Coachmen Industries, Inc. Confirms Strong Gain in Fourth Quarter and Full-Year Earnings
* Fourth quarter earnings of $0.17 per share and 2002 earnings of $0.62
per share mark significant improvements over the losses of ($0.09) and
($0.25) per share in year-earlier periods.
* Fourth quarter RV sales up 48% with increased production and shipments
over previous year period.
ELKHART, Ind., Feb. 11 -- Coachmen Industries, Inc.
today confirmed significantly higher earnings for the fourth
quarter and year 2002 compared with a year ago.
Coachmen reported earnings of $2.7 million, or $0.17 per share for the
quarter, compared with a loss of ($1.4) million or ($0.09) per share in the
year-earlier period, an improvement of 289% on a gain in sales of 28.5%.
Sales for the fourth quarter increased to $164.1 million versus $127.7 million
in the same period of 2001, reflecting higher year-over-year RV and
residential home shipments but lower demand for commercial telecommunications
structures.
Coachmen's sales of $665.2 million for the year 2002 are 13.3% higher than
last year, while net income of $9.9 million and earnings per share of $0.62
for the year represent increases of $13.9 million and $0.87, respectively, and
earnings per share improvement of 348%. Driving the year-over-year advances
were a 0.7 percentage point improvement in gross profit, resulting from rising
productivity, coupled with a 2.0 percentage point improvement in GS&A expenses
as a percent of sales. Sales increases of 13.3% were supported with $1.7
million less in operating expenses.
Claire C. Skinner, Chairman, Chief Executive Officer and President,
remarked, "While we are disappointed that we fell short of our aggressive
earnings expectations of $0.75 per share, we significantly returned the
business to profitability during 2002 and established a solid foundation from
which to build upon during 2003. As reported, the RV segment performed
admirably during the year, accelerating its performance as the year
progressed. We expected the accelerating trend to continue through the fourth
quarter, but, while the performance remained strong, it leveled off, as did
industry sales. November results did not keep pace with October, but we
believed this most probably was temporary and primarily related to timing
issues; specifically, the National RV Trade Show in Louisville and harsh
early-winter storms that delayed the delivery of residential finished goods."
"Our belief was that the forecast could still be achieved and that a
number of factors would come together in December to enable us to achieve our
estimate," Skinner added. "Those factors included the shipment of a good
portion of the Louisville RV orders and the delivery of the modular home
finished goods that couldn't get delivered in November due to the weather, in
addition to the housing deliveries and order inflow of December.
Unfortunately, market and weather challenges continued, coupled with
intensified concerns about Iraq. As a result, the Company missed its range of
earnings guidance."
Three Months Ended Year Ended
December 31, December 31,
2002 2001 2002 2001
Sales
Recreational Vehicle $103,736 $70,001 $435,548 $344,645
Modular Housing/
Building 60,350 57,728 229,644 242,567
Total $164,086 $127,729 $665,192 $587,212
Pre-Tax Income/(Loss)
Recreational Vehicle $($1,212) $(2,571) $1,903 $(11,631)
Modular Housing/Building 3,050 2,980 10,058 15,466
Other 2,007 (2,591) 3,035 (9,953)
Total $3,845 $(2,182) $14,996 (6,118)
Recreational Vehicle Segment
The Company's Recreational Vehicle segment continues to show improved
year-over-year results with a full-year sales increase of 26.4% and a $13.5
million pre-tax income improvement. 2002 pre-tax profits were $1.9 million
compared to a loss of ($11.6) million in 2001. Fourth quarter sales were up
48.2% while the segment's fourth quarter pre-tax loss was reduced by 52.9%.
Improving industry trends, as well as the Company's extensive branding and
design improvements, continue to result in increased dealer and consumer
demand. Full-year recreational vehicle wholesale shipments for the Company
were up 29.7% compared to 2001, while the industry was up 22.1% in the same
categories. Because the Company outperformed the industry, Coachmen's share of
recreational vehicle wholesale shipments for the year was 6.6%, a 6.5%
increase from its 2001 full-year share.
