Coachmen Industries, Inc. Reports Strong Gain in Third Quarter Earnings
ELKHART, Ind., Oct. 21, 2002; Coachmen Industries, Inc. announced significantly higher earnings for the third quarter of 2002, compared with a year ago and reaffirmed its outlook for a solid return to profitability for the full year 2002.Coachmen reported earnings of $4.3 million, or $0.27 per share for the quarter, compared with earnings of $1.0 million or $0.06 per share in the year-earlier period. Sales for the third quarter increased to $179.2 million versus $149.6 million in the third quarter of 2001, reflecting strong RV shipments but softer results for modular telecommunications structures. Year- to-date sales of $506.3 million are 8.9% higher than last year, while net income of $7.3 million and earnings per share of $0.45 for the nine months represent increases of $9.8 million and $0.61, respectively.
Claire C. Skinner, Chairman, Chief Executive Officer and President, remarked, "Our performance during the third quarter was a significant improvement over the year-earlier period and demonstrates that we are on target to deliver a solid improvement in earnings for 2002. Our Recreational Vehicle business is continuing to improve and deliver gains in market share. Coachmen's share of wholesale shipments through August was 6.8%, a 9.7% increase from our 2001 full-year share. Coachmen's wholesale shipments of recreational vehicles through August are up 22.5%, compared to a 17.8% growth rate for the entire industry. While our Modular Housing and Building business remains profitable, our results continue to be lower than year-ago levels primarily as a result of lower demand for commercial structures used in the telecommunications industry."
Three Months Ended Year to Date
September 30, September 30,
2002 2001 2002 2001
Sales
Recreational Vehicle $114,588 $78,527 $335,491 $278,705
Modular Housing/
Building 64,576 71,050 170,835 186,155
Total $179,164 $149,577 $506,326 $464,860
Pre-Tax Income/(Loss)
Recreational Vehicle $2,578 $(1,551) $3,115 $(9,060)
Modular Housing/Building 3,550 6,288 7,008 12,486
Other 512 (3,128) 1,028 (7,362)
Total $6,640 $1,609 $11,151 (3,936)
Recreational Vehicle Segment
The Company's Recreational Vehicle segment continues to show improved year-over-year results with third quarter sales and pre-tax earnings up 46% and 266%, respectively, over the year-ago period. The improvement in the Company's Recreation Vehicle segment continues to be driven by improving industry trends as well as by increased dealer and consumer acceptance as the result of extensive redesign and brand strategy changes made during 2001. Compared to third quarter of 2001, Coachmen's unit production rate was up 47%. The Company was able to make reasonable progress in reducing its extremely high backlogs by increasing production rates during the quarter. Coachmen's backlogs continue to run at substantially higher levels than at the beginning of 2002, demonstrating the higher demand for its RV products.
Modular Housing and Building Segment
The Company's Modular Housing and Building segment reported slightly lower year-over-year sales but remained profitable in the third quarter. The downturn in the telecommunications industry has continued to result in lower demand for commercial modular structures for telecom applications and continues to impact the overall performance of this segment. Excluding the telecom-related commercial structure business, third quarter unit production increased 5.4% versus the year-ago period. Third quarter shipments were down versus the prior year, but showed sequential gains, hitting the highest level of shipments for the year and demonstrating the growing demand for the Company's residential homes. The Company also launched its new Spirit of America(TM) line of residential homes, geared toward first-time homebuyers and value-minded consumers on a limited budget.
Balance Sheet/Cash Flow
As of September 30, 2002, the Company had cash and marketable securities of $40.3 million and shareholders' equity of $211.4 million. Cash flow from operations was $22.5 million for first nine months. Capital expenditures totaled $1.1 million for the third quarter and $3.4 million year to date. In keeping with its belief that Coachmen shares are an excellent value, the Company repurchased shares totaling $3.8 million during the quarter. Additionally, dividends were increased by 20% during the quarter to six cents per share.
Joseph P. Tomczak, Executive Vice President and Chief Financial Officer, said, "Our third quarter results are gratifying, as we continue to increase our profitability during 2002. Our balance sheet remains very strong, and our financial metrics have improved across the board compared to 2001. We also took steps during the quarter to reduce our level of interest expense, using a portion of our cash to retire a significant loan against the cash surrender value of executive life insurance policies. This step will eliminate approximately $1 million in annual interest expense."
