Monaco Coach Corporation Reports Third Quarter 2004 Results
COBURG, Ore., Oct. 27, 2004 -- Monaco Coach Corporation today reported revenue and earnings for its third quarter ended October 2, 2004. Third quarter earnings per share were 25 cents, 19% higher than last year's third quarter earnings of 21 cents. Revenues for the third quarter were a record $358.9 million, 18.4% ahead of last year's third quarter revenue of $303.2 million. Net income for the third quarter was $7.4 million, an 18.8% increase compared to $6.3 million for the third quarter last year. Third quarter 2004 motorhome sales totaled 2,110 units and third quarter towable sales totaled 1,254 units for a total of 3,364.
Earnings per share, on a diluted basis, for the nine months ended October 2, 2004 were $1.04 compared to 38 cents per share for the same period last fiscal year. Revenues for the nine months ended October 2, 2004 were $1.072 billion, a 26.9% increase over revenues for the first nine months of last year. Net income for the nine months ended October 2, 2004 was $31.3 million, a 180% increase compared to $11.1 million earned for the comparable period last year. Unit sales of Monaco Coach Corporation products for the nine months ended October 2, 2004 totaled 9,847 units. Nine-month motorhome sales totaled 6,377 units and nine-month towable recreational vehicles totaled 3,470 units.
"While we are pleased to report that the Company achieved record revenue for the third straight quarter, competition in the motorhome industry remains very intense," stated Monaco Coach Corporation Chairman and Chief Executive Officer Kay Toolson. "Our earnings in the third quarter reflect these difficult market conditions. The financial results for the quarter emphasize the need to address some tough challenges such as higher selling, general and administrative costs, discounting and production levels."
John Nepute, Monaco President, stated, "The Company's gross profit margin was impacted by a product mix shift as well as not realizing our forecast reduction in the level of wholesale discounting. Discounting and retail incentives were used to help discourage a build-up of finished goods inventory and support our dealer partners in retailing their inventory."
"The Company has reduced production and run-rates to reflect the softer retail market and weakness in specific brands," Nepute said. "The reduction should lessen our reliance on discounts and incentives."
Monaco Coach Vice President and Chief Financial Officer, Marty Daley said, "Reducing selling, general and administrative expenses as a percentage of revenues is a significant focus for the Company. We expect these adjustments will be realized ratably over the next few quarters."
"We expect that a combination of reduced run-rates and fewer production days in the fourth quarter will generate fourth quarter revenues of approximately $300 - $310 million. This lower plant utilization level should lead to fourth quarter gross margins between 10.4% and 10.7%. Sales, general, and administrative expenses for the fourth quarter are expected to be in the 7.8% to 8.0% range," said Daley.
Monaco Coach Corporation will conduct a conference call in conjunction with this release at 2 p.m. ET today, Wednesday, October 27, 2004. 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.
Headquartered in Coburg, Oregon, with additional manufacturing facilities in Central Oregon and Indiana, Monaco Coach Corporation is one of the nation's leading manufacturers of recreational vehicles. The Company manufactures luxury recreational vehicle models under the Monaco, Holiday Rambler, Safari, Beaver, McKenzie and Royale Coach brand names.
MONACO COACH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited: dollars in thousands, except share and per share data)
January 3, October 2,
2004 2004
ASSETS
Current assets:
Cash $13,398 $8,406
Trade receivables, net 89,170 129,314
Inventories 127,746 162,595
Resort lot inventory 13,978 8,241
Prepaid expenses 3,029 5,700
Deferred income taxes 33,836 33,650
Total current assets 281,157 347,906
Property, plant, and equipment, net 141,662 138,928
Debt issuance costs net of accumulated
amortization of $815, and $1,200,
respectively 596 277
Goodwill 55,254 55,254
Total assets $478,669 $542,365
LIABILITIES
Current liabilities:
Current portion of long-term note payable $15,000 $15,000
Accounts payable 64,792 96,328
Product liability reserve 20,723 20,595
Product warranty reserve 29,643 34,027
Income taxes payable 3,395 6,826
Accrued expenses and other liabilities 26,373 32,635
Total current liabilities 159,926 205,411
Long-term note payable 15,000 3,750
Deferred income taxes 17,495 18,141
192,421 227,302
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par, 1,934,783 shares
authorized, no shares outstanding
Common stock, $.01 par value; 50,000,000 shares
authorized, 29,246,143 and 29,414,436 issued
and outstanding, respectively 292 294
Additional paid-in capital 54,919 56,829
Retained earnings 231,037 257,940
Total stockholders' equity 286,248 315,063
Total liabilities and stockholders' equity $478,669 $542,365
MONACO COACH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited: dollars in thousands, except share and per share data)
Quarter Ended Nine Months Ended
September 27, October 2, September 27, October 2,
2003 2004 2003 2004
Net sales $303,178 $358,869 $845,113 $1,071,619
Cost of sales 266,458 315,454 747,534 938,073
Gross profit 36,720 43,415 97,579 133,546
Selling, general,
and administrative
expenses 25,667 31,036 77,060 82,556
Operating income 11,053 12,379 20,519 50,990
Other income, net 64 43 502 256
Interest expense (767) (370) (2,558) (1,147)
Income before
income taxes 10,350 12,052 18,463 50,099
Provision for
income taxes 4,088 4,616 7,293 18,792
Net income $6,262 $7,436 $11,170 $31,307
Earnings per
common share:
Basic $ .22 $ .25 $ .38 $ 1.07
Diluted $ .21 $ .25 $ .38 $ 1.04
Weighted average
common shares
outstanding:
Basic 29,080,716 29,410,086 29,021,742 29,354,598
Diluted 29,625,959 29,962,722 29,478,842 29,981,063
MONACO COACH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited: dollars in thousands)
Nine Months Ended
September 27, October 2,
2003 2004
Increase (Decrease) in Cash:
Cash flows from operating activities:
Net income $11,170 $31,307
Adjustments to reconcile net income
to net cash (used) provided by
operating activities:
Loss on sale of assets 20 240
Depreciation and amortization 7,202 8,029
Deferred income taxes 4,297 832
Changes in working capital accounts:
Trade receivables, net 11,075 (40,144)
Inventories 43,467 (34,849)
Resort lot inventory 4,712 5,737
Prepaid expenses 724 (2,679)
Accounts payable (551) 31,536
Product liability reserve (696) (128)
Product warranty reserve (2,769) 4,384
Income taxes payable (2,440) 3,431
Accrued expenses and other liabilities 633 6,262
Net cash provided by operating
activities 76,844 13,958
Cash flows from investing activities:
Additions to property, plant, and equipment (16,969) (7,069)
Proceeds from the sale of assets 2,051 1,927
Proceeds from the sale of Naples property 6,650 0
Net cash used in investing activities (8,268) (5,142)
Cash flows from financing activities:
Book overdraft 1,206 0
Payments on lines of credit, net (51,413) 0
Payments on long-term notes payable (19,500) (11,250)
Debt issuance costs (304) (66)
Dividends paid (4,404)
Issuance of common stock 1,435 1,912
Net cash used by financing activities (68,576) (13,808)
Net change in cash 0 (4,992)
Cash at beginning of period 0 13,398
Cash at end of period $0 $8,406