The Company continues to see mounting improvements in its Recreational
Vehicle business that should prove beneficial in 2003. Wholesale shipments to
dealers were up 52.8% for the fourth quarter compared to a 34.6% growth rate
for the entire industry. Coachmen's unit production rate was up 51.9% during
the quarter and 33.3% for the year compared to 2001. As a result of increased
production rates, the Company has brought its unit backlogs to more reasonable
levels during the fourth quarter, but still substantially up from the
beginning of the year. Backlogs have increased 55.8% since January. These
continuing healthy backlogs together with the dealers' strong response to
Coachmen's offerings at the Louisville show contributed to the Company's
recent decision to add more production capacity at its Coachmen RV operations
in Middlebury, Indiana and Fitzgerald, Georgia.
Modular Housing and Building Segment
The Company's Modular Housing and Building segment remained profitable in
the fourth quarter with sales and pre-tax earnings up 4.5% and 2.3%,
respectively, over the year-ago period. For the first time in 2002, total
Modular Housing and Building segment quarterly shipments surpassed 2001
shipment levels, up 3.6% during the quarter. The results for the overall
segment continue to be negatively impacted by lower demand for commercial
modular structures used in the telecommunications industry. The results for
the residential portion of the business have been hampered by the market
economics associated with it. The primary market served is the rural,
scattered lot, secondary or tertiary city market, with an ultimate customer
who is largely dependent on either the agriculture economy or the
manufacturing sector for his or her livelihood. These buyers have been
plagued in 2002 by concerns over the economy, world events, drought, lack of a
farm bill, and high unemployment. Despite that, residential unit production
was up, increasing 7.3% for the quarter and 3.8% for 2002 versus the year-ago
periods. Shipments from the Company's residential home operations were up
9.7% during the fourth quarter.
With that as a foundation, the Company is pursuing higher growth markets
in 2003, such as subdivision opportunities and hotel and assisted living
center developments. On the non-residential commercial side, the Company is
pursuing other markets for its products, such as concrete portable schoolrooms
for hurricane-prone areas and new uses for Miller's steel-framing technology.
To gain efficiencies in 2003, Miller Building Systems closed its New York
operation in December. Production will be assumed by the neighboring Vermont
and Pennsylvania operations, increasing their productivity and throughput.
Balance Sheet/Cash Flow
As of December 31, 2002, the Company had cash and marketable securities of
$24.2 million and shareholders' equity of $209.4 million. Cash flow from
operations was $13.0 million for the year. Capital expenditures totaled
$1.9 million for the fourth quarter and $5.3 million for the year. In the
fourth quarter, the Company sold real estate for $4.0 million for an after-tax
profit of $0.8 million. Sales for the year totaled $10.0 million for after-
tax gains of $1.6 million. During the third quarter, the Company paid back
loans it had accumulated against the cash value of certain executive life
insurance policies totaling $17.6 million. Coachmen repurchased 263,300
shares totaling $4.0 million during the fourth quarter and 505,600 shares
during the year for $7.8 million. Book value per share is $13.37.
Joseph P. Tomczak, Executive Vice President and Chief Financial Officer,
said, "Our fourth quarter results, while less than our estimate, were a marked
improvement over last year. More importantly, we returned to profitability in
2002 by a wide margin. Compared to 2001, we delivered across the board
improvements in our financial performance and we continued our focus on cash
flow and keeping a strong balance sheet. That strength is demonstrated by the
fact that our capital structure is made up of less than 5% debt. We are also
keeping an extreme focus on improving the results of our Modular Housing and
Building business, especially Miller Building Systems that had predominantly
served the telecommunications industry. With the closing of Miller's New York
facility in December and other efficiency improvements, we're focused on
returning that division to profitability during 2003."
Outlook
Chairman Skinner said, "Our goal in 2003 is to strengthen the foundation
we built upon during 2002 and further improve our overall performance. With
solid growth in shipment and production levels, and a healthy backlog going
into 2003, our RV segment is gaining momentum, and we anticipate a strong
follow-up performance out of the group this year. We are, at the same time,
extremely focused on improving the results of the Modular Housing and Building
business. The new modular markets and products mentioned previously indicate
that 2003 should be an exciting year. While these are all positive
developments, we, like all Americans, are concerned about the economy,
terrorism, and war. Because of that, we feel it is not advisable to give a
definitive forecast for 2003 at this time. Assuming reasonable stability, we
anticipate sales growth of between 8% and 10%, and earnings growth in the 30%
to 40% range. As conditions become clearer, we will endeavor to tighten up
the forecast."
