Coachmen Industries Reports First Quarter
Results and Declares 75th Consecutive Quarterly
Dividend
ELKHART, Ind., May 7 Coachmen Industries, Inc.
, a leading manufacturer of recreational vehicles (RVs) and the
nation's largest modular home builder, announced that net sales for the
quarter ended March 31, 2001 were $154.8 million compared to 2000's net sales
of $202.5 million. The net loss for the quarter was ($4.9) million or ($.31)
per share compared to net income of $4.0 million, or $.26 per share last year.
Coachmen Industries' Chairman, President and Chief Executive Officer
Claire C. Skinner said, "As we had forecasted, our first quarter results were
an improvement over the fourth quarter of 2000, though still in a loss
position. The economic and business environment for the entire recreational
vehicle industry continues to be a challenge, although we are beginning to see
intermittent signs, including recent interest rate reductions, that suggest
there may be improvement in the second half of the year. In our other core
business, the first quarter performance of our Modular Housing and Building
Segment was profitable, although impacted by unusually hard winter weather
conditions that we expect will be largely self-correcting in the second
quarter."
"The highlight of the first quarter," Skinner continued, "was the
acquisition of Kan Build, Inc., a manufacturer of modular homes and buildings,
with plants in Kansas and Colorado. Kan Build is Coachmen's third acquisition
within ten months, and represents the continued implementation of our
strategic plan that was aggressively acted upon during 2000."
The strategic initiatives undertaken by Coachmen Industries in 2000 were
particularly timely in light of the continuing softness in the RV industry and
the economy in general. These initiatives include a dramatic shift in the
business mix to bring a better balance between the modular and RV segments;
the liquidation of four of the Company's RV retail dealerships; the exit from
the van conversion and furniture industries; and the reorganization of our
operations to reduce inefficiencies and eliminate redundancies.
Recreational Vehicle Segment
Recreational vehicle sales for the first quarter were $107.2 million,
compared to $162.7 million for the same period in 2000. The lower sales
relative to overhead costs significantly impacted earnings, as did margin
pressure due to continued industry-wide discounting and sales costs.
During the quarter, Coachmen's RV business units were successful in
reducing their finished goods inventories by approximately $7.0 million,
albeit with higher selling expenses. At the same time, these units have been
aggressively pursuing product development activities for accelerated 2002
model introductions, which will help relieve the normal margin pressures that
accompany the model year "sell-down" process. In conjunction with their
efforts to reduce wholesale inventories, Coachmen's RV business units have
implemented plans to maximize production efficiencies and retail turns by
suspending or eliminating production of small volume series. These products
are being replaced by new 2002 offerings as well as the new models introduced
by the Company during the National Trade Show in Louisville. Based on
available data, these new offerings have begun to have their intended impact,
with market share improvement in both Travel Trailers and Camping Trailers.
Though operating at levels significantly below last spring, Coachmen RV has
experienced less of a decrease in Class A, Class C and Fifth Wheel wholesale
shipments than the industry in general, based on statistics published by the
Recreation Vehicle Industry Association, which bodes well for market share
growth.
Finally, as part of an on-going strategy to reduce overhead and redundant
operating costs, the Company continued the consolidation of its Shasta
Industries subsidiary into Coachmen RV Company. The Company expects to
complete this activity during the second quarter of 2001. Throughout the
Company's RV Segment, capacity is being adjusted and employment has been
reduced by 866, or 28.8 percent, from first quarter levels of last year.
Modular Housing and Building Segment
The Housing and Building Segment continued its profitable performance
during the first quarter. Segment sales for the quarter ended March 31, 2001
were $47.6 million, compared to 2000 first quarter sales of $39.8 million.
Excluding the impact of acquisitions completed in 2000 and 2001, modular
housing and building sales were down by 33 percent, principally due to
unusually harsh winter weather conditions. Historically, first quarter
revenues in our modular businesses have been impacted by weather, state frost
laws and road conditions that delay delivery of sold homes. The severity of
the 2000-2001 winter season had a tangible negative effect on our results.
The combination of weather delays and planned production of product that is
pre-sold, paid for or under contract resulted in increases in finished goods
inventories of approximately $8 million, much of which will be delivered in
the second quarter.
Throughout the first quarter, builders reported strong consumer interest
and traffic, but a reluctance to commit to purchase, particularly in the
Midwest markets where lay-offs and other regional concerns played a larger
role. In general, this reluctance appears to also be driven by the
anticipation of further interest rate reductions. However, according to the
U.S. Commerce Department's March 2001 report, single-family home starts are at
a very strong annual rate of 1.02 million, which gives management confidence
that modular sales should remain strong for the year. While modular homes
currently comprise under five percent of the new single family home starts
nationwide, as the advantages of modular construction become more widely
recognized, the potential exists for growth rates that exceed those of site-
built homes. This, together with the marketing and business advantage that
all homes are built to order, supports the Company's strategic decision to
aggressively grow this segment. With the acquisitions of Mod-U-Kraf and Miller
Building Systems in 2000, and the acquisition of Kan Build during the first
quarter of 2001, the modular segment should represent approximately 37 percent
of Coachmen's total revenues in 2001. This compares to 18 percent in 1999 and
24 percent in 2000.
