Coachmen Industries, Inc. Returns to Profitability; Declares
Dividend
ELKHART, Ind., Aug. 9 Coachmen Industries, Inc.
announced today that it has returned to profitability, consistent
with its previously announced expectations.
Total net income for the second quarter ended June 30, 2001 was
$1.4 million compared with $3.7 million reported last year. For the quarter,
diluted earnings per share were $.09 compared to $.24 per share in the same
period in 2000. This rebounds from a loss in the first quarter of
$4.9 million, or $.31 per share. For the first six months of the year, the net
loss is $3.5 million, or a $.22 per share loss, compared to net income of
$7.7 million, or $.50 per share for the same period in 2000.
The return to profitability was achieved in spite of revenues that were
significantly below those of a year ago because of continuing softness in the
recreational vehicle industry. Sales for the second quarter ended June 30,
2001 were $162.4 million compared with last year's second quarter sales of
$194.7 million. Sales for the first six months were $315.3 million compared
with sales in the first six months of 2000 of $395.9 million.
"Given the continuing difficulty in the RV market as a whole, we are
pleased to return to profitability after two quarters of losses. We believe
that our ability to rebound so quickly is the result of the many internal and
structural changes we have put in place," said Claire C. Skinner, Chairman,
Chief Executive Officer and President of Coachmen Industries.
Recreational Vehicle Group
The reduction in sales and much of the profit erosion during this period
was due to the continuing industry-wide softness experienced by the Company's
Recreational Vehicle Group.
Recreational vehicle segment sales for the second quarter were
$93.9 million, compared to $148.8 million for the same period in 2000. Sales
for the first six months were $200.2 million compared to $311.3 million for
the same period in 2000. After adjustments for sold or discontinued RV
operations, sales for 2000 were $128.3 million for the second quarter and
$276.8 million for the first six months of the year. The lower sales volumes,
coupled with unusually fierce competitive pressures in phasing out 2001
models, negatively impacted profits of the RV Group. During the quarter,
Coachmen's recreational vehicle operations were successful in reducing their
inventories by $11.7 million, in preparation for introduction of the new line
of 2002 models.
Throughout the Company's RV Group, capacity and staffing have been further
adjusted during the second quarter. It is anticipated that many of these
adjustments will be temporary, and the Company remains poised to recapture
market share as the industry recovers.
"Cost containment is important in the near-term," said Joe Tomczak,
Executive Vice President and Chief Financial Officer. "However, the Company
continues to be very focused on growth, and is prepared to capitalize on those
opportunities as the market recovers."
Modular Housing and Building Group
During the quarter, the Company's Modular Housing and Building Group
successfully offset the current cycle in the recreational vehicle industry.
This underscores the merits of the Company's strategic plan to bring a better
balance between its two core businesses. The Company's modular homes offer a
high-quality alternative to conventional site-built homes, and should not be
confused with manufactured housing and the problems that have plagued that
industry.
The Housing and Building Group continued its profitable performance during
the second quarter. Segment sales for the quarter ended June 30, 2001 were
$68.5 million, compared to second quarter 2000 sales of $45.9 million. Year
to date sales were $115.1 million compared to $84.6 million in the first half
of 2000.
Throughout the second quarter, consumer interest and traffic in our
builders' model homes remained strong. This is consistent with the National
Association of Homebuilders forecast that single family housing starts will
total 1,274,000 in 2001, 3.3 percent ahead of last year. Since modular homes
currently comprise less than five percent of the new single family home starts
nationwide, the potential exists for growth rates that equal or exceed those
of site-built homes, as the advantages of modular construction become more
widely recognized. The Company's strategic growth plan for this segment
included the completion of a new manufacturing facility for recently acquired
All American Kan Build in Colorado that will enhance the Company's production
in that important area of the country.
During the first half of 2001, the modular and building segment
represented approximately 37 percent of Coachmen's total revenues. This
compares to 24 percent in calendar year 2000 and 18 percent in calendar year
1999.
Financial Strength
The Company continues to maintain a strong financial position with total
shareholders' equity of approximately $209.8 million and net book value of
approximately $13.30 per share. The Company has continued to carefully manage
its cash and expenditures in the second quarter and finished the quarter with
over $39 million of cash and marketable securities. Capital expenditures
totaled $0.8 million in the second quarter, compared to $3.2 million in the
same period in 2000.
"Coachmen has a strong balance sheet, with an extremely low level of debt.