Founded in 1964, Coachmen Industries, Inc. is one of the nation's leading
manufacturers of recreational vehicles with well-known brand names including
COACHMEN(R), GEORGIE BOY(R), SHASTA(R) and VIKING(R). Coachmen Industries is
also the largest modular home producer in the nation with its ALL AMERICAN
HOMES(R) and MOD-U-KRAF(R) subsidiaries. Modular commercial and
telecommunication structures are manufactured by the Company's Miller Building
Systems subsidiary. Prodesign, LLC is a subsidiary that custom thermoforms
composite and plastic parts for numerous industries under the PRODESIGN(R)
brand. Coachmen Industries, Inc. 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 condition
of the telecommunications industry which purchases modular structures, the
availability and the price of gasoline, the Company's dependence on chassis
suppliers, interest rates, the availability and cost of real estate for
residential housing, 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, the impact of potential war against Iraq
on the economy, consumer confidence, and 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 Year Ended
December 31, December 31,
2002 2001 2002 2001
Net Sales $164,086 $127,729 $665,192 $587,212
Gross Profit - $ 25,204 18,807 99,219 83,445
Gross Profit - % 15.4% 14.7% 14.9% 14.2%
GS&A - $ 22,416 21,562 86,198 87,934
GS&A - % 13.7% 16.9% 13.0% 15.0%
Operating Income/
(Loss) - $ 2,788 (2,755) 13,021 (4,489)
Operating Income/
(Loss) - % 1.7% (2.2)% 2.0% (0.8)%
Other (Income)/Expense (1,057) (573) (1,975) 1,629
Pre-Tax Profit/
(Loss) - $ 3,845 (2,182) 14,996 (6,118)
Pre-Tax Profit/
(Loss) - % 2.3% (1.7)% 2.3% (1.0)%
Tax Expense/(Benefit) 1,185 (742) 5,067 (2,167)
Net Income/(Loss) 2,660 (1,440) 9,929 (3,951)
Earning/(Loss) per
share - Basic & Diluted 0.17 (0.09) 0.62 (0.25)
Weighted Average
Shares Outstanding
Basic 15,778 15,635 15,996 15,835
Diluted 15,871 15,635 16,107 15,835
Coachmen Industries, Inc.
Condensed Consolidated Balance Sheets
(In Thousands)
(Unaudited)
ASSETS 12/31/02 12/31/01
Current Assets
Cash and temporary cash investments $16,549 $28,416
Marketable securities 7,641 12,180
Accounts receivable 29,408 23,756
Inventories 85,010 80,477
Prepaid expenses and other 8,862 9,059
Deferred income taxes 6,885 7,319
Total Current Assets 154,355 161,207
Property & equipment, net 78,889 80,233
Goodwill and other, net 18,954 18,954
Cash value of life insurance 33,155 13,454
Real estate held for sale 276 11,129
Other 7,566 3,583
Total Assets $293,195 $288,560
LIABILITIES AND SHAREHOLDERS' EQUITY 12/31/02 12/31/01
Current Liabilities
Current portion of long-term debt $902 $917
Accounts payable, trade 18,801 18,944
Accrued income taxes 1,222 494
Other accruals 39,856 38,846
Total Current Liabilities 60,781 59,201
Long-term debt 10,097 11,001
Deferred income taxes 4,123 1,257
Other 8,768 8,461
Total liabilities 83,769 79,920
Shareholder's Equity 209,426 208,640
Total Liabilities and Shareholders' Equity $293,195 $288,560
Coachmen Industries, Inc.
Condensed Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)
Year Ended
December 31,
2002 2001
Cash Flow from Operations $13,027 $41,294
Cash Flow from/(used in) Acquisition &
Investing Activities 4,828 (4,384)
Net Borrowings (19,377) (8,643)
Issuance/Purchase of Stock (6,824) 704
Dividends (3,521) (3,169)
Cash Flow from/(used in) Financing Activities (29,722) (11,108)
Increase in Cash and Temporary Cash Investments (11,867) 25,802
Beginning of Period Cash and Temporary Cash
Investments 28,416 2,614
Ending Cash and Temporary Cash Investments $16,549 $28,416