Financial Strength
The Company continues to maintain a strong balance sheet with total
shareholders' equity of approximately $209 million and net book value of
approximately $13.23 per share. The Company has continued to carefully manage
its cash and expenditures in the first quarter and its cash position increased
by $14.6 million as of March 31, 2001. Capital expenditures were curtailed
and limited to items that have a direct bearing on productivity and
profitability. Capital expenditures totaled $2.2 million in the first
quarter, compared to $3.2 million in the Company's original 2001 business
plan. Capital expenditures this quarter were primarily for Mod-U-Kraf's new
headquarters that will also serve as a model for commercial modular office
buildings, and the new Kan Build plant in Colorado that will be completed in
the second quarter of 2001. Capital expenditures for the remainder of the
year will continue to be subject to close scrutiny.
"Coachmen is in sound financial shape and is poised to resume the growth
that we experienced throughout the decade of the '90s," said Richard M.
Lavers, Executive Vice President and interim Chief Financial Officer. "Our
balance sheet is strong and improved performance should result from our
continuing emphasis on planning and control measures."
Outlook
As it did throughout 2000, Coachmen Industries will continue to execute
its strategic plan by concentrating on its two core businesses: recreational
vehicles and modular housing and building. The Company should begin to
realize the financial benefits and returns from the strategic actions taken
during 2000 and early 2001; and as market conditions recover, we anticipate
improved performance during the second half of 2001. Based on current economic
and market conditions, the Company anticipates that the second quarter should
show some improvement over the first quarter of 2001. With the assumption of
some reasonable help from an improving U.S. economy during the second half of
the year, the Company continues to forecast earnings per share of $.60 to $.70
for the year.
Chairman Skinner concluded, "Coachmen has unique strengths including
powerful brand equity, an experienced management team, dedicated and motivated
employees, a strong balance sheet and the willingness to take aggressive
actions in response to changing market conditions. Coachmen is in its 37th
year of operation and we know how to operate our business in a variety of
economic environments. We have the experience of having not only survived but
thrived following the last economic downturn, and we expect nothing less going
forward."
In other news, during the its regular meeting following the Company's
Shareholders' Meeting on May 3, 2001, Coachmen's Board of Directors approved a
five cents per share dividend to shareholders of record as of May 24, 2001.
This is the 75th consecutive quarter that Coachmen Industries has paid
dividends.
Coachmen Industries, Inc., founded in 1964, is one of the nation's leading
manufacturers of recreational vehicles and is also a leader in modular
construction. Coachmen is one of the industry's best-known brand names of
RVs, and Coachmen's All American Homes subsidiary is America's largest modular
homebuilder. Coachmen 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
implementation of its enterprise-wide software, the availability and pricing
of gasoline, the Company's dependence on chassis suppliers, interest rates,
competition, government regulations, legislation governing the relationships
of the Company with its recreational vehicle dealers, the impact of economic
uncertainty on high-cost discretionary product purchases and other risks
identified in the Company's SEC filings.
COACHMEN INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands except per share data)
THREE MONTHS
ENDED MARCH 31,
2001 2000
Net sales $154,807 $202,485
Cost of sales 136,802 171,062
Gross profit 18,005 31,423
Selling, delivery and general and admin. expenses 25,432 25,045
Operating income (loss) (7,427) 6,378
Nonoperating income (expense), net (365) (178)
Income (loss) before income taxes (7,792) 6,200
Income taxes (2,852) 2,170
Net income (loss) $(4,940) $4,030
Earnings (loss) per common share:
Basic and diluted $(.31) $.26
Number of common shares used in the computation
of earnings (loss) per share:
Basic 15,746 15,551
Diluted 15,746 15,570
PRELIMINARY CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands)
MARCH 31,
2001 2000
ASSETS
Cash and cash equivalents $17,229 $15,044
Marketable securities 17,100 22,274
Receivables 41,637 47,659
Inventories 98,866 107,651
Prepaid expenses and other 2,007 2,236
Deferred income taxes 9,312 4,743
Current assets 186,151 199,607
Property and equipment, net 86,038 75,358
Intangibles and other assets 49,428 20,375
Total assets $321,617 $295,340
LIABILITIES
Current maturities of long-term debt $865 $2,746
Accounts payable 31,299 29,360
Other current liabilities 41,912 30,945
Current liabilities 74,076 63,051
Long-term debt 25,295 7,000
Other liabilities 13,521 8,083
Total liabilities 112,892 78,134
TOTAL SHAREHOLDERS' EQUITY 208,725 217,206
Total liabilities and shareholders'
equity $321,617 $295,340
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