Outlook
Chairman Skinner said, "We are pleased that our third quarter results were consistent with our expectations of positive earnings. We continue to anticipate reporting earnings approaching $0.75 per share for the full year of 2002, assuming that the general industry and economic conditions experienced during the third quarter remain comparable for the fourth quarter. For the first nine months of this year, our earnings per share have increased 385% compared to the same period of last year. We are extremely pleased with this improvement, as it represents significant progress toward our goal of achieving, and then surpassing, our historical level of profitability."
Founded in 1964, Coachmen Industries, Inc. is one of the nation's leading manufacturers of recreational vehicles with well-known brand names including Coachmen®, Georgie Boy®, Shasta® and Viking®. 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 telecommunications structures are manufactured by the Company's Miller Building Systems subsidiary.
Coachmen Industries, Inc.
Consolidated Statements of Operations
(In Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended Year to Date
September 30, September 30,
2002 2001 2002 2001
Net Sales $179,164 $149,577 $506,326 $464,860
Gross Profit - $ 31,151 26,141 79,553 70,322
Gross Profit - % 17.4% 17.5% 15.7% 15.1%
GS&A - $ 24,422 23,927 69,320 72,056
GS&A - % 13.6% 16.0% 13.7% 15.5%
Operating Income/
(Loss) - $ 6,729 2,214 10,233 (1,734)
Operating Income/
(Loss) - % 3.8% 1.5% 2.0% (0.4)%
Other (Income)/Expense 89 605 (918) 2,202
Pre-Tax Profit/
(Loss) - $ 6,640 1,609 11,151 (3,936)
Pre-Tax Profit/
(Loss) - % 3.7% 1.1% 2.2% (0.8)%
Tax Expense/(Benefit) 2,344 604 3,882 (1,425)
Net Income/(Loss) 4,296 1,005 7,269 (2,511)
Earning/(Loss) per share -
Basic & Diluted 0.27 0.06 0.45 (0.16)
Weighted Average Shares Outstanding
Basic 16,080 15,815 16,070 15,811
Diluted 16,175 15,875 16,186 15,811
Coachmen Industries, Inc.
Condensed Consolidated Balance Sheets
(In Thousands)
(Unaudited)
ASSETS 9/30/02 12/31/01
Current Assets
Cash and temporary cash investments $29,297 $28,416
Marketable securities 10,975 12,180
Accounts receivable 37,446 23,756
Inventories 86,553 80,477
Prepaid expenses and other 7,400 9,059
Deferred income taxes 7,183 7,319
Total Current Assets 178,854 161,207
Property & equipment, net 76,236 80,233
Goodwill and other, net 18,954 18,954
Other 43,912 28,166
Total Assets $317,956 $288,560
LIABILITIES AND SHAREHOLDERS' EQUITY 9/30/02 12/31/01
Current Liabilities
Current portion of long-term debt $908 $917
Accounts payable, trade 38,625 18,944
Accrued income taxes 2,668 494
Other accruals 42,896 38,846
Total Current Liabilities 85,097 59,201
Long-term debt 10,620 11,001
Deferred income taxes 2,158 1,257
Other 8,661 8,461
Total liabilities 106,536 79,920
Shareholder's Equity 211,420 208,640
Total Liabilities and Shareholders' Equity $317,956 $288,560
Coachmen Industries, Inc.
Condensed Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)
Nine Months Ended
September 30,
2002 2001
Cash Flow from Operations $22,474 $42,591
Cash Flow from/(used in) Acquisition &
Investing Activities 2,753 (3,650)
Net Borrowings (18,848) (8,265)
Issuance/Purchase of Stock (2,922) 717
Dividends (2,576) (2,373)
Cash Flow from/(used in) Financing Activities (24,346) (9,921)
Increase in Cash and Temporary Cash Investments 881 29,020
Beginning of Period Cash and Temporary Cash
Investments 28,416 2,614
Ending Cash and Temporary Cash Investments $29,297 $31,634
