Rexhall Industries Announces 1st Unprofitable Quarter Since 1997
LANCASTER, Calif.--Nov. 14, 2001--Rexhall Industries, Inc. today announced that it was unprofitable for the 3rd quarter ended September 30, 2001, which is its first unprofitable quarter in nearly four years.Consolidated net revenues for the nine months ended September 30, 2001 increased 4.8% to $50,287,000 from $47,983,000 for the same period in 2000. Gross profit for the nine months decreased 23.5% from $7,620,000 to $5,829,000. Net loss for the period was $404,000, or ($0.13) per diluted share, compared with net income of $1,822,000 or $0.58 per diluted share last year.
For the third quarter ended September 30, 2001, consolidated net revenues increased 11.5% to $13,925,000 from $12,488,000, while gross profit decreased 47.5% to $1,335,000 from $2,544,000. Net loss for the quarter was $655,000, or ($0.22) per diluted share, compared with net income of $498,000 or $0.16 per diluted share last year.
"With our industry already in a down market for the last year and a half, the events of September 11, 2001 certainly exacerbated a difficult situation. Dealers simply stopped taking product, which caused us to start discounting current model year product for the first time during this long down market. September's net shipments were less than one-third the YTD average. However, we did ship 94 units in October, but it took some steep incentives," stated William J. Rex, Chief Executive Officer.
These incentives caused the Company to write down some of its September 30, 2001 inventory at both the manufacturing and retail operations by $528,000. Most of this inventory has been subsequently sold in October and November.
"We had over 100 unsold, finished units when the orders dried up, which forced us to layoff about 185 employees and to start aggressively selling product to convert this inventory into cash. As of today, we have about 10 unsold finished units, which is the lowest level in over a year. Two weeks ago we rehired approximately 40% of the employees, and we expect to be back to pre-September 11, 2001 production levels the week after Thanksgiving," added Michael Bourne, Chief Operating Officer.
The Company announced that two of its larger dealers went out of business during the 3rd quarter, which led to $250,000 increase in bad debt expenses. "We have already replaced these dealers and plan to sign up more dealers at the industry's annual trade show in Louisville later this month," clarified Michael Bourne.
The Rexhall International Club held its 7th Annual Homecoming Rally in Lancaster two weeks ago. In attendance were approximately 335 coaches, which is an increase of nearly 100 coaches from the prior year. During this Rally, the Company's Retail Rebate program was launched with an overwhelming response. Eighteen motorhomes were sold during the rally, which is two to three times the usual amount. Mr. Rex concluded, "The responses we received from our Club members regarding the 2002 models and the rebate program were very encouraging. We will have some exciting new models to show at Louisville, which should translate to a solid order backlog to start next year. We still believe the demographics for this industry are strong, and with interest rates so low and fuel prices dropping, we are looking forward to 2002."
Three Months Ended:
September 30, 2001 September 30, 2000
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Statements of Operations
($000 omitted)
Net Revenues $13,925 $12,488
Cost of Sales 12,590 9,944
-------- --------
Gross Profit 1,335 2,544
Selling, General, Administrative
Expenses and Other Expenses 2,423 1,661
-------- --------
Income (Loss) Before
Income Taxes (1,088) 883
Income Tax Expense (Benefit) (433) 385
-------- --------
Net Income (Loss) $(655) $498
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Basic and Diluted Net Income
(Loss) per Common Share $(.22) $0.16
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Weighted Average
Shares Outstanding-Basic and
Diluted (1) 3,036 3,096
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Nine Months Ended:
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Statements of Operations
($000 omitted)
Net Revenues $50,287 $47,983
Cost of Sales 44,458 40,363
-------- --------
Gross Profit 5,829 7,620
Selling, General, Administrative
Expenses and Other Expenses 6,494 4,427
-------- --------
Income (Loss) Before
Income Taxes (665) 3,193
Income Tax Expense (Benefit) (261) 1,371
-------- --------
Net Income (Loss) $(404) $1,822
-------- --------
Basic and Diluted Net Income
(Loss) per Common Share $(.13) $0.58
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Weighted Average
Shares Outstanding - Basic
and Diluted 3,043 3,144
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Rexhall Industries, Inc. (www.rexhall.com) designs, manufactures and sells various models of Class A motorhomes used for leisure travel and outdoor activities. Rexhall's five lines of Class A motorhomes, sold through approximately 100 dealer locations across the U.S., Canada and Europe, include Aerbus, RexAir, Vision, American Clipper, and RoseAir.
FORWARD-LOOKING STATEMENTS: RISK FACTORS. Our statements of our intentions or expectations or future results are "forward-looking statements", based on assumptions and on facts known to us today. There are risks that actual developments will not be as favorable as our expectations, both because of risks existing today and because of new factors arising. We do not intend to update this report. Rexhall's business is seasonal. The recreational vehicle industry has in the past enjoyed favorable recreational vehicle industry sales when we have low interest rates, low unemployment, and ready availability of motor fuel. Consumer confidence has reduced sales, and the long-term effect is not known. Many of Rexhall's competitors are substantially larger, and many of its suppliers also have greater economic power, so that the volume and prices of both supplies and sales may be adversely affected. Management intends to remain aware of these factors and react to them, but cannot predict their timing or significance.
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