The Auto Channel
The Largest Independent Automotive Research Resource
The Largest Independent Automotive Research Resource
Official Website of the New Car Buyer

Coachmen Industries, Inc. Reports Third Quarter Earnings

ELKHART, Ind., Nov. 7 -- Coachmen Industries, Inc. despite the impact of the economic slowdown on the recreational vehicle industry that was aggravated by the attacks of Sept. 11.

Net income for the third quarter ended Sept. 30, 2001 was $1.0 million compared with $2.3 million a year ago. For the quarter, diluted earnings per share were $0.06 compared to $0.15 per share in the same period in 2000. For the first nine months of 2001, the Company reported a loss of $2.5 million, or $0.16 per share, compared with net income of $10.0 million, or $0.64 per share for the same period in 2000.

Sales for the third quarter ended Sept. 30, 2001 were $149.6 million compared with $188.5 million in the year-earlier quarter. Sales for the first nine months were $464.9 million compared with $584.4 million in the first nine months of 2000.

``Although the earnings for the third quarter were less than we had expected prior to the tragic attacks of Sept. 11, we are encouraged by Coachmen's strong relative performance within the very challenging environment that our industry is experiencing. Clearly, our immediate prospects have been affected by the acceleration in the economic slowdown that is occurring; but we remain confident about the actions being taken to position the Company to resume its long-term path of growth,'' said Claire C. Skinner, Chairman, Chief Executive Officer and President of Coachmen Industries.

                              Three Months Ended        Nine Months Ended
                                 September 30,             September 30,
                              2001          2000         2001         2000
     Sales
     Recreational Vehicle   $78,527      $140,066     $278,705      $451,325
     Modular Housing/
       Building              71,050        48,407      186,155       133,059
       Total                149,577       188,473      464,860       584,384

     Pre-Tax Income
     Recreational Vehicle   $(1,551)         $543      $(9,060)       $9,506
     Modular Housing/
       Building               6,288         3,873       12,486         9,900
     Other                   (3,128)       (1,140)      (7,362)       (4,575)
       Total                  1,609         3,276       (3,936)       14,831


Recreational Vehicle Segment

The Company's Recreational Vehicle segment is being affected by the adverse impact that the economic slowdown is continuing to have on sales. Industry-wide deliveries to RV dealers are down 16.2% through the first nine months of 2001, following a decline of 6.6% for the year 2000. Retail sales have experienced a smaller decline of 10.6% through the first eight months, indicating that many dealers are delaying the replacement of sold units. Attendance has remained high at most retail shows demonstrating sound, underlying demand for recreational vehicles; but consumers are hesitant about purchases, similar to the pattern observed during previous economic downturns. Until consumers regain confidence about the course of the economy, there is unlikely to be much change in industry-wide sales.

As part of its aggressive market expansion plans, product development at Coachmen is a continuous process. During the national industry trade show later this month, for example, Coachmen will introduce 27 new products, each designed to appeal to a specific target market.

Modular Housing and Building Segment

The year-to-year growth in the Company's modular segment is due to the incremental contribution to sales and income from acquired operations. Although housing starts have remained strong nationally, several of the regions where the Company's All American Homes subsidiary operates are experiencing declines in homebuilding due to difficult local economic circumstances. Margins have been improved by shifting the sales emphasis to larger, more complex homes; and the Company is actively seeking to develop new markets for these models. The Company is also focusing on a greater penetration of urban markets where there is more concentrated demand.

In addition to introducing new residential floor plans and exteriors, Coachmen is successfully broadening the uses for its commercial structures. Recent completions include modular structures for a veterinary clinic, banks, portable classrooms and many variations of multiple family housing.

Balance Sheet/Cash Flow

As of Sept. 30, 2001, the Company had cash and marketable securities of $44.5 million, shareholders' equity of $210.7 million and book value of $13.27 per share. Capital expenditures totaled $0.9 million in the third quarter and $4.0 million for the nine months.

Joseph P. Tomczak, Executive Vice President and Chief Financial Officer, said, ``We are continuing to contain expenses, manage our balance sheet more effectively and allocate our resources in a manner that will generate the highest efficiency during this difficult period. Our cash flow remains strong. Through the first nine months, we generated $7.9 million in EBITDA (earnings before interest, taxes and depreciation and amortization). Coachmen generated cash flow from operations of $15.0 million in the third quarter and $42.6 million in the first nine months of 2001, and we had cash and equivalents of $44.5 million at the end of the quarter.

``During the quarter we initiated a process for restructuring our bank line of credit to obtain terms and conditions that would better meet our current and expected future borrowing needs over the duration of the agreement. Subsequent to the close of the quarter, we amended the agreement as a secured $30.0 million facility. Our liquid cash position and expectations of continued positive EBITDA were key factors in our ability to execute the new agreement. We believe Coachmen's strong financial position is a vital asset that will support our efforts to gain market share through ongoing internal gains as well as strategic acquisitions of complementary operations such as the KanBuild modular housing unit that we added in February 2001.''

