots are available in Las Vegas. Operating income for
the segment was $2.0 million, down from $4.8 million for the same
period last year.
The Company
has purchased additional land in the Palm Springs, California, area
and very recently closed on a site in Naples, Florida. Both
locations plan to have lots for sale by the beginning of 2008.
2007 Business Outlook
“The improvement from the fourth
quarter 2006 to the first quarter 2007 was largely due to
adjustments we made to our business model last year,” said Daley.
“While we have not observed the improvement in the retail market we
were anticipating, at our current run rates and backlog, we will not
be modifying our previously stated second quarter earnings
expectations. However, if the originally anticipated uptick in the
retail markets fails to materialize in the second half of the year,
our 2007 fiscal year results will likely come in at the low end of
our previously released guidance.”
Conference Call to be Held
Monaco Coach Corporation will
conduct a conference call in conjunction with this news release at
2:00 p.m. Eastern Time, Thursday, April 26, 2007. Members of the
news media, investors, and the general public are invited to access
a live broadcast of the conference call via the Investor Relations
page of the Company’s website at
www.monaco-online.com.
The event will be archived and available for replay for the next 90
days.
About Monaco Coach Corporation
Dedicated to quality and service,
Monaco Coach Corporation is one of the nation’s leading
manufacturers of motorized and towable recreational vehicles.
Headquartered in Coburg, Oregon, with substantial manufacturing
facilities in Indiana, Monaco Coach employs approximately 5,300
people. The Company offers entry-level priced towable RVs up to
custom made luxury recreational vehicle models under the Monaco,
Holiday Rambler, Safari, Beaver, McKenzie, R-Vision and Dodge brand
names. Monaco Coach maintains RV service centers in Harrisburg,
Ore., Elkhart, Ind., and Wildwood, Fla.
Ranked as the
number one manufacturer of diesel-powered motorhomes, Monaco Coach
is a leader in innovative RVs designed to meet the needs of a broad
range of customers with varied interests. Monaco Coach Corporation
trades on the New York Stock Exchange under the symbol “MNC,” and
the Company is included in the S&P Small-Cap 600 stock index. For
additional information about Monaco Coach Corporation, please visit
www.monaco-online.com or
www.trail-lite.com.
The statements above regarding the Company’s expectation for further
gains in fiscal 2007 as a result of future market upturns, improved
manufacturing efficiencies, increases in market share in the
towables segment, improved prospects for the Motorized RV Segment in
fiscal 2007, sales of remaining available lots at the Company’s
existing resorts in the first half of fiscal 2007, and in the “2007
Business Outlook” section regarding improving retail sales and
expectations for revenues, gross profit margin and SG&A expenses in
fiscal 2007 are forward-looking statements subject to various risks
and uncertainties that could cause actual results to differ
materially from these statements, including unforeseen declines in
the wholesale and retail markets for recreational vehicles,
consumers’ preference for certain models and resort lots, failure to
realize gains from the motorized manufacturing efficiencies as
anticipated, a decline in consumer confidence, an increase in
interest rates affecting retail and wholesale financing, an increase
in price or availability of fuel, and a downturn in the equity
markets. Please refer to the Company’s SEC reports for additional
risks and uncertainties, including but not limited to the most
recent Form 10-Q, the annual report on Form 10-K for 2006, and the
2006 Annual Report to Shareholders for additional factors. These
filings can be accessed over the Internet at
http://www.sec.gov.
(Tables to
follow)
