Monaco Coach Corporation Reports First Quarter 2005 Profits
COBURG, Ore., April 27 -- Monaco Coach Corporation today reported revenues and earnings for its first quarter ended April 2, 2005.
First quarter earnings per share were 18 cents, compared to earnings of 40 cents for the first quarter of 2004. Revenues for the first quarter were $331.5 million compared to revenues of $355.0 million for the first quarter of 2004. Net income for the first quarter was $5.3 million compared to $11.9 million for the first quarter of 2004. First quarter 2005 motorhome sales totaled 1,798 units and first quarter towable sales totaled 1,227 units for a combined total of 3,025.
"Discounting during the first quarter allowed us to retain shelf space at our dealers' lots, but it chipped away at our first quarter gross profit margin," said Monaco Coach Corporation President John Nepute. "We introduced incentives earlier this year to help prevent a build-up of finished goods inventory and to support our dealer partners in retailing their inventory, and we are seeing positive results from these efforts. We do expect to see some level of discounting as we move into the 2006 model year. Being proactive in reducing run rates and making production cuts during the first quarter enabled us to manage dealer and Company inventories and to attain the level of profitability that we accomplished."
"Shifting our product mix to yield a higher percentage of towables during the first quarter generated an increase in our direct material costs as a percentage of sales, however, this was more than offset by savings in labor costs," said Monaco Coach Vice President and Chief Financial Officer Marty Daley. "And while the reduced production and run rates contributed to our overall profitability during the first quarter, the corresponding reduction in plant efficiencies affected coverage of our indirect costs on a per unit basis."
The Company reported minor improvements in several expense areas during the quarter which helped compensate for increased settlement costs and resulted in a slight reduction in selling, general and administrative expenses in the first quarter of 2005, compared to the fourth quarter of 2004.
"Looking toward the second quarter, we expect that revenue will be in the $340 million to $350 million range. Improvements in the level of discounting and additional savings in certain direct and indirect costs should lead to second quarter gross margins between 11.3% and 11.5%. Sales, general, and administrative expenses for the second quarter are expected to be in the 8.0% to 8.2% range," said Daley. "Additionally, as we have previously announced, there will be one-time pre-tax charges of approximately $3.5 million in the second quarter related to the closure of the Bend manufacturing plant."
"The market conditions that have been affecting the industry over the past few quarters impacted our financial results in the first quarter," stated Monaco Coach Corporation Chairman and Chief Executive Officer Kay Toolson. "Nonetheless, we are very positive about the strong acceptance of our 2005 product line by our dealer network and our retail customers. We believe that our 2005 product line-up has been one of the strongest in our company's history. As we move into the 2006 model year, we will continue to focus on delivering the industry's most innovative products, seek to further improve quality, find ways to lower our costs, and continue to provide the best after-market service support in the industry."
Monaco Coach Corporation will conduct a conference call in conjunction with this news release at 2:00 p.m. ET today, Wednesday, April 27, 2005. 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 Eastern Oregon and Indiana, Monaco Coach Corporation employs more than 5,900 people and is one of the nation's leading manufacturers of recreational vehicles. The Company offers entry-level priced towable RVs up to custom made luxury recreational vehicle models under the Monaco, Holiday Rambler, Safari, Beaver, McKenzie and Royale Coach brand names. For additional information about Monaco Coach Corporation please visit www.monaco-online.com.
MONACO COACH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited: dollars in thousands, except share and per share data)
April 2,
January 1, 2005
2005 (unaudited)
ASSETS
Current assets:
Cash $0 $1,477
Trade receivables, net 127,380 138,770
Inventories 169,777 169,018
Resort lot inventory 7,315 8,228
Prepaid expenses 5,190 4,937
Deferred income taxes 33,188 33,350
Total current assets 342,850 355,780
Property, plant, and equipment, net 141,563 140,112
Debt issuance costs, net of accumulated
amortization of $572 and $616, respectively 571 537
Goodwill 55,254 55,254
Total assets $540,238 $551,683
LIABILITIES
Current liabilities:
Book overdraft $1,587 $0
Line of credit 34,062 25,000
Accounts payable 79,072 96,095
Product liability reserve 20,233 20,053
Product warranty reserve 32,369 32,159
Income taxes payable 2,087 3,984
Accrued expenses and other liabilities 31,533 30,891
Total current liabilities 200,943 208,182
Deferred income taxes 19,679 19,713
Total liabilities 220,622 227,895
STOCKHOLDERS' EQUITY
Common stock, $.01 par value; 50,000,000
shares authorized, 29,425,787 and 29,488,513
issued and outstanding, respectively 294 295
Additional paid-in capital 57,454 58,071
Retained earnings 261,868 265,422
Total stockholders' equity 319,616 323,788
Total liabilities and
stockholders' equity $540,238 $551,683
MONACO COACH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited: dollars in thousands, except share and per share data)
Quarter Ended
April 3, April 2,
2004 2005
Net sales $354,976 $331,512
Cost of sales 310,493 295,295
Gross profit 44,483 36,217
Selling, general, and administrative
expenses 24,800 27,343
Operating income 19,683 8,874
Other income, net 86 114
Interest expense (405) (485)
Income before income taxes 19,364 8,503
Provision for income taxes 7,441 3,180
Net income $11,923 $5,323
Earnings per common share:
Basic $ .41 $ .18
Diluted $ .40 $ .18
Weighted average common shares outstanding:
Basic 29,296,193 29,460,137
Diluted 29,967,452 29,893,889
Units sold: 3,136 3,025
MONACO COACH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited: dollars in thousands)
Quarter Ended
April 3, April 2,
2004 2005
Increase (Decrease) in Cash:
Cash flows from operating activities:
Net income $11,923 $5,323
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Loss (Gain) on sale of assets 78 (1)
Depreciation and amortization 2,536 2,537
Deferred income taxes 459 (128)
Changes in working capital accounts:
Trade receivables, net (25,447) (11,390)
Inventories (18,805) 759
Resort lot inventory 3,360 139
Prepaid expenses (3,547) 228
Accounts payable 39,075 17,023
Product liability reserve (1,120) (180)
Product warranty reserve 1,068 (210)
Income taxes payable 2,967 1,897
Accrued expenses and other liabilities 3,556 (642)
Net cash provided by operating activities 16,103 15,355
Cash flows from investing activities:
Additions to property, plant, and equipment (2,553) (2,119)
Proceeds from sale of assets 145 52
Net cash used in investing activities (2,408) (2,067)
Cash flows from financing activities:
Book overdraft 0 (1,587)
Payments on lines of credit, net 0 (9,062)
Payments on long-term notes payable (3,750) 0
Debt issuance costs 129 (11)
Dividends paid (1,465) (1,769)
Issuance of common stock 769 618
Net cash used by financing activities (4,317) (11,811)
Net change in cash 9,378 1,477
Cash at beginning of period 13,398 0
Cash at end of period $22,776 $1,477
FOR MORE INFORMATION CONTACT:
Craig Wanichek - Investor Relations
Monaco Coach Corporation
(541) 681-8011
http://www.monaco-online.com/