Outlook

Skinner said, ``Based on the recent events and current economic trends, we anticipate operating at or slightly below break-even in the fourth quarter, which is a seasonally slow period for our RV segment. We believe, however, that the results of the actions we have taken to realign our operations, reduce expenses and complete accretive acquisitions will lead to fourth quarter results significantly improved from the loss of $7.8 million, or $0.50 per share, in the fourth quarter of 2000. This would result in a loss for the full year in the range of $0.20-$0.25 per share.

``Coachmen has the opportunity to use our well-established brand names, outstanding network of dealers and strong financial position to focus on increasing market share during this cyclical downswing in demand. Our record over almost four decades in the recreational vehicle industry shows that while our near-term financial performance has been affected during periods of slower demand, we have historically emerged to reach new records in net sales and earnings. The successful expansion of our modular segment reinforces our optimism about Coachmen's longer term prospects. Fundamental demographic trends favor growth in those population segments especially attracted to our products, and we are intent on capitalizing on that potential.''

Founded in 1964, Coachmen Industries, Inc., is one of the nation's leading manufacturers of recreational vehicles with well-known names including Coachmen RV, Shasta, Viking and Georgie Boy. Coachmen Industries is also the largest modular home producer in the nation with its All American Homes and Mod-U-Kraf subsidiaries. Modular commercial and telecommunication structures are manufactured by the Company's Miller Building Systems subsidiary. Coachmen is a publicly held company with stock listed on the New York Stock Exchange (NYSE) under the COA ticker symbol.

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, the functioning of the Company's information technology systems, the availability and the price of gasoline, the Company's dependence on chassis suppliers, interest rates, competition, government regulations, legislation governing the relationships of the Company with its recreational vehicle dealers, the impact of consumer confidence and economic uncertainty on high-cost discretionary product purchases 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         Nine Months Ended
                               September 30,               September 30,
                            2001           2000         2001         2000

    Outside Sales         $149,577      $188,473     $464,860      $584,384

    Gross Profit - $        26,141        27,206       70,322        87,871
    Gross Profit - %          17.5%         14.4%        15.1%         15.0%

    GS&A - $                23,927        25,289       72,056        74,028
    GS&A - %                  16.0%         13.4%        15.5%         12.7%

    Operating Income/
      (Loss) - $             2,214         1,917       (1,734)       13,843
    Operating Income/
      (Loss) - %               1.5%          1.0%        -0.4%          2.4%

    Other (Income)/Expense     605        (1,359)       2,202          (988)

    Pre-Tax Profit/
      (Loss) - $             1,609         3,276       (3,936)       14,831
    Pre-Tax Profit/
      (Loss) - %               1.1%          1.7%        -0.8%          2.5%

    Tax Expense/(Benefit)      604         1,003       (1,425)        4,828

    Net Income/(Loss)        1,005         2,273       (2,511)       10,003
    Earning/(Loss)
      per share -
      Basic & Diluted         0.06          0.15        (0.16)         0.64

    Weighted Average Shares Outstanding
      Basic                 15,815        15,574       15,811        15,566
      Diluted               15,875        15,577       15,867        15,573


                          Coachmen Industries, Inc.
                     Condensed Consolidated Balance Sheet
                                (In Thousands)
                                 (Unaudited)

         ASSETS                                        9/30/01       12/31/00

    Current Assets
      Cash                                             $31,634         $2,614
      Marketable securities                             12,852         18,737
      Accounts Receivable                               35,765         40,079
      Inventories                                       85,850         97,315
      Prepaid expenses and other                         6,984          6,821
      Deferred income taxes                              8,858          8,384
        Total Current Assets                           181,943        173,950

    PP&E, Net                                           82,304         84,163
    Goodwill and Other Intangibles, Net                 18,775         15,983
    Other                                               27,653         22,350

    Total Assets                                      $310,675       $296,446


    LIABILITIES AND SHAREHOLDER'S EQUITY               9/30/01       12/31/00

    Current Liabilities
      Current portion of LT debt                          $927           $865
      Accounts payable, trade                           33,715         24,015
      Accrued income taxes                                   -            845
      Other Accruals                                    42,403         31,988
        Total current liabilities                       77,045         57,713

    Long-Term Debt                                      11,379         11,795
    Deferred Income Taxes                                3,349          3,370
    Other                                                8,204          8,619
    Total Liabilities                                   99,977         81,497
    Shareholder's Equity                               210,698        214,949

    Total Liabilities and Equity                      $310,675       $296,446