National R.V. Holdings Announces Financial Results for the First Quarter of 2005
PERRIS, Calif., May 18, 2005 -- National R.V. Holdings, Inc. , a leading manufacturer of recreational vehicles, today announced financial results for the quarter ended March 31, 2005, the first quarter of its fiscal year. The Company also announced today an additional restatement to its previously issued financial statements.
First Quarter of 2005 Results
Net sales for the first quarter of 2005 increased 22% to $125.6 million versus $103.1 million for the same quarter in 2004, which has been restated as further discussed below. The Company recorded a net loss for the first quarter of 2005 of $1.0 million, compared with net income of $1.2 million in the prior year's first quarter. The loss in the first quarter of 2005 corresponded to a diluted loss per share of $0.10 compared to diluted earnings per share of $0.12 in the first quarter of 2004. All of these amounts reflect results from continuing operations. In September 2004, the Company sold its travel trailer business, which was designated as a discontinued operation, and this business' results are excluded from the prior year's amounts.
In the first quarter of 2005, the gross profit margin from continuing operations was 4.2% compared to 6.9% in the first quarter of 2004, which has been restated as further discussed below. The decrease in gross profit margin in the first quarter of 2005 is the result of higher manufacturing overhead and warranty costs, and to a lesser degree, higher direct labor costs and increased discounts when compared to the first quarter of 2004.
Operating expenses from continuing operations for the first quarter of 2005 were $6.8 million, or 5.4% of net sales, compared to $5.1 million, or 5.0% of net sales for the first quarter of 2004. Higher selling expenses required to support the increased sales volume, increased marketing programs and higher costs related to compliance with the Sarbanes-Oxley Act, including increased personnel expenses, were the major contributors to the higher operating costs for the quarter.
"We are encouraged by the increase in demand that we have seen for our products," said Brad Albrechtsen, National R.V. Holdings' president and chief executive officer. "Sales this quarter resisted the downward trend that was expected by industry analysts as a result of the increases in fuel prices and declining consumer confidence. This quarter's increase in net sales marks National's seventh consecutive quarter with a year-over-year increase. The continued strength of the Company's 'Highline' products, the addition of new dealers, the introduction of new product lines and improved dealer incentive programs have all contributed to the sales increase.
"However, we are seeing high inventory levels on dealer lots as we work through the second quarter," continued Albrechtsen. "These higher dealer inventories have caused us to reduce production rates and increase discounting in the current quarter, compared to the first quarter."
Additional Restatement
In a press release dated April 1, 2005, National reported that it was restating its previously reported financial information and that it was in the process of finalizing its review of the Company's 2004 financial statements and assessing its internal controls. While undergoing this review, the Company determined that an additional restatement is required in order to reflect the restatement of certain dealer sales incentives, which include rebates and floorplan interest reimbursement paid to dealers to promote the sale of product and retail sales incentives paid directly to dealer retail salespersons to promote the sale of the product and the return of sale and warranty information. The 2003 and 2002 statements of operations will be restated to reclassify these sales incentives from selling expenses to a reduction of revenue, as required by generally accepted accounting principles. As a result of this restatement, net sales, gross profit and selling expenses presented in the accompanying statements of operations have been reduced by $0.6 million in the first quarter of 2004 from what was previously reported. This adjustment has no impact on net (loss) income as previously reported.
The Company has not finalized its review of the 2004 financial statements and its assessment of internal controls. There can be no assurance that other financial statement issues will not arise. At this time the Company is working as quickly as possible to finalize its financial statements for the year ended December 31, 2004 and the quarter ended March 31, 2005 in order to file, as soon as practicable, its Form 10-K and Form 10-Q for these periods.
National R.V. Holdings, Inc., through its two wholly owned subsidiaries, National R.V., Inc. (NRV) and Country Coach, Inc. (CCI), is one of the nation's leading producers of motorized recreation vehicles. NRV is located in Perris, California where it produces Class A gas and diesel motor homes under model names Dolphin, Islander, Sea Breeze, Tradewinds and Tropi-Cal. CCI is located in Junction City, Oregon where it produces high-end Class A diesel motor homes under the model names Affinity, Allure, Inspire, Intrigue, Lexa and Magna, and bus conversions under the Country Coach Prevost brand.
NATIONAL R.V. HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three-Months Ended
March 31,
2005 2004
(Restated)
Net sales $125,625 $103,146
Cost of goods sold 120,352 96,053
Gross profit 5,273 7,093
Selling expenses 3,639 2,707
General and administrative expenses 3,196 2,437
Operating (loss) income (1,562) 1,949
Interest expense 277 62
Other income (109) (48)
(Loss) income from continuing operations
before income taxes (1,730) 1,935
(Benefit) provision for income taxes (689) 720
(Loss) income from continuing operations (1,041) 1,215
Loss from discontinued operations -- (870)
Income taxes related to discontinued operations -- 324
Loss from discontinued operations,
net of income taxes -- (546)
Net (loss) income $(1,041) $669
Basic (loss) earnings per common share:
Continuing operations $(0.10) $0.12
Discontinued operations -- (0.05)
Total $(0.10) $0.07
Diluted (loss) earnings per common share:
Continuing operations $(0.10) $0.12
Discontinued operations -- (0.06)
Total $(0.10) $0.06
Weighted average number of shares:
Basic 10,335 10,190
Diluted 10,335 10,334