We are well positioned to withstand the industry conditions and are poised to
resume the growth that we experienced throughout the decade of the '90s," said
CFO Tomczak. "Improved performance should result from our continuing emphasis
on cost containment and efficiency, as well as from better utilization of
Company assets."
Outlook
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 is beginning to realize the financial
benefits and returns from the strategic actions taken during 2000 and early
2001, including the reorganization of the RV segment; the Company's
divestiture of its van conversion and furniture subsidiaries and four RV
retail dealerships; and the acquisitions of Miller Building Systems, Inc.,
Mod-U-Kraf Homes, Inc., and Kan Build, Inc.
Based on the Company's return to profitability in the second quarter,
management expects the Company to remain profitable during the second half of
the year, though at lower levels than previously forecasted due to a softer
than anticipated economy. "It now appears that recovery in the economy and the
recreational vehicle industry will be later than the experts had originally
forecasted," Chairman Skinner commented, "although we are encouraged by signs
that market conditions have begun to improve in the third quarter, and we
expect continuing improvements through early 2002. Further, many of the
Company's actions to reduce costs and improve margins should be more apparent
in the third and fourth quarters." Continuing, she said, "We are also very
encouraged by the strong response to our 2002 RV models recently unveiled at
our Annual Dealer Seminar. As a result of the orders placed by our dealers, we
are increasing production rates in many of our facilities."
Chairman Skinner concluded, "Coachmen has many unique strengths including
powerful brand equity, dedicated employees, a strong balance sheet and the
willingness to take aggressive actions in response to changing market
conditions. Our senior management team is now fully in place. Having been
through similar cycles during our 37 years in operation, we know how to not
only survive, but thrive, as our Company emerged stronger from each of the
previous economic downturns. All of us at Coachmen expect nothing less going
forward."
In other news, during its regular meeting on August 6, 2001, Coachmen's
Board of Directors declared a $.05 per share dividend to shareholders of
record as of August 27, 2001. This is the 76th consecutive quarter that
Coachmen Industries has paid dividends.
Coachmen Industries, Inc.
Condensed Consolidated Statements of Operations
(In Thousands, Except Per Share Amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
Outside Sales $162,359 $194,699 $315,283 $395,911
Gross Profit - $ 28,059 30,515 44,181 60,665
Gross Profit - % 17.3% 15.7% 14.0% 15.3%
SG&A - $ 24,580 25,033 48,129 48,739
SG&A - % 15.1% 12.9% 15.3% 12.3%
Operating Income/
(Loss) - $ 3,479 5,482 (3,948) 11,926
Operating Income/
(Loss) - % 2.1% 2.8% -1.3% 3.0%
Other (Income)/Expense 1,232 127 1,597 371
Pre-Tax Profit/(Loss) - $ 2,247 5,355 (5,545) 11,555
Pre-Tax Profit/(Loss) - % 1.4% 2.8% -1.8% 2.9%
Tax Expense/(Income) 823 1,655 (2,029) 3,825
Net Income/(Loss) 1,424 3,700 (3,516) 7,730
Earnings/(Loss) per
Share - Basic & Diluted .09 .24 (.22) .50
Weighted Average Shares Outstanding
- Basic 15,778 15,566 15,773 15,559
- Diluted 15,855 15,581 15,773 15,571
Coachmen Industries, Inc.
Condensed Consolidated Balance Sheet
(In Thousands)
(Unaudited)
Current assets 6/30/01 12/31/00
Cash $25,098 $2,614
Marketable securities 13,987 18,737
Accounts receivable 30,505 40,079
Inventories 86,514 97,315
Prepaid expenses and other 5,330 6,821
Deferred income taxes 9,077 8,384
Total current assets 170,511 173,950
PP&E, net 84,484 84,163
Goodwill and other intangibles, net 19,087 15,983
Other 28,663 22,350
Total assets $302,745 $296,446
Current Liabilities 6/30/01 12/31/00
Current portion of L-T debt $865 $865
Accounts payable, trade 20,310 24,015
Accrued income taxes 269 845
Other accruals 39,667 31,988
Total current liabilities 61,111 57,713
Long-term debt 19,945 11,795
Deferred income taxes 3,349 3,370
Other 8,580 8,619
Total liabilities 92,985 81,497
Shareholders' equity 209,760 214,949
Total liabilities and
shareholders' equity $302,745 $296,446
